Lowering Customer-Acquisition Costs with E-Mail Marketing - dummies

Lowering Customer-Acquisition Costs with E-Mail Marketing

By John Arnold

With e-mail marketing, you can lower your acquisition cost — the amount of money you need to spend to get a consumer who is totally unaware of your products or services to make a purchase. Figuring acquisition costs is standard business practice; Using e-mail to acquire and retain customers is pretty standard as well and can help lower those costs.

An example is the best way to illustrate how e-mail helps lower your customer-acquisition costs. You can substitute website costs, advertising costs, or other primary sales methods for the seminar in this scenario: Suppose you own a retail business where most of your sales are made through weekly group seminars in your store. Someone you met at a networking event comes to your seminar and makes a purchase, netting you one sale for your networking efforts. You also signed up 10 of the 20 people you met to your newsletter list. Your acquisition analysis looks something like this:


A week later, you send your first monthly e-mail to your new list subscribers, which gains you four additional purchases through your in-store seminars. Your calculations, after you update them with the new purchase information, look like this:


E-mail follow-up not only resulted in $400 in additional revenue, but it also resulted in lowering the acquisition cost of each customer you met at the networking event from $100 per customer to $20 per customer because you were able to obtain an additional four purchases by sending follow-up e-mails.

Many businesses are bought and sold on the strength of their customer database. Possessing contact information and detailed information on buying behavior, purchasing patterns, and interests are assets that make your business valuable and your revenue and growth more predictable. You can build on your e-mail list while at the same time helping yourself maximize the return on all your assets.