Email Marketing Cost Benefit Analysis
Have you ever run an email marketing cost benefit analysis? It may help you better understand how powerful and valuable email marketing can be for your business. When looking at spending any money on a marketing campaign, it makes sense to do your research.
Let’s start by taking a look at the published ROI (Return On Investment) numbers for various digital marketing channels:
This graphic shows us that most digital marketing channels can be profitable.
(More detailed stats available at DMA.)
When running your email marketing cost benefit analysis, the big question is: “What sort of return should I expect for my email marketing dollar?” All other aspects being the same, any business is going to prefer a $40 return on a $1 email marketing spend. This doesn’t make the other digital marketing channels a bad choice. In fact, we use a wide variety of digital marketing. Each of those channels points to our email marketing and lead generation funnels.
How do you do the cost benefit analysis for your business?
The basic idea is to calculate the value of bringing on a new sale and the value of getting repeat business from existing customers.
As an example, if you can generate $100 profit on a new sale and it costs you $100 in advertising and support to generate that new sale, you broke even on that sale. If you spent $50, you have an ROI of 100%.
If that same customer can be expected to generate repeat sales or referrals, then your ROI is even better.
When talking to new prospects about TrafficWave.net, and they see that we offer a Free 30 Day Trial, they quickly realize that any new sales means an incredibly profitable ROI. We have customers reporting an ROI on their email marketing campaigns well over 1,000%.
The key for doing your own email marketing cost benefit analysis is to calculate the profit you can expect from the average new sale. This will vary based on your business model, your profit margins, how well you upsell, whether you can expect referrals or repeat business, etc…
Then deduct the cost of your email marketing campaign with TrafficWave.net at $17.95 per month. How many sales does your business need to see in order to generate a profit from your $17.95 monthly email marketing spend?
Here is a simple example:
Joe Marketer sells a product online for $49.00.
His profit on each sale is $25.00.
After deducting $17.95 (the cost of his TrafficWave account), his profit is $7.05 on that first sale.
($25.00 – $17.95 = $7.05)
Each additional sale that month increases his profit margin as he is now clearing $25.00 for each sale after the first sale.
If Joe makes 10 sales in the month, his profit is $232.05 ($250.00 – $17.95 = $232.05)!
(Your own results will vary based on your costs, profit margins, etc… )
When you break down the email marketing cost benefit analysis like this, it’s easy to see why so many businesses are excited about using email marketing to generate leads, follow up, and drive sales!