What is an email address worth?

What is an email worth? You’ve likely seen signs at retailers offering discounts such as this one:

Email-value

Is an email address worth $10 of the retailer’s revenue? How could you tell? Let’s look at a few ways to evaluate the worth of an email address. I’m going to assume that you have goals and goal values set up in Google Analytics already. If you don’t have goals and goal values set up and configured, do so before reading on.

Here’s the simplest way to do it: judge what a trackable transaction on your website is worth and assign that as a goal value. For example, if your sales process involves someone filling out a contact form, you have your new revenue numbers from 2010, and you have the raw number of contact form submissions from 2010. Set a goal in Google Analytics to be the confirmation page after the contact form submission, and then assign it a value of (2010 new revenue)/(2010 form submissions). You’ve now got a rough raw goal as a starting point.

In your email service provider’s software, make sure Google Analytics tracking is turned on. If you’ve been leaving it on as a default, congratulations! You’ve got a ton of data already inside Google Analytics waiting for you to analyze. If your email service provider doesn’t offer Google Analytics integration, you can still do this manually with each link using the URL Builder tool. For WhatCounts customers, just ensure that Google Analytics is enabled for your realm and you’ll be all set.

Next, go into Google Analytics and look at your goals. Create a custom report that splits out goal and goal value by medium. If you’re unsure how to do this, you can download this free, pre-configured report from WhatCounts and import it into your Google Analytics. Important: if you have not set goals and goal values, this report will be useless!

Set the time parameter of the report for 6 months or whatever best matches your average customer lifespan. For example, if you operate a publication, you know how long paid subscribers remain customers on average. For retail, your POS system should be able to determine the lifespan of a customer including repeat purchases.

Now look at the summary goal value for that period of time. In this example, we see that email over the example 6 month period is responsible for a goal value of $53,824:

Custom-Report

We know that during that time period, our mailing list was approximately 6,000 subscribers. Thus, the roughest possible value of a subscriber’s email address to us in this case is $53,824/6,000, or $8.97 per email address.

This isn’t the entire story, though. If we dig into our analytics a bit more, we find that of 6,000 subscribers, approximately 3,000 have clicked on a link in the last 6 months. Unengaged, unresponsive subscribers are worth nothing. Engaged, active subscribers are the ones that provide value. In this case, the value of an engaged subscriber is $53,824/3,000, or $17.94.

The retailer depicted above is placing a bet that by offering a discount, they’ll be able to recruit engaged, active subscribers. If the retailer’s list worked like our example here, offering a $10 coupon for $17.94 in economic activity in a 6 month period is a great return on investment and well worth the cost of the coupon.

Use this methodology to calculate the value of active, engaged subscribers to your list and you’ll have an idea of how discounts and other incentives for subscription and engagement will work for you.

Christopher S. Penn
Director of Strategy, WhatCounts

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