Email Marketing Costs & ROI

The first question I usually hear when I start talking to a client about the benefits of email marketing is “How much does it cost?”

Cost is usually a company’s first question and sometimes the first road block to getting started with email marketing. But instead of asking how much does it cost – the real question should be how much can I save utilizing email marketing over other traditional marketing methods.

Since my clients have a wide range or list sizes, I thought it would be best to use three examples using the prices listed on my email marketing birthday club page and examine their costs & return on investment (ROI) using the email marketing program from Shout It Out Design.

Costs

Cost isn’t just dollars and cents. There is opportunity cost, the cost of doing nothing and of course the cost of your time in managing a email marketing program. And as a restaurant or small business owner, sometimes your time is much more valuable than anything else. I used different sized email databases in the below examples to show what the true cost and time investment of each database entails.

1,000 Email Database

Using the price chart on the email birthday club page, you will be spending about $1.78/customer a year when your list is at 1,000 subscribers. Which is an impressive number when you factor in the value that you get at that price. Even more of a value when you begin to look at the time you’ll be needing to factor in to your already busy schedule to be successful with your program:

  • 1 ½ hours/month: Writing/drafting/designing/scheduling/sending/monitoring each email (x2 emails/month on average)
  • 1 ½ hours/month: Responding to emails about missing coupons, lost emails, questions about offers
  • 1 ½ hours/month: Database work – entering new members, updating information, deleting members

That equals roughly 54 hours a year (a work week) of time that you’d be spending properly managing your email marketing list. And that doesn’t factor in the cost of printing sign up slips throughout the year, which would probably be about $200/year at this level.

5,000 Email Database

At this level of subscribers, you will be spending about $0.75/customer a year. Less than a $1/year to market to your customers – a really impressive thought. Factoring in the time it would take to manage a list of this size:

  • 3 hours/month: Writing/drafting/designing/scheduling/sending/monitoring each email (x2 emails/month on average)
  • 3 hours/month: Responding to emails about missing coupons, lost emails, questions about offers
  • 3 hours/month: Database work – entering new members, updating information, deleting members

That equals roughly 108 hours a year or two weeks out of your year that you’d be spending properly managing your email marketing list. And probably spending around $300/year in printing costs for sign up slips.

15,000 Email Database

Once you hit this amount of people on your list, you’re probably doing pretty well at growing your list. And you’re also probably going to be spending a fair amount of time working on the finer elements of how to use your email marketing list to its full advantage. At this level of subscribers, you will be spending about $0.55/customer a year. As for time managing the list:

  • 4 hours/month: Writing/drafting/designing/scheduling/sending/monitoring each email (x2 emails/month on average)
  • 1 hour/week: Responding to emails about missing coupons, lost emails, questions about offers
  • 1 hour/week: Database work – entering new members, updating information, deleting members

That equals roughly 152 hours a year or a nice little summer vacation that you’d be spending properly managing your email marketing list. While I won’t include a summer vacation along with managing your email marketing list – I will promise you won’t have to work on it while on the beach.

Return on Investment (ROI)

Now that we’ve established that it costs less money and less time (maybe the more important fact!), let’s look at the ROI from a do it yourself perspective vs a managed email marketing perspective.

Companies stated that they saw an amazing $44.25 ROI for every dollar spent last year. Now that is a great return for your money – but every business shouldn’t expect to see numbers like that. But if we look at attainable ROI’s like 20-30%, for example, you’ll be happy you made the decision to give email marketing an opportunity for your business.

If you’re spending around $1/customer a year, you can quickly see how email marketing can be a great tool. Let’s take our 1,000 email database as an example:

Let’s say we send a free one dip ice cream cone to little George on his birthday. You sell ice cream cones at your store for $3.00, but you’re also planning the birthday boy to bring mom & dad as well as his sister. Of course, the family isn’t going to just sit and watch George watch him eat his ice cream cone, they’re all going to buy one for themselves.

So, using our numbers above:

  • -$1.78 to send emails to George (of course, you’d probably be sending more than just this one email to him, but birthday emails are generally the most effective to being used)
  • -$3.00 for the sale of the ice cream cone to George
  • +$9.00 for the rest of the family’s ice cream cones

In this simplistic example, you spent $4.78 to make $9.00. That’s a 88% ROI. Not quite the $44.25 per dollar spent that was reported by businesses last year – but an impressive number nonetheless. And as I noted, that $1.78 is a cost to send George (and his family) emails all year long, not just per email. So if we used the same example and assumed that the family did the same for at one other family member throughout the year:

  • -$1.78 to send emails to the whole family
  • -$6.00 for the two free ice cream cones as incentives
  • +$18.00 for the rest of the family’s ice cream cones

In this scenario, you’ve spent $7.78 to make $18.00. That’s a 131% return on your money spent. We’re also not accounting in the hope that this family won’t just come in, have their free ice cream and leave. They’re likely to have lunch and/or dinner (if you have food options) and buy some ice cream to take home.

So using these examples – you can see where there is money to be made using email marketing. If you’re ready to get started, fill out the contact form and I’ll reach out and show you how to make it work for your business.