Sometimes it seems like everybody everywhere is trying to get you to start an email list.
But why? Nobody ever comes out and explains what all the buzz is about. It’s unclear how much an email list is worth or why an email list is so valuable.
In this post, let’s figure out exactly why everyone’s telling you to start your list.
How Valuable is an Individual Email Address?
It turns out we can pretty easily figure out how much an email address is worth.
To determine the value of an email. Take your email’s click-through rate. Multiply it by your website’s conversion rate. Then multiply that by the average profit you make per sale. It looks like this.
So let’s plug these values in for an “average” site and figure out what all the fuss is about.
Only about 30% of people will open your emails, let alone click-through to your website. Despite low open rates, click-through rates of 3-4% are average. Meaning if you send out 100 emails, 3 or 4 people will click-through to your website.
OK. We’ve got a visitor on our website. Now we have to get them to buy something. How likely is that to happen?
This will vary wildly from site to site and depends on a ton of factors. It depends on what you’re selling and how appealing your offer is. It depends on your ability to write sales copy and the design of your website and so much more.
It’ll be impossible for me to find an industry average here. But, you should be able to convert 5% of the people who click through to your website into sales.
I made that number up. But your email list is warm traffic that’s familiar with you. If you have a compelling offer they should be receptive towards buying it. A 5% conversion rate is realistic for a moderately priced item.
The final thing that matters is how much money your customers are spending on your website. Let’s pretend you’re selling a generic product with a $50 profit margin. Meaning, if you make a sale, you get $50.
OK ready for the big reveal? Ready to find out why everybody is telling you to start an email list? This is what an individual email address is worth.
Wait, 10 cents?!? WTF!!! That can’t be right? Can it? Why are people so crazy about starting email lists if each address is only worth 10 cents?
How Often Should You Send Marketing Emails?
I was a little disingenuous in the last section. You’re not making 10 cents per email address. You’re making 10 cents per email address per email sent.
If you spam the crap out of your list, you’re likely to find yourself in the GMail spam folder. You also can’t send hourly emails and expect to maintain your conversion rates.
But you could send a weekly email and maintain your conversion rates. In fact, you would likely be able to maintain conversion rates sending emails up to 3x per week.
However, let’s assume you’re not an email marketing machine and you don’t want to spam your list. So you stick to a weekly email for a year. How much money are you making from an individual email address now?
Every email address you collect is making you $5.20 every year. Not too bad, I’m starting to see the appeal of capturing email addresses.
But is that it? Is this why everybody is telling you to start an email list?
Email Marketing Becomes Effective At Scale
It probably hasn’t occurred to you why email lists are a big deal yet. Sure, 5 bucks is nice. You could buy a $5 footlong with that. But it’s hardly enough to be excited about. Or is it?
The power of email marketing has to do with how many emails you can be acquiring from your traffic. The number of emails you can acquire depends on two things. The amount of traffic you have and the rate at which you capture emails from that traffic.
Our new formula to make money from emails looks like this.
According to Sumo.com, the average rate for email capture is 1.95%. But I’m going to use 2% because you’re above average (and it’s simpler math).
As far as traffic, pretend your site is starting to get a real following but hasn’t blown up to crazy numbers yet. Let’s say you’re getting 10,000 visitors per month from Google or Pinterest right now and plug in the numbers.
If you converted 2% of your visitors into email subscribers, you’d be collecting 200 emails per month. Those emails are worth $1,040/yr.
That sounds a little bit more appealing. That’s close to what people are getting as an annual raise at their jobs. Except you’re getting that raise every single month you see this type of traffic.
Which brings up my next point. These effects are cumulative based on how many months you’ll be operating for. So the TRUE formula to calculate how much email addresses are worth has to factor in how many months you’ve been capturing email addresses.
By the end of a year, you’d have annual revenues of $12,480. This is from your email list alone, not counting your regular site traffic.
That’s not too bad from very modest traffic numbers… But what if you were getting 100,000 visitors per month? That’s a high but achievable level of traffic.
OK. Now we’re talking about serious money. You’d be making more than most people make in a year. This is just from your email list, 100k page views per month, and a single $50 product to sell to them.
Improve Your Email Funnel for Better Results
What if instead of using industry average numbers, we kicked things up a notch and used above average numbers?
- What if you got your average order value up to $100 by adding new premium products to your store?
- What if you got your email click-through rate up to 6%?
- What if you got your email capture rate up to 4%?
- What if you got your website’s conversion rate up to 10%.
This is why everybody is telling you to start an email list.
These are the types of numbers other professionals are seeing exclusively from their lists. This is on TOP of the money they regularly make from their normal traffic. It’s why the pros won’t shut up about their email lists.
Sure, you’d need to have an attractive $100 product, be good at writing sales copy and have acquired 100,000 visitors per month to see these types of numbers. That would be hard to do, but these are not impossible numbers if you consistently work to improve each piece.
Focus on Building Your List as a New Blogger
The beauty of an email list is that you don’t have to have all the pieces in place today.
A lot of new bloggers don’t see the value in starting their list as they have no product to sell their list yet.
Don’t worry about that, work to improve your email capture rates right now. This will pay dividends down the line. You also don’t need huge amounts of traffic to improve the rates at which you capture emails. A thousand visitors would be more than enough to determine if your changes are working.
As you get more traffic and as you get a product built, the work you do now will grow exponentially in value.
And in the meantime, there’s still value in having an email list. You can do the following valuable things with it before you have products to sell.
- Promote your new blog posts.
- Ask your audience for feedback.
- Offer consulting services.
- Use the list to create more targeted ads.
Emails Are More Valuable Than Google Adsense Clicks.
I’ve already written a blog post on why you shouldn’t use ads to monetize your website. But if you insist on using ads, I want to drive home why you should always prioritize your own email list over advertisements on your website.
Earlier we calculated an email address was worth $5.20 per year using industry average metrics. But, what if we used the higher conversion rate numbers? You’d come up with a value of $31.20 per email address per year.
But maybe you think my numbers are too high. Let’s give a more pessimistic scenario. A 2% click-through rate and a 2 percent conversion rate for your $50 product. With this, an email address would still be worth $1.04/yr.
What’s The Average Revenue Per Click from Google Adsense?
Let’s compare that to what you make per click from Google Adsense. There is no official data on this because it varies. But typically after the ad network takes its cut, you’ll be lucky if you see 20-50 cents per click.
Even if an email address is only worth $1 to you, it’s still 3x more valuable than an ad click.
If you insist on using ads, for the love of God, please don’t give them a more premium position on your website than you’ve given your email capture.
Remember an email address is about 3x to 100x more valuable than an ad click. And that’s in year 1, you’re going to be able to market to this person for a long time.
Can You Market To Your Email List Forever?
Email addresses aren’t really forever. A decent percentage of people will unsubscribe over time. Particularly if you’re spamming out a lot of low-quality emails.
Plus, external factors can dramatically cut down the number of people who receive your emails. For instance, when Google created the promotions tab, email open rates declined across the industry.
This is why I don’t like to do the math on 5 years out for email addresses. Most of your subscribers will likely be gone by then. Your list isn’t forever, but a significant portion of your list will stick around for years to come.
Do You Own Your Email List?
This is where a lot of online marketers are painting too rosy of a picture.
Most marketers claim that the reason emails are so valuable is that you own the list and nobody can ever take that away from you. Whereas if you build a business on Facebook traffic and that traffic goes away, you’re screwed.
Your email list is the safest form of traffic out there. It’s a much more reliable source than Google, Facebook, YouTube, Pinterest, Amazon, Ads, etc. But that doesn’t mean that an email list is infallible.
For instance, the GDPR required re-consent for email addresses that were obtained in a non-GDPR compliant way. Most companies were able to keep their lists. But many companies had to send out re-consent emails or else lose their entire list (or risk lawsuits).
Meaning if you had an email list of 1,000,000 people. And an industry standard 4% clickthrough rate on your emails. Your 1,000,000 person email list was now only 40,000 people!!!
Please re-read that. There were companies out there who had obtained MILLION person email lists whose lists shrank to 4% of the original size overnight.
You own your list… For now. The GDPR was the first law to regulate email capture, but I would guess it won’t be the last. Plus, you’re always at risk of some new spam filter technology coming around and cutting open rates significantly.
However, compared to the risk of your Google or Pinterest traffic going away? Email marketing is the safest form of traffic out there to build your business on.
… And that is why everybody out there including myself is telling you to start building your email list today!
Thanks for reading! Let me know if I missed anything in the comments… And umm… Sign up for my email list below!