Sometimes, our view of opens/clicks/conversions blinds us to the actual value the program generates.
For instance, consider this business ... one with an e-mail marketing list of 500,000 customers, sending one campaign per week to all customers who subscribe.
- Open Rate = 20%.
- Click-Through Rate (of those who open) = 30%.
- Conversion Rate (of those who click-through) = 5%.
- Average Order Value = $100.
- Total Program Sales = 10% of Company Sales.
Let's look at the results, on an annual basis:
- Annual Sales = 500,000 * 0.20 * 0.30 * 0.05 * 100 = $7,800,000.
- Annual Variable Profit = $7,800,000 * 0.40 (profit factor) - $500,000 (program cost) = $2,620,000.
- Total Company Sales = $78,000,000.
- Total Company Variable Profit (before fixed costs) = $11,500,000.
Then you look at the resources committed to e-mail marketing in your marketing department, and you probably observe that fewer than 1 in 5 of marketing person-hours are spent on e-mail marketing, right?!
In other words, this is probably a marketing channel that warrants increased investment.