What is email marketing and how it works? (Easy Guide)

Despite the rise of social networks, email marketing is still one of the most effective ways of communicating with your audience. It’s not an optional process but a necessity for all kinds of online businesses.

When done correctly, email marketing can help a business increase sales, traffic, and maximize profits.

In this guide, you’ll learn what email marketing is, how it works and why it’s important for the success of your business.

• What is email marketing?
• How does email marketing Work?
• Why is email marketing important?

What is email marketing?

Email marketing is the digital marketing process of communicating with an audience via electronic mail messages (email). The email messages usually have a commercial intent but they are also used to educate and inform the recipient on topics of interest.

In simple terms, email marketing is the process of using email as a sales channel.

In order to do this, you need to have a BIG email list of people who voluntarily signed up to receive your messages.

This automatically excludes buying email lists, even if they include emails of people who are somehow related to your niche.

Email Marketing Benefits

The most important benefits of email marketing to any kind of online business are:

• It’s a great way to build a community around your brand
• It can help you get more leads and make more sales
• It’s one of the best ways to get more recurring traffic
• It’s a way to minimize some of the risks associated with SEO algorithmic changes. This is particularly important because once you get to a point that you have a big list of active email subscribers; you can worry less about SEO changes that can have a negative impact on your traffic.

How does email marketing work?

Email marketing is not a complicated process but it’s a process that requires a lot of A/B testing to find out how to best communicate with your subscribers in a way that is beneficial for them and for your business goals.

Here is an overview of how email marketing works:

• Sign up for an email marketing tool
• Create an email marketing strategy
• Build and grow your email list
• Setup automation tasks
• Monitor and improve campaign performance through A/B testing
• Regularly ‘clean up’ your email lists

Sign up for an email marketing tool

Email marketing is a process can be fully automated with the help of a good email marketing tool.

If you try to use your personal account to email hundreds of people and manually keep track of the results won’t work, so your first step is to select which platform to use.

An email marketing platform will help you:

• Create an email list
• Add users to your list using a number of methods
• Send emails to your audience
• Provide you with reports on how many people open your emails and interact with them (click a link in the email)
• Provide you with different options to segment your audience based on specified criteria
• Create retargeting audiences on Facebook based on your email list
• Automate various email marketing tasks such as sending a welcome email to your subscribers or different emails based on their actions
• Make sales directly from an email message
• Create email funnels to redirect users to pages/products/actions you want them to take

The most popular email marketing tools to consider are:

• Mailchimp
• ConvertKit
• Aweber
• Constant Contact
• SendPulse

Create an email marketing strategy

As with any type of digital marketing campaign, the first thing to do is to create a strategy.

Having an email marketing strategy in place before running any campaigns will help you to:

• Decide how email marketing will be used in conjunction with the other online marketing campaigns you’ll be running.
• Decide which email marketing platform to use and figure out your monthly costs.
• Decide on the strategies to use to grow your email list
• Decide when to use automation and what kind of messages to send and when
• Have the right reporting mechanisms in place to measure the effectiveness of your email campaigns

Build and grow your email list 

For email marketing to work, you need to have a BIG list of active subscribers so the most important task in your strategy should be how to grow your email list.

As mentioned above, it’s not only a matter of adding random people to your list but people who manually registered to receive your emails.

Growing and maintaining an email list is tricky but with the right approach and tools, it can a valuable asset for your business.

The best ways to increase your email subscribers are:

Publish great content on your site – if your content is not what users want, whatever technique you use, it won’t help you get more subscribers.

If, on the other hand, your content provides value to users, your email list will grow faster.

Give them incentives – Free eBooks, trial offers, and other ‘gifts’ are great incentives to offer to users in return for their email address.

Make it easy to subscribe – Having the position of your signup buttons in places that users can easily spot (on both desktop and mobile), will make a difference to the number of people that can sign up for your emails.

You can use the resources below to learn more effective ways on how to build an email list.

Setup automation tasks

One of the biggest benefits of email marketing is that it’s a process that can be fully automated.

When we refer to email marketing automation, we mean sending targeted emails to your users based on the actions they take when they receive your emails or actions they perform on your site.

The most common email automation tasks are:

Welcome emails – Sending a welcome email to users as soon as they subscribe to your list

Email campaigns – Sending them a series of emails (replicating a sales funnel)

Abandon cart emails – Sending emails to website visitors that added a product to their shopping cart but did not checkout

Cross-selling / Upselling – Suggest products to customers based on their purchase history

Review/Feedback forms – requesting feedback/reviews from customers X days after they made a purchase

Monitor and improve campaign performance through A/B testing

Besides having the right type of people subscribed to your list, to run successful email marketing campaigns, you need to do a lot of A/B testing.

A/B testing will help you find out what kind of email messages can potentially generate higher user engagement and more conversions.

Things to test with A/B testing include:

• The length of the email subject titles
• The format of the emails (HTML, text, with or without images)
• The length of the email body
• The frequency of sending emails
• The level of promotional messages within the email
• Placement of your signup forms
• The message used in your signup forms
• The ‘offers’ used as incentives for email signup
• The authentication method used to verify the validity of emails (no authentication, double-opt-in)

To perform any kind of A/B testing (not just emails), you need to monitor the right metrics and eliminate any factors that can influence the results of your testing.

For email marketing, you need to monitor the following metrics:

• Number of new email subscribers per day
• The exact method they have used to subscribe to your list (if you have multiple placements like sidebar, exit popups, etc.), you need to know which one they used to register
• Email Open and Click-through rates (how many people opened a specific email campaign and how many people clicked a link in the email)
• How many people visited your website from a link in an email
• How many conversions were generated from email (and from which campaign)

Regularly ‘clean up’ your email lists

As a beginner to email marketing, you need to understand three things:

A large percentage of your email subscribers will be inactive – It is normal to have a lot of inactive subscribers to your list. The average email open rate for an email campaign is around 20% and this means that a large majority of the people on your list will not read your messages.

Having a big list is not always the best approach – Sending emails that get opened by a small percentage of recipients will mark your emails as spam. This means your reach will gradually decrease. On the other hand, emails that get opened by the majority of recipients, help the overall performance of the campaign.

Big lists will cost you a lot of money to maintain – As your email list grows, so does the monthly expense. When you reach 10,000 subscribers you may have to pay more than $150 per month to have a subscription with a good email marketing tool.

One of the ways to minimize your costs and increase the healthiness of your list is to occasionally perform a list cleanup and remove inactive subscribers from your list.

Users that registered to your list but do not open your campaigns are not useful for your business goals and it’s better to remove them.

Remember that it’s better to have a smaller list but with active subscribers than a big list of inactive subscribers.

Why is email marketing important?

I’ve mentioned many times above that email marketing is important for your business. Let’s see below the reasons why.

1. Email is used by 50% of the World’s population
2. You ‘own’ your audience
3. You can communicate directly with your subscribers
4. Users voluntarily register to receive email messages
5. Email Marketing has a high ROI
6. Email is still one of the efficient selling tools
7. Email marketing can be automated
8. Performance can be measured easily and accurately
9. It’s a great survey tool
10. Increases the value of your online business

1. Email is used by 50% of the World’s population

The first reason that makes email marketing very important is the fact that email is by far the most commonly used communication tool in the World.

Statistics show that:

• There are more than 4 billion active email accounts (Total world population is around 8 billion)
• 99% of email users check their email at least once per day and many of them multiple times per day
• Email open rate is around 20% and CTR 3.71% while the engagement rate on major social media networks is around 0.6%
• 60% of users subscribe to a newsletter to get messages and deals compared to only 20% that follow the same brand on social media.
• Email marketing has a 4400% ROI. This means that the return for $1 could be as high as $44.

So, email has higher ROI and greater engagement than any other channel, which makes it a perfect medium for digital marketing campaigns.

2. You ‘own’ your audience

Your email list is an asset for your company, and you don’t have to share this with anyone, you own it. Unlike your Facebook or Twitter followers that are owned by those companies.

Having a BIG list of users that manually and voluntarily registered to your list, can add a lot to the resale value of your online business.

3. You can communicate directly with your subscribers

Email marketing offers you a direct channel of communication between your company and your audience.

When you have a healthy email list, you can use it in any way you want to communicate directly with your audience without having to pay advertising fees to Facebook or relying on their algorithms.

Emails can be heavily personalized and can be used to initiate a one-to-one conversation with your potential clients.

4. Users voluntarily register to receive email messages

When a user registers to your list, it means that they trust your business and they want to receive emails from you. This is different than users on Facebook that are shown ads that they don’t care about.

From a business perspective, you can nurture them so that eventually they will perform an action that generates value for your business.

5. Email Marketing has a high ROI

As mentioned above the ROI from email marketing can be as high as 4400%. That’s more than double than the next best channel which is SEO.

Email marketing can help an online business to:

• Increase revenue
• Improve sales conversions
• Increase website traffic
• Increase brand awareness

While these are general statistics, the actual return on investment depends on a number of factors like the type of products you’re selling, your profit margins, the cost of customer acquisition and how optimized your email marketing campaigns are.

6. Email is still one of the best selling tools

At the end of the day, all companies want to increase sales and this is one of the most important reasons to run email marketing campaigns.

Email is proven to be a great selling tool because unlike other channels, it can be personalized.

An email sales funnel has different stages and as you travel through the funnel emails can be customized according to user actions.

No other channel offers this kind of flexibility and that’s why email is more effective and has a higher ROI than Ads.

7. Email marketing can be automated

One of the beautiful aspects of email marketing is that is can be fully automated. From the time a user subscribes to your list to the time they make a purchase from your store, the whole process can be fully automated.

Automated processes are easier to optimize (because they have a lot of constant variables) and require less time to manage.

8. Performance can be measured easily and accurately

Another characteristic of email marketing is that everything can be measured with high accuracy. This is important because if you cannot measure something, you cannot improve it. Knowing exactly how much it costs you to run a campaign and the revenue made, can help you maximize your profit.

This is not the case with other digital channels. When you run an email campaign, you know exactly how many people opened your emails, how many people click on a link and how many people made a purchase because of an email you sent.

You can even drill down and find out what actions a particular user made and adjust your campaigns accordingly or initiate a one-to-one conversation with them.

9. It’s a great survey tool

To grow a successful online business, you need to constantly improve your products and online presence and to do this, you need feedback from users.

Your community and your list of subscribers are the best candidates to provide you with valuable information. These people registered to your list to follow your brand and their opinion matters more than everyone else.

Email marketing can also be used to survey your community and get answers that can help you create better content, products, and services.

You can even utilize your list to test a new product idea and save a lot of time and money if you had to outsource this activity to a third party company.

We have used this technique several times in the past and it helped us a lot in fine-tuning our products and services and understand what users want in terms of content.

10. Increases the value of your online business

If you want to increase the value of your online business for resale purposes (or other reasons), having a targeted email list and optimized email campaigns, can make a big difference in the amount you can get.

The valuation of an online business is usually based on three factors: monthly organic traffic, monthly traffic, and monthly revenue. Other than that potential buyers look for other factors and email marketing is one of them.

A company that has a constantly growing email list and good conversion rates is worth substantially more than a company that can only prove traffic performance.