Hi everyone, time for another exciting installment from the world of online marketing! I promise to not use the words synergy, paradigm, or learnings anywhere in this post. I’d like to follow up on the New Media Summit again and share some more ideas about most effectively using your email newsletters to generate business–and, of course, sell more wine!

Last time around we talked about using reports and testing to work out what editorial tone would be most effective in capturing the attention of a winery email newsletter’s readers. This time we’re going to be focusing on the readers themselves – the people on your winery’s mailing list.

Let’s kick off with a question that might sound cold and heartless:

What’s a winery email mailing-list subscriber worth?

Yes, I know, online marketing’s supposed to be about engagement and connectedness and social leadership and whatever other marketing buzzword is hot this week. But let’s be honest–we want people to buy more wine. And that means we want them to spend money. And we often have to spend money to get them to spend their money.

What we have to do here is establish and understand what each email subscriber is worth to the winery and express that value in dollars. Only once we know what the email subscribers are worth can we calculate a return on investment in communicating with those people by email.

Here’s how we do it:

Step 1: Count your subscribers

This is the easy bit. Just go to your database and get it to tell you the number of active email subscribers you have (don’t include subscribers who have been “bounced out”). Call the number of active subscribers X.

Step 2: Set a timeframe

For what time period do you have email, sales, and website traffic stats? For the sake of discussion let’s assume we’ve got a nice tidy calendar year of information.

Step 3: Estimate sales over the year from email

The easiest way to do this is to simply count sales that came directly from clicks in an email campaign. How many sales at your online store were the result of clickthroughs straight from your newsletters? If you have data-tracking processes in place for your email newsletters and your online store you have all the info you need. Add up the value of the sales that resulted from people clicking through from newsletters during the year and call that number Y.

(Bear in mind that direct clickthroughs to the online store from the email are not the only way that email newsletters influence sales. People may receive and read your newsletter then ring your cellar door on the phone to place an order; if local they may even be inspired to physically visit you to purchase (this is what I do!). This means that your average subscriber value is almost certainly a conservative estimate.)

Step 4: Work out your average subscriber value (SV)

SV=Y/X

Just like that.

I went through this process with a client for whom I’ve been running email campaigns for a while–long enough to have some really good data–and we worked out that our SV across the email database was $55 per year. That let us work out what how efficiently we were using the marketing budget. Obviously, if it was costing more than $55 per year to communicate with each recipient then we were going backwards.

Fortunately a quick calculation revealed that the email newsletter campaign was costing 16.50 per recipient; that meant that email communications were providing a very positive financial return.

Wait. Hold on. Sorry, I put the decimal point in the wrong place.

Averaged out across the year for which we had numbers our email campaign was costing 16.5 cents to maintain 55 dollars of relationship.

Remember in my last post I said that email marketing has an ROI that blows any other sort of direct marketing away? This is what I meant.

Here’s another way of thinking about that $55-average-subscriber value: every time my client started a relationship with a new email subscriber that means he had effectively just made fifty-five dollars.

Scene from a meeting at the cellar door:

Me: Let’s make it easier for the cellar door visitors to get on the recipient list. How about putting an iPad on the counter with the browser permanently open to a “join our mailing list” page?

Him: Oh, I don’t know if I can justify that, how much does an iPad cost?

Me: $579.

Him: So how many subscribers would this thing need to get us at cellar door before it was making us money?

Me: Based on the numbers we just worked out, it will have paid for itself after eleven signups.

(silence)

Him: Apple does free delivery, right?

Relationship, relationship, relationship

Note that in my examples above I talked about starting a relationship–not just getting an email address.

Here’s an email address: hahaha@nospam.com. Stick it in your database. Reckon you’ll get a response if you send something to it? Reckon you’ll make a sale? Of course not; that email address is worth nothing because an email address in and of itself has no value.

Someone who has visited your website, or who has walked into your cellar door, that person’s email address is worth something because that relationship is worth something. That person has invited you to keep in touch with them. Take them up on it. Give that person the opportunity to add to your average subscriber value.

Get the numbers

As you can tell these strategies only work if you have the numbers to crunch. If you’re doing an email newsletter and a website without getting detailed statistical information about your readers and your visitors and what’s driving your online sales, you’re flying blind. Analysis of your reports may reveal points where potential customers are being left behind and will enable you to improve your results and your return on investment. And get people buying more wine, while spending less money yourself.

Thanks everyone. As always I’m happy to answer further questions about these sorts of things, so please feel free to leave comments below; alternatively I can be contacted via email or by phone at 08 7127 0435. Thank you once again to the Barossa Dirt team for their hospitality!

+Simon Garlick