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Last month we explored the first of two important digital marketing list subscriber metrics: CPA, the cost to acquire a new list member. I also presented a process for determining your maximum allowable CPA—that is, how much it's worth paying or investing to acquire a single subscriber.

This month we'll explore various approaches to assigning economic value to every subscriber already on your list.

Let's start with the clearest way first: the revenue-per-subscriber (RPS) method.

What Is RPS?

Revenue per subscriber (in email marketing commonly termed RPE—revenue-per-email) is a method for determining what each list member is worth to your business in cold hard cash: How much revenue does the average subscriber produce per year? Per quarter? Per campaign?

It's a relatively simple calculation when you can clearly attribute revenue to the specific channel of your list. For example, if you have an email marketing list and want to calculate RPS for the year, take all revenue attributed to your email marketing programs and divide it by the number of valid, deliverable email addresses on your list.

So for example, your annual email RPS might look like this:

  1. Annual revenue attributed to email marketing: $1,000,000
  2. Number of valid, deliverable subscribers: 25,000
  3. Annual email RPS ($1,000,000/25,000) = $40

In this example, on average each email list member produces $40 in revenue per year.

Think about this scenario further: If the average email subscriber delivers $40 in revenue per year, even after factoring in all marketing, operations, fulfillment, and sales costs, you can probably afford to spend at least a dollar or two per person to acquire a new subscriber (your maximum allowable CPA) and still be profitable. Your maximum allowable CPA and profit climb even higher if your costs are accounted for elsewhere (or centrally) and not apportioned by channel.

Whether your list is of mobile, email, or social media marketing subscribers, fans, and followers, the RPS method works. I recommend you calculate RPS both per campaign as well as quarterly and for your full fiscal year.

But: What do you do if you can't clearly attribute revenue by marketing channel? Or if your email and mobile marketing supports sales conversion in other channels but does not drive revenue directly?

Both are legitimate concerns and common when email or social media is used primarily for lead nurturing and content marketing. In that case, let's examine subscriber value from a different perspective.

Average Cost per Action

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Determining Subscriber Value: What's an Email List Member Worth?

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ABOUT THE AUTHOR

image of Karen Talavera

Karen Talavera is the founder of Synchronicity Marketing, a company specializing in digital marketing training, coaching, and education.