Create a Financial Model to Help Prioritize Improvements and Quantify Results
Have you ever wondered exactly how much, in dollars, your email-marketing campaign can improve? Most likely, you’ve read numerous articles and have attended webinars about what you can do to step it up a notch. But how do select from the many options for improving your program? Where should you focus your efforts? A financial model can help you answer these questions!
When it comes to improving email, things can get very complicated. You can have a list that is hardly growing, open rates that are dropping off, conversions that just aren’t happening, and the list goes on. Yet, if you do some simple math, you might determine that what you need to do is grow your list by 25% more a month—or increase your open rates by 200%. Individually, these are extremely challenging goals.
You could, however, develop a series of improvements to help get you to your financial goals. By developing a model, you can quantify the improvements and their impact. The idea is to find a combination of improvements that:
- are realistic
- get you to your goal.
Then, you’ll no longer be shooting in the dark. Instead, you’ll be setting very clear goals for you and your team. Aim to increase list growth by 5%, for example, or to improve conversion by at least 4.5%. Once you have these goals, you can then create an internal competition within your team to reach those levels. You know that if you do, you have gotten to where you need to be.
What to think about when creating your financial model
Creating a full, sophisticated model like we do for our clients may be beyond your Excel capabilities. So take it one step at a time, and keep it simple. What you need is to get at least a rough idea of the aggregated impact of improvements.
At a high level, you’ll want to consider the following when creating your own model.
- What are the key characteristics that drive the growth or decline of your active email list? They can include current list size, number of new subscribers per month, average number of unsubscribes per month, etc. You’ll want to consider these as assumptions that you can change.
- Then, consider the drivers of your revenue. For example, what are your open rate, click-through rate, conversion rate, and dollars per sale? With this data in hand, you’ll want to build upon your model to approximate the dollars generated from your list each month.
- Then, using the assumptions you’ve built in, you can play with those to determine what might have the greatest impact in your case.
- Over time, you can develop your model to further mirror your actual situation and the complexities of your business.
We often see clients who assume that they can reach certain goals, but after we do a few calculations, they can see what’s really within reason and what’s not. Your model can become one of your best tools. Aside from testing (which we’re always preaching), modeling is one of the most important analytical tools available to marketers.
If you’re ready to build a model, contact us at FulcrumTech. We’re here to help.