Email subscriber value is the income brought to your business by every your client when being subscribed. Certainly, not all your subscribers bring you income, but it's possible to calculate the approximate value. Even if one of your subscribers brought you $50, while the other one brought nothing, the average value is $25. Still, this sum is very approximate as you need to know the time frames, the exact source of income and the buying frequency.
1. Find out the total number of active subscribers
If your mailing list has 10,000 subscribers, it does not mean that all of them are active and engaged. Active subscribers should open your emails, follow the link, i.e. bring you conversions. It will be easier to discover passive subscribers and to reengage them or to delete from your list in order to keep it clean. So, check your mailing list carefully, find the subscribers who have not performed any of the above-mentioned actions for 6 months, send them a nice reactivation email with a special offer, if they are still inactive — let them go. Pay special attention to email bounces, try to fix them or stop sending to these emails. They won't bring you income.
2. Count the sales made with the help of email marketing over the past year
This metric is not so easy to count, as it's difficult to track if the purchase was really made with the help of email marketing.
You should differentiate:
- Direct sales. These are the purchases made by following a link from the email.
- Sales made using discount vouchers. The purchase was made via a promotional offer on your website or via the phone calls, but there should not be direct sales from the email.
- Sales made via organic search. Subscriber received your email, read the reviews about your product and made a purchase using a search engine. In this case, a source of the transaction is difficult to determine.
- Social media marketing. Subscribers may forward your email to their friends or share it on social networks. It means that your email campaign brought you income. Still, it's difficult to calculate, but can't be neglected.
3. Specify the time frame
Come up with the time frame you are going to analyze. Take into account the time you are in email marketing. It's convenient to analyze 1 year.
4. Calculate email subscriber value (SV)
To do it, you need to know the total number of active subscribers (X) and direct sales made via email (Y) over the last year.
Let's take some data:
X = 230,000
SV = $10 per year
Now, when you have an annual email subscriber value, you can calculate email subscriber value during the whole lifetime value of a client.
To do this, you should know the time period between the first and the last purchase.
Let's split all your active subscribers in 3 segments:
1st — made a purchase once
2nd — made purchases during 2 years
3rd — made purchases during 3 years
76,666*$10 = $766,666
76,666*$20 = $1,533,333
76,666*$30 = $2,300,000
Total amount: $4,366,666
Now you can find out the lifetime value of every client, to do this, divide the total amount ($4,366,666) by the total number of your subscribers (230,000).
Lifetime value of every subscriber makes $19.
5. Analyse the results
Correlate your ROI per every client with the expenses you make. So, if the lifetime value of every client is $19, we can assume that an email campaign with the $50 expenses will be loss-making, but with $10 expenses — you will get benefits. These calculations will make the picture of your business more precise and clear. Use it when managing the budget.