How To Calculate Sales Conversion Rate & Lead Value
Do you have any rough calculations on how much each name on an opt-in mailing list is worth in sales, based on the frequency of contact or promotion and the average price point of product(s) being promoted? For example, based on a 25,000-name opt-in list and a $100 item, if you assign a value of $10 in annual sales per name, can you predict a total of $250,000 in annual sales?” – Daniel Braun
Understanding The Value Of An Email Address & Email Signup
Theoretically, if you have experience selling your products using a particular email list and have tested each of the variables, you might be able to make some accurate projections. However, I know of no rule-of-thumb governing the sales value of email newsletters. It all depends.
Here are six of the top factors:
- Deliverability. Because of over-aggressive ISP spam filters, many opt-in email newsletters just aren’t being delivered. Don’t assume 100% delivery.
- List Aging. The longer a subscriber is on your list, the more likely it is that he no longer reads your emails. He likes you or your company and doesn’t want to unsubscribe, but he has gotten out of the habit of reading them fully when they arrive.
- List Focus. To get the highest sales, the focus of your list — the reason people subscribed in the first place — must be very close to the product or service you are promoting. The farther your product diverges from the main focus of the list, the lower your sales.
- Trust. Sales depend a great deal on how much confidence your subscribers put in you and your recommendations. If you heartily endorse every profitable product that comes along, people will no longer trust your objectivity. Also, realize that any list you might rent will not be nearly as trusting of you — or as responsive — as your own house list.
- Permission. You might be tempted to rent a list or “trade” lists with a friend. But don’t assume that trust and permission can be sold or traded as easily as email addresses. Subscribers give permission for a particular, limited purpose to a particular company. “Heart” permission (and responsiveness to sales) is not as easily transferred as legal permission.
- Saturation. The more you promote a particular product on your list, the lower the sales you’ll receive each time you send out a promotion. The peak response will be the first time you promote the product, though a small percentage may become interested due to:
- changing circumstances in their life or business or
- regular exposure to your promotion.
Wrapping Up: The Cost & Value Of An Opt-In Email Address
Any “sure-fire” formula has to take into account these factors, that’s why any formula is at best an educated guess.
Be conservative in your projections and base them only on your own experience, not on others’ claims of success.