What could be better for an online marketer than being able to tell his or her boss that their company’s keywords have propelled it to the No. 1 spot on Google?
After all, keyword listings drive clicks; clicks drive registrations; and registrations drive sales. Therefore, it’s no wonder that Google’s market capitalization is now nearly $200 billion. And the “Goliath” of online marketing, otherwise known as search volume, continues to grow faster than any other market channel, except social media.
As in real estate, however, premium locations come at a steep price. The costs associated with driving search engine marketing (SEM) results continue to climb. Google has a near monopoly on the search engine market and, accordingly, the prices for high-value keywords continue to escalate, because there’s no other game in town.
So let’s do some simple math to determine the cost of gaining a customer registration through SEM, based on some conservative assumptions. The average keyword pay-per-click cost is $1. The average conversion rate, the percentage of clicks that convert to e-mail registrations, is one out of 10, or 10%. Therefore, the cost of customer e-mail registration is $10.
Of course, you also need to consider your conversion rate from e-mail registration to sale. Assuming this is one out of five, your cost-per-sale through an SEM program would be $50. Feel free to insert your own numbers into the calculation above to find your cost of customer e-mail registration and acquisition.
Now, let’s take a look at the “David” of customer retention and reacquisition services: ECOA, or e-mail change of address. ECOA is not about trolling the streets, i.e. the Internet, like a street vendor looking for hungry customers. It’s about reconnecting with your former customers who already know and like your product and services.
More than 50 million people change their e-mail addresses each year due to various lifecycle changes. They switch jobs, change schools, move, and choose new Internet service providers and e-mail providers all the time. As a result, you can easily lose track of your best customers through no fault of your own. Can you really afford to wait for them to find you again?
The typical e-mail list experiences 30% or more attrition annually. If you don’t think this is true for your e-mail database, take a look at your inactives – most of these are the result of e-mail being sent to inboxes nobody is reading anymore.
Let’s do some simple math again to determine the cost of gaining a customer registration through e-mail change of address. The average ECOA cost is 48 cents per guaranteed deliverable e-mail address. The conversion rate, the percentage of ECOA results that convert to e-mail registrations is 100%. The cost of customer e-mail registration is 48 cents.
ECOA is a true pay-for-performance service, so you don’t have to pay for the street gawkers, and you don’t have to worry about the drop-off from clicks to registrations. Your 48-cent cost-per-ECOA update brings your former customer back through your door.
Of course, you still need to convert this former customer into a current customer. But as any marketer knows, it’s a lot cheaper and easier to reactivate a former customer than it is to educate and sell a new onlooker who’s surfing the Web looking for the best price.
Bill Kaplan is CEO of FreshAddress, an e-mail list manager.
