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What is the ROI of Email Validation?

Aug 20, 2018   |   3 min read

Knowledge Center  ❯   Blog

Email Validation ROI

What’s the cost of a lost customer?

It’s a complex question, sure. But when it comes to losing a customer who simply gave you the wrong email address, we can put a number on it.

Here’s how Email Validation helps ensure you’re not losing leads, and in turn, converting more sales.

What is Email Validation?

Email Validation is a service that uses a combination of steps to determine if an email is deliverable, without sending an email to it. A thorough Email Validation service corrects poor syntax, suppresses toxic data and ensures deliverability by pinging an email’s domain and mailbox. Marketers who use Email Validation improve the quality of their data, leading to better inbox placement and higher response rates.

TowerData has been cleaning email lists since 2002 and introduced the first email validation API on the market in 2005. We have a ton of experience and have worked with thousands of clients over that time. As a pioneer in the space, the standards we set over 15 years ago have been adopted around the industry.

What’s an Email Worth to You?

To determine ROI we need to estimate the value of an email address to your business. Factors to consider include the lifetime value of a customer, the cost of new customer acquisition, etc. Also, some industries use email for driving sales, while others use it for general communications or delivering publications and advertisements.

To keep things simple, we’ll use e-commerce to illustrate.

If your current email list is 25,000 records, and you get an average conversion rate of 1%, with an average order size of $50, that’s $12,500 per email campaign. If you mail 2x per month, that’s $600,000 per year.

The average value of your email addresses in this case is $600k/25k = $24 per email address.

Other components of deriving value:

How Accurate is Your Data?

When a user signs up on your site, there’s a whole slew of things that could go wrong. Typos, such as writing “gamil” instead of “gmail.” Poor syntax, such as missing an “@” sign. Or even simply fake email addresses.

How often does this happen?

To quantify this, we looked at the statistics from our Email Validation API, which helps customers validate emails in real-time as they are entered into a web form.

Evaluating millions of records processed so far in 2018, we found that about 8.4% of the data entered on web forms using TowerData’s Email Validation service is invalid.

Measuring ROI

Now, let’s get back to our e-commerce example above of 25,000 records. Say you capture 1,000 new emails per month. If 8.4% are invalid, that’s up to 84 lost per month* or 1,008 new emails lost per year. Taking the average value of $24, that’s $24,192 in lost value, or 4% in annual sales.

By stopping bad emails at the point of entry and prompting customers to enter correct addresses, most of that value can be recaptured.

We also need to factor in the cost of Email Validation. The service starts at $0.01 per record, $100 minimum per month. Our example above is looking at a spend of only $1,200 per year.

$24,192 in sales ÷ $1,200 in cost = 20x ROI. There’s a good chance your numbers aren’t far off, and that doesn’t even include the additional benefit of the better open rates that clean data provides.

It’s time to add Email Validation to your tool set. Use these formulas to calculate your ROI.

(# of new emails per month)*8.4% = potential # of reclaimed emails.

(# of reclaimed email addresses)*(value of an email address) = recaptured revenue

(recaptured revenue)/(cost of email validation) = ROI of Email Validation

Validate up to 100 email addresses free today and learn how Email Validation can impact your bottom line.

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