The ROI of List Building Ads | 125
You’ve probably heard that you have to spend money to make money. But where should you invest money in your business? And exactly how much money are you making back?
My recommendation is pretty much to always be investing in email marketing…
In this episode, I’m breaking down email marketing ROI (ROI = Return On Investment) when list building.
What is ROI?
As I mentioned, ROI stands for return on investment. Sometimes ROI is used interchangeably with ROAS or (Return On Ad Spend), but there is a difference. With ROAS, you specifically look at the return you’re getting from ads, whereas ROI looks more broadly at your business.
What are the Benefits of Email Marketing?
Before we talk about email marketing ROI, I want to talk specifically about why email marketing is beneficial.
#1 All Warmed Up
The biggest reason I love email marketing? Your subscribers are typically your warmest leads. They decided to sign up for your email list (a big ask these days!) which tells you they are interested in what you have to offer.
#2 Nurturing
Email marketing is a great way to nurture and build relationships. Emails feel personal. Even if we know they are mass produced, there is an intimacy of it landing in your inbox and talking specifically to you. Plus, you’re likely giving them content they are interested in, right in their inbox. This builds and nurtures relationships.
#3 No Algorithm
Who likes fighting an algorithm? Not me. With email marketing, it’s just chronological order. No fretting over how many likes you get or praying the Instagram gods will look favorably upon you that day. It lands in their inbox pretty much every time.
#4 Ownership
Those emails you collect are all yours, and it's a reassuring feeling. However, don’t forget that technically only the emails are yours. Convertkit or Flodesk could self-implode or you could get hacked, so it’s good to have the CSV file (seriously… stop reading and go download it right now!!).
Email Marketing ROI
What can you expect regarding email marketing ROI? Crazily, email marketing has an average ROI of $42 return for every dollar spent. (Did your brain just explode? Mine did the first time I heard that stat…)
However, ROI isn’t ONLY money. For example, email subscribers are three times more likely to share content on social media than non subscribers. AKA they are more loyal and help promote you to new audiences. They will help grow your business exponentially.
Additionally, email marketing drives more conversions than any other marketing channel, which includes search and social media.
Tips for Tracking Email Marketing ROI with Facebook Ads
If you decide to run list building ads, then you’ll probably want to track the ROI much more closely. Here are a few tips I recommend to my Facebook Ads clients.
1.) Create a separate landing page that you use specifically for Facebook Ads. This way you can track how many people are actually viewing and signing up through the ad.
2.) Tag the people who sign up through Facebook, so you can see who is still on your list three, six, and nine months down the road. This will tell you about the quality of the leads. Additionally, you can track if those people are buying down the road. I recommend using UTM codes for this.
Want more tips on Facebook ads? Check out Episode 118 about the three pillars of Facebook Ads.
Don't forget to follow me on Instagram @heyitsjenzaia and tune in next Saturday for more business tips and strategies!
xo, Jenzaia
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Episode Transcript:
Hey there - I'm Jenzaia and this is Market Scale Grow - a podcast created for ambitious teacherpreneurs looking to have a bigger impact on the world, achieve freedom, flexibility, and ultimately make more money. With weekly strategy sessions and inspiring stories from fellow teachers just like you, my goal here is to help you create a customized marketing strategy so you can grow your teacher business beyond your wildest dreams.
Today we are gonna be talking about the return on investment of a list building ad. I may refer to return on investment as ROI, and it sometimes is also interchangeably used with ROAS or return on ad spend.
There is a slight difference between those two. Basically, when we're saying return on ad spend, it would be very, very specifically looking at the ads exclusively, whereas return on investment is usually a bigger view. But most people use ROI and ROAS interchangeably.
So the ROI of list building. We're gonna start with the benefits of list building, then some tips for creating a healthy email list. Then we'll talk about exactly what ROI is and why it's important, and we will then dive into examples of return on investment. Specific to list building and email list growth and how you go about tracking the ROI of a Facebook ad, specifically when you are talking about list building, not sales ads, and then.
So let's start with the benefits of list building. Number one, your email list is typically your warmest leads. These are the people who have seen you somewhere else and said, yes, I will sign up. Yes, I'm interested in whatever this thing is that you have to offer. And that makes them warmer. The more often that they open an email, the warmer they are. The more often they click, the warmer they are. The more content that somebody consumes, typically they are warmer leads, which does not mean that they're gonna buy from you, but it does likely mean that they like you, they trust you, and that they wanna continue consuming your information.
The more someone likes you, the more someone trusts you, the more likely that they are to eventually buy from you. And when the time is right, you are gonna be that person who's top of mind. And so it's obviously a good thing for you to have a list full of warm leads, even if some of those people are not ready to buy right now.
Another benefit of building your list is that it's a really great way to nurture and build relationships because even if we know that an email is being mass sent out or mass produced, we still have this feeling or this vibe that it's personal, even when we know that that's not true, even when we know that it's a mass-produced email list. There still is this level of intimacy which creates relationships and helps you nurture the relationships, which is great.
I personally love email because you're not fighting an algorithm, it's just chronological order. So whoever sent the most recent email, it's gonna be at the top.
There are newer inboxes that kind of sort differently and filter differently, but overall you're not fighting the algorithm the same way that you are on Instagram or TikTok or Facebook or wherever else you are. Another huge benefit that I hear thrown around all the time is that you own that email list, which is true as long as you download your CSV file. If you don't download that file, then whoever has your email list (flow desk, convert kit, MailChimp, AWeber, whoever it is), if they deem what you're doing as fraudulent, or that your account's been hacked or they shut down for whatever reason, you could lose that list.
So yes, you own your email list, but download the CSV file cuz that's what you actually own. And then you can have that list. And somebody once said, you can print it off and carry it around in your pocket. And I always say that because I think it's so ridiculous, but it's true. I just think you need a digital copy of it somewhere, but if you want to print it off, walk around with it in your pocket, you can, because you own it. Just like you can walk around with a pack of gum.
So anyway, a few interesting stats that I found while I was researching this episode is that number one, email marketing has an average ROI of $42 for every dollar spent. And so that's really cool because what that means is if you spend $1 on your email list, you're going to make $42 back, which is insane returns on your investment. Insane!
And if you think about it, it makes so much sense. If statistically 1% to 2% of your email list will buy when you launch something, just imagine if you have an email list of a hundred thousand. 1% of a hundred thousand is like a thousand people. That's insane! So right now your list is a couple hundred. Just imagine the difference that growing it to a couple thousand would make. It's going to increase your return. And every single launch that you have is gonna be more successful if you're continuing to grow.
Another interesting stat that I came across was that email subscribers are three times more likely to share content on social media than non-subscribers. And this is part of that relationship piece. Someone who subscribes to you and sees a post that they like, if they're also getting your emails, they're so much more likely to share your content out to people. So those people who are your warmest leads are also your biggest fans, your loyal raving fans who are going to spread your message for you.
Then the last one, and this kind of comes under the first one I said, but email marketing drives more conversions than any other marketing channel, which includes search and social media. And I think that's just because it's a list of your warmest followers. So if you can build that list, build your community, then it's only gonna do good things for your business.
So here are some tips that I have for creating a healthy email list. Number one is to send out valuable emails. And I like 80% believe that selling is serving and that when you are authentically serving people in your programs, then selling is a form of service. You are making sure that their problems are solved and that they don't have to continue “suffering” with the problem because you can help them. So, Sending out valuable emails that they can consume, get value from it, and then make a change without ever paying you is amazing.
Another tip to make sure that your email list remains healthy is to scrub your email list regularly. And when I say scrub, what that means is send subscribers through a cold subscriber sequence if they aren't engaging in your content anymore. So for me personally, I scrub my email list once a quarter and anyone who hasn't opened an email from me within the last 90 days goes through the sequence. This way when somebody is no longer engaging with the content, I send them out a couple of emails that just say like, Hey, you joined my email list for this reason, here's some great podcast episodes if you're still interested. If not, that's cool. You can hit subscribe below, or I'm gonna send out an email again in two or three days and if at that point you still haven't engaged, then I'm gonna remove you from my email list.
That way I'm not clogging up their inbox anymore and they aren't lowering my open rate. Like I'm keeping my open rates high because people who aren't engaged anymore, who are no longer consuming my content, are no longer on my list. So when we say scrub, it just means to remove people who are no longer engaging in your email content, who no longer want your emails so that it doesn't impact your open rates and your click rates.
Tip number three is to target and segment your list. So I sent out an email to my email list, probably like two months ago that basically was just a couple sentences. It said, hey, I wanna make sure that I'm getting you the content that's right for you, where you are in your business.
So let me know if you are more interested in done for you services or hiring out your ads for done for you services or DIY ads, tips, strategies, all of that kind of stuff. And then people answered and it helped me to know what kind of content.
So I've started to send out a second email on a slightly more consistent basis on Thursdays, I've been able to specifically target and send emails out to people based on what they said in that question. And you can send out regularly enough some sort of question that just tags people. So mine, they either got tagged as done for you or diy. So when I send out something that's very specifically done for you, the DIYs don't necessarily need to see that.
And so just segmenting your list and sending out targeted content is going to help ensure that people feel like you're really meeting their needs. You understand who they are and what they want from you, and that they're getting that content.
Then the last one I have for you is to prioritize nurture content and to prioritize relationship building because in today's digital marketing era, relationships are everything. Trust is at an all time low. And so if people don't trust you, then they aren't gonna buy from you. And so by prioritizing the nurturing, prioritizing the relationship building, that is what's gonna build the trust, build the confidence that people need, and to really help you make that sale when you do start selling something or when you have a bigger launch or a push or something like that.
Okay. Let's move into what ROI is and why is it important? So at the beginning of the episode, I talked about ROI stands for return on investment. And it is important because when you're making an investment, like spending money on ads, you want to know that there's a return on that money that you are getting more than you're spending.
You don't want to feel like you're at a casino and you're just putting money into a slot machine and pulling the lever, and who knows what's gonna happen, right? You want to be more like an atm machine where you put your card in and money comes out. And there are times in our business that we're gonna spend money. We have to spend money. And there's no return on that money. But it's not a good idea to just be spending money, spending money, spending money, spending money, spending money, and never getting a return. That's how you go into debt.
And I'm not saying debt is a bad thing at all. What I mean more by that is you go into debt to a point where like your business can't function, you have to shut down. And we don't want that kind of debt. We want your business to be a profitable business and not just a debt machine that's spiraling out of control. So, I also wanna be clear that the return on your investment does not always need to be financial.
There are some times when you're gonna get something from your investment that's not at all money related. You might spend money, but what you get back from that isn't money. So a good example of this is gardening. I spent money on the plants. We bought tomato plants and cucumbers. My kids wanted broccoli, which I thought was really interesting. I've never grown broccoli before, so we'll see how that goes. We tried cauliflower last year. It wasn't for me, so I'm a little bit nervous that broccoli's not gonna go well. But anyway, we bought peppers and strawberries, so I made a financial investment, right? I had to buy them. And the return on investment at the end of the summer season isn't going to be financial.
We're not going to sell these fruits and vegetables. We're going to eat them. So the return on our investment is food. And I do also understand that I'm gonna be saving money because I'll be able to pick tomatoes from my garden. I won't have to buy tomatoes. But really, we do not have enough gardens to be like selling. It's not a profitable thing.
We have two, four by four gardens for the four of us, so it's not enough to have an overflow of vegetables by any means, but the return that we're gonna have is fresh vegetables from our garden, and I'm so happy and excited about that. And even if I don't save a single penny or I break even on the amount of vegetables that I make from it, I still am so happy and excited to get the return that is fresh, homegrown vegetables on my plate.
I'm really, really excited about the strawberries. When I was a kid, we used to grow raspberries, and it's one of my favorite memories ever, just going and raiding the raspberry bush and eating them right off of the bush. So as an adult, I cringe a little bit of how dirty and gross that probably was, but as a child it's just like one of my happiest memories.
So that being said, return on investment does not always need to be financial. There are a lot of times when the return on investment is emotional or a physical return, like losing weight would be a physical return on your investment if you have a coach or something like that. I spend money on a therapist. She's not making me any money, but she's helping me rearrange things and understand my life better and process things. Like there's a lot of good that's happening there. There's no financial return though. It's all like brain and emotional returns.
The other piece that I actually don't even have in my notes but just came up to me is that often in marketing, we don't always even know what that return on investment is. And I always use the example of realtors because they love to throw their faces up on benches and buses and billboards and all over the place. And they have no idea who is gonna see their face.
I'm sure that the company that owns the billboard says, based on our market research and the cameras we have installed, on an average day, Monday through Friday, there's gonna be about a thousand cars that drive past this spot, blah, blah, blah, blah, blah. Like they probably have a guesstimate about that, but how many of those cars are gonna have passengers that are looking out the window, and how many of them are just single people who are focused on driving and not really paying any attention to the faces on the billboard? How many of them are like my husband, that even if he is the passenger, is totally oblivious. Versus me where I'm like noticing every single detail.
So with more traditional advertising types, newspapers, radios, billboards, it's really hard to necessarily directly be able to correlate what your return is on an investment. And so in the digital space, there's so many numbers and so much information, so much data that it can be overwhelming and we can lose sight of what's really, really important. And that's growing our visibility, growing our business, and continuing to move forward. So I just wanna throw all that out there.
With that said, going back to it doesn't have to be a financial return, here are some of the examples of return on investment. When we're speaking specifically about growing your email list, the number one return that’s easy to see is if your list is growing. You're getting new subscribers on your list every single day. The second one is increased visibility, and so people typically run a list building ad to cold audiences who have never heard of you before, don't know you exist, and you are now going to be showing up in their world. They're now part of your orbit.
When they see something else from you, hopefully you have a really strong branding presence with colors and your voice and the energy that you project so that the next time that they see you, the next time that they consume content, they are starting to make connections and starting to recognize you and your brand. And so your ads are gonna create visibility.
There is of course also the money piece that you can make money from growing your list and then just creating that community. So, I know I said you're gonna grow your email list and your visibility, but you're also building your community and the network of people that you have around you.
So one of the reasons why I really, really, really like list building ads to start is because there is a tangible result attached to the ad. You put in $10. You get 10 new subscribers, right? And you can see the correlation there. You can say, okay, I'm spending $1 per subscriber, or whatever it is. And so there's a very tangible result and you can very easily see the results.
They also aren't complicated funnels, and so it's a little bit easier to tease apart, like what is working well, what isn't working well, what needs to change and be adapted and updated to get the entire funnel converting where we want it to. So when we're running Facebook ads for email list building, the number one way to track is list size, and I recommend that you have some sort of way that you can tag people who are coming onto your list through a Facebook ad.
So typically that would mean using a landing page and a form specifically for your Facebook ads that nothing else is going through. So that you can, with a hundred percent confidence, say that these leads came from Facebook ads. I also like to tag them so that in 3, 6, 9 months I can see who's still on my email list, who's either unsubscribed or been scrubbed from my email list.
Because depending on the quality of those leads, sometimes you're gonna be getting like 10 new people a day and five of them are gonna instantly unsubscribe. And then we need to go, okay, like where's the mismatch here? Other times you'll notice that the dropoff is three months later, or the dropoff is six months later, or that there is no drop off.
And by having people tagged as coming from Facebook ads, you'll be able to see, okay, well I'm noticing that people who come in from Facebook ads are doing this behavior. You'll also be able to say 3, 6, 9, 12 months down the road, people from the Facebook ads purchased from me. And you can start to see a financial return on the investment. Whereas if you don't have them tagged like that, it's a much more manual process, a much more challenging process. Definitely don't recommend it.
So tracking that return on investment, the list growth, by having that landing page and the form only used for Facebook ads is just gonna make your life so much easier now, and then down the road as well.
You can also use UTM codes and tracking links to help separate the traffic so that you can see where people are coming from. This could be like to the extent of you having a separate welcome sequence that is promoting your signature offer. So for example, for me, I have my case studies and when you opt into the case studies, then there is an email sequence that goes out afterwards.
What I could do is I could have Facebook ads, welcome sequence, and then everyone else, welcome sequence. I do have separate landing pages and separate forms. I do not have the separate welcome sequences, but what you could do is have that separate welcome sequence that has U T M codes or other types of tracking links in there so that you can see when somebody does purchase or who's clicking, how often they're clicking what they're doing, and you can use the codes to track that way too.
And then my last tip, which I actually already covered, is to tag the new leads as Facebook ads so that you can continue to track them. And that one is really a choice. It also depends on the platform you're using. I use Flow Desk and so I think it's a little bit clunkier to do it with Flow Desk, but you can still do it.
Just having a way to know that they came from Facebook ads, I personally think is really helpful. When I first started my email list, I was tagging the source for everything. So with a lead magnet, I would have a specific landing page for people who came from Instagram and people who came from my podcasting, people who came from my collaborations, and people who came from Facebook ads. And it got to be a little bit excessive.
So I've kind of pulled back a bit. I still do track specifically Facebook ads and specifically collaborations, but I don't track anything else. So it's like everything except collaborations and ads are separated and it's still a little bit like extra, but I do like to know who's come from a collaboration and who's come from Facebook ads.
So that's what I have for you today. We talked about the benefits of building your list and how to ensure that you have a healthy email list. We talked about exactly what return on investment is, why ROI is important, and then we got into examples and specifics on. The ROI of building your email list and how you can be tracking that with your Facebook ads.
I know that growing your email list with Facebook ads is hugely important. Right now is a great time to be building your email list. Ad costs are down, and so if growing your email list using Facebook and Instagram ads is something that you're interested in, send me a DM on Instagram. I'd love to chat about supporting you with one of our Facebook ad sprints. It's our v i p six week experience where we create your Facebook ad, get it up and running and optimize so that you can grow your email list. And we have a couple spaces open. So send me that dm. We can chat about if it's a good fit for you or not, and I'll be back with another episode for you next Saturday.
Thank you for listening to this episode of Market Scale Grow. I'm so thankful that you've taken some time out of your busy schedule to make me part of your journey. If you love this podcast, don't forget to share it with your friends. And then head to your favorite podcast app to subscribe so that you won't miss next week's episode or any of the upcoming ones. And if you loved it, be sure to leave a review on Apple Podcast so that other people can find this podcast and we can impact teachers and teacher business owners around the world!