Have you ever asked yourself how successful newsletter managers calculate the amount of money they spend on their email marketing? Don’t worry – in this article, we’ll show you how to easily determine your newsletter budget for 2018.
These costs determine the budget for your newsletter marketing
At the center of each email marketing campaign there are two main goals:
a) Reaching new customers
b) Nurturing and expanding existing customer relations.
Now, there are two different ways of calculating the necessary budget:
Option 1: Find out, how much time and staff are available for your newsletter marketing this year and then try to get the most out of these resources (part 3 of our series will then be of special interest to you).
Option 2: Define targets for your email marketing and then think of the resources necessary to achieve them. Formulate your target as specifically as possible – set KPIs (Key Performance Indicators) to have explicit numbers that show the performance of your company and that help you evaluate and control your processes.
Take a little time to answer the following questions and develop specific KPIs:
- How many new customers do you want to win?
- What is my conversion rate?
If you don’t know your conversion rate (don’t worry, you’re not alone), get inspired by these figures:
Suppose, you’re targeting 1,000 new customers. At a conversion rate of 2%, you will need 50,000 potential interested customers; at a conversion rate of 5%, 20,000 would suffice. The conversion rate depends, among other things, on the circumstances of your industry and the quality of your address (for more information, see part 3).
What you should take into account: For acquiring new customers via e-mail marketing, it’s advisable to contact potential customers several times. We know from experience that one-time mails are often ignored, and it is only by following up that many potential new customers are convinced of the seriousness of your offer and it arouses their curiosity about your products or services. Don’t be one of those non-binding bulk mail senders – make a positive difference!
Next, it’s time for your existing customers. Quick reminder: this is all about finding the budget that fits your goals. You should therefore try to find answers to the following questions:
- How many contacts do I have in my address database?
- How many useful contact occasions (news, offers, events) does the year offer: What will your customers find helpful? What information do the customers want or need at what time?
A short example for your inspiration:
- January: New Year greetings and offer, winter sports
- February: Valentine’s Day
- March: first day of spring, gardening season, spring cleaning
- April: Easter, vacation, bad weather
- How many mails can I send before the customer loses interest or gets annoyed?
- There is no general rule here – it depends on the industry, the target group and the quality of your newsletters. Observe your unsubscribe rate immediately after sending a newsletter, this can give you helpful hints.
- How many customer segments can your customers be divided into? How many segment-specific mails should there be? Segments make it possible to better serve customer requirements and keep track of their composition.
- Classical segments are those based on age, gender, place of residence and similar information that allow you to send mails on specific occasions, such as
- Your birthday,
- World Women’s Day,
- The one-year membership/registration as a customer,
But you can make it even more customer-oriented: A wool store can adapt to the skills (beginners or advanced level) of their customers. A wine merchant divides his newsletter subscribers into groups, depending on the region their favorite wine comes from. An online shop segments its customers by the age (and dress size) of their children.
As you now know how many segments you have and how many newsletters you send to these segments, you can use these data to calculate your expenses.
Overview of expenditures for your email marketing
If you have defined figures for the above-mentioned aspects, you can start calculating a preliminary budget. Assign numbers to the following expenditure categories to get the ideal overview:
You save a lot of time if you use templates, dynamic elements and email automation. With these tools, entire email campaigns can be created in advance. Once created, these email campaigns automatically run “in the background”, whereby you determine the trigger for the delivery beforehand.
The four expenditure categories for creating and sending your newsletter help you check if your “gut instinct” about your budget has been right. On this basis you can formulate arguments e.g. to explain the goals and costs of your email marketing budget for 2018 to your business partner or CEO. Our next article shows you how to get the best out of your fixed budget.