Tips to Building Successful E-Mail Lists, Part 1 of 2

In a session at last month’s All About eMail Virtual Conference & Expo, presented by eM+C magazine (sister publication of Catalog Success), Arthur Middleton Hughes, senior strategist at the e-mail marketing firm e-Dialog, presented his best practices for acquiring e-mail addresses, most notably by incentivizing consumers and employees. Here’s a look at Hughes’ top tips and observations from the session.

“The e-mail isn’t anywhere near as important as the audience,” Hughes said. “The list is everything. If you have the right audience, you can make money. If you have the wrong audience, you can’t.”

Offer rewards to help find the right audience. Knowing that e-mail is a never-ending process — 20 percent or more of e-mail subscribers unsubscribe or become undeliverable every year — first determine how much each e-mail address is worth to your company, Hughes said.

* To determine the value of an e-mail subscriber name, set up a chart.
Take a segment of your subscribers and follow their lifetime cycle over a three-year period. Account for the following factors: unsubscribe rate, undelivered rate, average substitutions in a year, promotional e-mails delivered, open rate, clickthrough rate, conversion rate, online orders, offline orders, total orders and total revenue.

Then figure in your costs, including goods and costs per order, acquisition cost, marketing costs, transaction e-mails, and e-mail cost per 1,000. To determine your profit on an individual e-mail address, factor in the following variables: discount rate, net present value (NPV) profile, cumulative NPV profit, lifetime value, net revenue per e-mail and overall conversion rate.

This analysis provides a lifetime value per e-mail address. “If you know what a subscriber is worth, you can develop and organize your subscriber acquisition program,” Hughes said. This program should consist of a three-step process, Hughes advised:

1. determine the value of a subscriber e-mail address;