A common phrase you will hear is “the money is in the list!”. And people are generally talking about an email list (there are actually other types of lists, but that’s a story for another day).
So is this true? Is the money really in the list? Or is this just a cliche? This article will explore this idea about the value of email marketing.
Despite being a bit old and daggy, email is an enormously powerful tool in a digital marketer’s arsenal. If you a list of email subscribers, you can send them emails (through an auto-responder, don’t think you’d actually be writing and sending individual emails to thousands of people) whenever you want, for free.
This is basically a powerful free targeted advertising channel, which is any marketer’s wet dream. So many people will go to great lengths to build up a list of targeted subscribers.
In fact, many marketing offers are set up so that they lose money but collect emails, which you can use to make money from in the future.
For example, say you have a squeeze page or opt-in page that offers a free ebook in exchange for an email address. Half of the visitors do this. After people put in their email, they get the ebook and are shown a $10 offer on the thank you page. Let’s say 2% of people convert and buy the $10 offer – you are then making 20 cents per subscriber. If you’re paying 50 cents to send people to the squeeze page, half of them convert, which means you are effectively paying $1 to get someone to the thank you page.
So if you’re paying $1 to get someone to the thank you page, and are making 20 cents via that page, you’re losing money, right? Not really – you’re collecting emails. The $10 offer is really just reducing the purchase cost of your email subscribers from $1 to 80 cents. The real money you’re looking to make is in the future, off of those email subscribers.
So how much will you make off them? That’s the million dollar question! (for some marketers, literally the million dollar question).
This is a question debated a lot by internet marketers. The bad news is, there is no simple answer. A common number trotted around is “$1 per person per month” (let’s call it $1 Monthly Recurring Revenue or $1 MRR).
So if you have a list of 1000 people, that list should be making you about $1000 per month. But is that really true? There are a lot of stories about people who confirm these numbers. But I think we have to be very careful here.
Firstly, the people quoting those numbers are generally email marketers, and they put time and effort into their lists. They put time and effort into building their list, into building a relationship with their list, and into pruning their list (yes they will often kick people off their list, since you pay based on the size of the list and if people there aren’t opening your emails, you might as well get rid of them!).
So let’s think about this $1MRR number. First, it won’t be forever. If it was, just one subscriber would be worth a fortune!
People will eventually get sick of you and unsubscribe. Or change emails, lose interest in a niche, or whatever. Some might unsubscribe after just a week! Some might stay with you for a couple of years.
I’m not sure if there is much research here, and it probably varies a lot from list to list. But let’s say on average that someone lasts on your list for 6 months.
That means that one subscriber would be worth about $6 – $1 MRR for six months.
You might be thinking “that’s just printing money then! If I can pay $1 or $2 for an email, and get $6 from every email address, I’ll make a fortune! The money IS in the list!”.
That might sound tempting, but don’t go too fast.
You see, the money isn’t actually in the list. I could have a list of 10,000 people that is worth nothing, and a list of 1000 people that is worth a fortune. The money is not in the list. The money is in the relationship you have with your list.
Think about it for a moment. If you had a list of 100 people, and you made $100 per month from that list, are you making $1 from each person per month? Are each of them buying a pack of bubble gum from you? Of course not. You are probably selling things worth $50 or $100. So only a tiny fraction of our list is buying from you each month. Most people in your list are just tire kickers and freebie seekers. But a few of them are active buyers.
So most of your list will probably make not much for you – and a few of them might make a lot.
Or another way to think about it is like this. That average might not just be an average within your list, but an average across lists. If someone had a list which was all freebie seekers, then it might only be worth 50 cents (or less!) per person per month. And if someone had a list which had a lot of buyers, it might be worth $2 or more per person per month.
It’s about the sort of people you get on your list, and what sort of relationship you build with them. You have to put effort and time into writing good emails and sharing great content and adding lots of value to your list.
And if you do, you might find that it is worth a great deal of money.