Yes, I know it’s been a little longer than a week since Part 1 of this post but who’s really reading this stuff anyway? (If you are, please comment below).

It is important to understand that email still is and will continue to be one of the most powerful communication and marketing tools for your small business.  Of course there’s Twitter and Facebook and Flubbly (I just made that up), but is your mother or grandmother using Twitter? Is she using email? (She may still call it “The AOL” but she still has an email address.)

Electronic communication will continue to grow and evolve but email, at least for the next decade, will be the gold standard. Since it is the standard, it is more important now than ever to understand this tool and to use it effectively.

Each email subscriber your business has should be considered a financial asset.

When someone patronizes your business and then goes away, you have just expensed the cost of obtaining them minus the profit you gained from them.

In other words, let’s assume each customer who walks in your door costs an average of $10 to acquire through your marketing efforts. If they visit you and then they go away forever, then regardless of how much money you make from them, their acquisition will always be a sunken cost fixed at $10.

However, if you are creating a relationship with that customer so that you may remind them of who you are and invite them back in the future, then your acquisition cost is instantly converted into a valuable asset that may be used again in the future.

You can think of it as the difference between buying an advertisement in a magazine or just simply owning the magazine [publisher] itself.

Email is the perfect way to establish a friendly and helpful follow-up customer relationship that can be cultivated and mutually benefited from indefinitely.

Assume that if the customer’s first visit covers their acquisition cost, then each additional visit created through email has a higher profit margin with practically zero acquisition cost. Therefore, each email subscriber’s asset value could be calculated by:

Net profit per visit multiplied by the total average additional visits you can influence from your entire list minus the original acquisition cost.

For example, if your customer acquisition cost is $10 and you make $10 profit each time they visit and your average email list subscriber visits ten times per year then:

$10 profit multiplied by 10 visits = $100 minus original acquisition cost $10 = $90 = the value of each subscribing customer. Compare this to the theoretical non-subscriber who visits just one time: $10 multiplied by 1 visit = $10 minus $10 = $0

Or to put it simply: every time someone joins your email marketing list, your marketing expenses get reduced BIG TIME!

What if your email list wasn’t just for reducing overall marketing expenses? What if there was a way to actually gain additional revenue from having an email marketing list?

Use Email for Getting Referrals

We all know that the easiest and least expensive way to gain a new customer is through referrals from existing customers. Otherwise known as word-of-mouth advertising. You can utilize your existing email subscribers to help spread the word about your business and increase your customer base in a way that is fun for you and your customers.

Forget the days of direct mail pleadings and awkward personal requests for referrals when you can leverage email in creative ways. Here are a few ideas to get you started:

The Ethical Bribe:

Send a coupon to your subscribers that will reward them for bringing in a friend, or reward their friend – or both. Make your customers benefit from spreading the word.

Create a social meeting:

Create a special event that only your email subscribers have access to. Have them bring a friend and they both get something for free or heavily discounted. This not only encourages new relationships but also spreads the word on the benefits of being an email subscriber where you get the “VIP” treatment.

“Tell your friends why you love us or please tell us why you don’t”:

Send an email that asks your subscribers to decide, “do you love us or don’t you”? If you don’t love us then let’s talk about it so we can understand why we suck. This may give some valuable insight on customer service/quality issues. And if they do love you, then surely they have already told their friends about you. This is just a reminder for them to keep on doing it!

Hopefully these two blog posts have given some insight on just how awesome email marketing can be. However, this is really just the “tip of the iceberg”. Using email as an integral part of your marketing mix can drastically reduce marketing expenses while giving you more power and control over the relationships you have with your customers.