Email marketing ROI: What’s the real cost of your ESP?
Many email marketers enter the email marketing fray with an entry level ESP (email service provider). It makes sense when you’re starting out. You don’t need much functionality, your in-house list is small, and your budget might be tight.
Then time goes by, your email marketing gets more sophisticated (or you want it to, at least). Your list grows. And you start to pay more attention to your email marketing ROI. That’s when it’s time to think about moving up to a top tier ESP and here’s why: A lower deliverability rate can mean you’re leaving money on the table.
Speaking of tables, the one below shows the impact on your ROI of using an entry level ESP vs. a top tier one. Say you have list of 100,000 names, your widget sells for $25 each, and your conversion rate is 3%. As you can see below, even with the higher cost per email with the top tier ESP, the increase in emails delivered-and therefore sales made-more than covers that additional cost. With this example, you’re still $9280 ahead.
|
|
Entry Level ESP | Top Tier ESP |
| # of names on list |
100,000 |
100,000 |
| Deliverability rate |
76% |
91% |
| Delivered |
76000 |
91000 |
| conversion sell rate |
3% |
3% |
| # sales |
2280 |
2730 |
| Average sale price |
$25 |
$25 |
| Total sales |
$57,000 |
$68,250 |
| Cost of ESP per email |
0.005 |
0.015 |
| Cost to email |
$380 |
$1,365 |
| Net revenue |
$56,620 |
$66,885 |
|
Increase in cost |
$985 |
|
|
Increase in revenue |
$10,265 |
|
October 1st, 2008 at 2:45 am
Hi just curious… do you recomend a top tier ESP? I think i will be using aweber.com.
December 3rd, 2008 at 10:45 am
[...] provider (ESP) might cost a little more, but, as we’ve pointed out in another email marketing blog post, the increased revenue more than makes up for the increased [...]
March 13th, 2009 at 9:01 am
[...] everything you can to improve your email delivery rate. As we’ve pointed out before in an earlier email marketing blog post, even a slight change in your email delivery rate can add up to significantly more email marketing [...]