Today, email is the most profitable marketing channel online.
There are several reasons for this:
- Email is one of the easiest ways to build long-term relationships with your subscribers.
- Building a relationship with the people on your email list is the most important business activity because it allows people to get to know you, builds credibility, and trust.
Once people get to know you and trust you:
- They are more likely purchase products and services that you recommend.
- They will purchase products at higher price points and are less likely to return the products.
- This makes the cost of serving your list easier and less expensive.
So, while the relationship that you have with your email list is the most crucial component to how much revenue you make, the size of your list is also important.
How can increasing the size of the email list increase revenue?
Before we answer this question, let’s examine how you can generate revenue with your email list!
Here are 10 Ways to Monetize Your Email List
- Affiliate Offers – Affiliate offers are when you promote someone else’s product, or the other person promotes your product. If you promote someone else’s product, then you earn a percentage of the revenue generated (normally between 30%-70%) depending on the relationship with your email list. If someone promotes your product, then you pay them a percentage of revenue based on the revenue they generate promoting your product. (normally 30%-70%)
- Sponsorships – Are when companies purchase advertising in the form of text ads, banner ads and dedicated emails to your email list.
- Text and banner ads are sold on either a fixed amount per email/monthly basis or either on a per thousand of subscriber basis.
- Dedicated emails– are a single email sent to your list that promotes one offer. Sold like text, and banner sponsorships, but more expensive.
- Promote Own Products– These can be physical products like T-shirts, digital products like Kindle books, or information products, such as on-line courses & training, membership sites, etc.
- Live Events & Webinars – these are conferences, workshops, or other offline or online events that you host. They can be online webinars type events, where people pay to attend.
- Public Speaking – Speak at conferences, workshops, or other events for breakout sessions or keynotes.
- Consulting/Coaching – paid to consult/coach other companies and businesses.
- Mastermind Groups – groups where people pay to have access to the other members who can help them solve specific problems.
- Publish Books/Book Deals– as the email list grows, then it gives you leverage when negotiating with publishers on book advances and percentage of sales of books sold. Plus, can self-publish books on Kindle.
- Licensing Content To Other Organizations –other organizations use content that you have created and pay you to use it. Payments are normally either a fixed amount, a royalty basis, or a combination of both.
- Services– Selling service can often be one the highest priced offers when you are first starting your email list. Plus, services can be sold on a recurring monthly basis, which leads to consistent, steady revenue.
Promoting Affiliate Products To Earn Revenue and Profit.
So back to the original question how to increase revenue by increasing the size of the email list?
First, let’s look at Affiliate Promotions.
These numbers are hypothetical for this example.
Let’s assume the email list is 5,000 people.
An affiliate product is promoted that has a $200 price-point and pays a 50% commission.
The email open rate is 20%, or 1,000 people open the email. Of those 1,000 people, 2% of them purchase the product. This means 20 people purchased the product.
So, the revenue earned would be $2,000. (20 products sold x $200 (price) x .5 (commission) = $2,000 in revenue.)
If the list size is 10,000 people with the same 20% open rate and 2% purchase, then 40 people purchased the product and generated $4,000 in revenue for the list owner.
With a list of 50,000 and if the same email open rate, and the percentage of people who purchase is the same, then you would sell 200 units at $100 commission per unit is $20,000.
The best part is that it doesn’t take any more time to create the email for 5,000, 10,000 or 100,000 people. You are sending the same email, but the revenue earned is proportional to the size of the email list.
Increasing Your Revenue Promoting Your Own Products
If you promote your own products, then the revenue generated from the size of the email list is like the affiliate promotions example except the revenue is not split with the affiliate. The list owner keeps 100% of the revenue generated. This provides for even bigger revenue days.
Revenue Via Paid Sponsorships
With sponsorships, businesses pay to advertise to the email list.
Sponsorships have a few different formats such as text links, banner ads and dedicated emails.
Text links and banner ads are similar. They are placed in an email newsletter that is already going to be sent to the email list.
Often banners and text ads are sold on either a flat rate or by the cost per thousand (CPM). Flat rate pricing is often charged until the list reaches a certain size, then charging by a per thousand people on the list is more profitable.
Imagine the email list has 5,000 names and the price for a banner ad inside an email is a flat rate of $300. Now, if the list size is 20,000 and the price to advertise a banner ad is $50 per thousand people on the list, then the banner would cost $1,000 (50×20) for a business to advertise to the list.
Dedicated emails are different from a banner ad. Dedicated emails are emails sent to promote a specific product. Dedicated emails can be used to generate leads and revenue.
These emails often range in length from 100-400 words and promote one thing. Unlike a newsletter where there are multiple pieces of content and links, the biggest advantage of dedicated emails is promoting one specific thing. Any call to action or link in the email is promoting one specific item. These are the most effective emails for generating clicks, opt-ins, and purchases.
Because dedicated emails are so effective, they command higher prices for sponsorships than banner ads. Prices for dedicated emails can range from $75-200 per thousand. So, if we use the same example from above of a 20,000-person list and sell the dedicated email for $100 per thousand, then the cost would be $2,000 (20×100). A dedicated email to a list of 40,000 would at the same cost per thousand would be $4,000.
Projecting Monthly Revenue
For this example, we are going to project the monthly revenue from an email list promoting products owned by the list owner, affiliate promotions and paid sponsorships.
In week one, one newsletter and two dedicated emails are sent to 20,000 people on the list promoting a $200 product owned by the list owner. One percent of the people on the list purchase the product. This means $40,000 in revenue is generated.
Week 2, an affiliate product is promoted in the newsletter and with a dedicated email. The price of the product is $400, and the product owner offers a 50% commission. A half of one percent of the people purchase or 100 people. This yields an additional an additional $20,000 in revenue. (20,000 (email list size) x.005 (conversion rate) x 400 (price of product) x.50 (commission rate).
Week 3 two sponsors purchase a banner ad in the newsletter and a dedicated email. The banner ad costs $35 per thousand or $700, and the dedicated email costs $150 per thousand (CPM). So the dedicated email cost the sponsor $3,000. Being two banners ads and two dedicated emails were purchase $7,400 in revenue is generated.
So, to wrap this up in Week 1 $40,000 in revenue was generated promoting the list owner’s own product. Week 2 generated $20,000 promoting an affiliate offer, and then Week 3 generated $7,400 for paid sponsorships. Heading into the final week of the month the list has generated $67,400. Now the list owner can choose to promote their own product, an affiliate product or sell a sponsorship for the final week of the month depending on their objectives and revenue goals.
Now if some of the revenue is reinvested into increasing the size of the email list to 40,000 or 60,000 then even more revenue can be generated in future months.