Email subscriber value is a marketing metric that shows how much revenue each subscriber brings to a business. Although not all subscribers bring companies income, it's possible to calculate the approximate value some of them generate.
In this article, we’ll unveil what email subscriber value is and how to calculate it.
Email Subscriber Lifetime Value
Email subscriber lifetime value (ESLV) is a metric that allows companies to calculate the revenue generated from email subscribers during their active interaction with email campaigns. With this indicator, business owners can get a clear idea of the value of each email subscriber over the long term. When marketers have email subscriber lifetime value at hand, they can focus on optimizing their email marketing efforts, including customer loyalty and retention strategies.
ESLV is essential for controlling the expenses associated with acquiring new subscribers. Businesses can find out whether the revenue they generate from these people covers the marketing spend to bring these subscribers. When marketers focus on improving their email content, engagement, offers, and personalization, they can improve their email subscriber lifetime value. It results in more subscribers completing a purchase and staying with a brand.
Now that you know what email subscriber lifetime value is and why it’s important, it's time to proceed with the calculations. They will help you identify whether you need any improvements related to your email marketing strategy.
How to calculate email subscriber value?
If you want to evaluate the effectiveness of your email campaigns and identify what revenue your subscribers bring, you can estimate email subscriber value. Follow the steps below.
Identify the number of active subscribers
The first step implies determining how many active subscribers you have. In this situation, you not only need to identify the total number of contacts on your mailing list but rather pay attention to those who interact with your email campaigns (open emails, click the links, use promo codes and complete purchases). For this purpose, you can manage your email list. After this, you’ll be able to divide subscribers into two main groups: active and inactive subscribers. Inactive subscribers are those who haven’t shown any activity during the last six months.
Let’s say you have 3,567 subscribers on your list, but only 2,850 of them engage with your email campaigns. In this scenario, you need to use the second number, which amounts to 2,850, and reflect the number of really active subscribers.
Calculate the number of direct sales from email marketing
The next step is to estimate how many sales were completed as a result of your email marketing strategy. This can be challenging, as it's not always possible to directly attribute specific sales to a particular marketing effort. However, you can identify direct sales by tracking instances where subscribers use promo codes provided in your email campaigns or click on direct links within those emails. With thorough research and analysis, you can arrive at a reliable figure to use in the email subscriber value formula.
Think of the timeframe
Choose a time period that aligns with your company’s goals and email marketing objectives to measure email subscriber value. This timeframe can vary depending on your needs but is typically calculated on a monthly, annual, or lifetime basis.
Calculate email subscriber value
Now when you understand which measures to use for calculations, let’s check out the formula. This is the most simple and commonly used one:
Email Subscriber Value = Total Revenue from Email Campaigns / Total Number of Active Subscribers
To ensure that you understand how to estimate the metric accurately, we’ll provide you with an example. Say, you have 3,000 subscribers, 2,500 of which are active. They helped you get $6,000 in revenue for the last year. It’s time to calculate the email subscriber value for these numbers.
Email Subscriber Value = $6,000 / 2,500 = $2.4
It means that each of your active subscribers brings in an average of $2.4.
Analyze your results
Email subscriber value is essential when you know how to use it right. You can use this measure to determine how effective and successful your email campaigns are and how good subscribers interact with your email content. It also helps you make data-driven decisions aimed at optimizing and improving your email marketing strategy for better results.
Email subscriber value enables you to identify whether you don’t overpay to acquire new prospects. For instance, if you spend $10 to get new subscribers but they bring your business only $8, you need to review your expenses. When you spend $7 to get a new potential customer, and then this person brings $20, it’s a good investment.
With this measure, you can calculate customer lifetime value. It allows you to estimate how much revenue a person can generate for your business. Having these numbers at hand enables you to understand your company’s profitability and scalability.
To sum it up, email subscriber value not only tells how much money subscribers bring to your business but also allows you to analyze your email campaigns’ performance. This, in turn, helps you optimize your email marketing strategy and provide subscribers with relevant offers that resonate with their needs. It’s crucial for scalability, customer satisfaction, and loyalty, ensuring the success of your business.
Last Updated: 04.12.2024
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