I recently wrote about the rise of newsletter recommendations. But something I didn’t cover in depth was the paid growth opportunity.

When that article was published, SparkLoop’s Partner Program was the only method available to indie newsletter publishers to pay for newsletter recommendations in the sign-up flow. Since, beehiiv has launched its Boosts feature which offers the same paid recommendation capability within their beehiiv network.

SparkLoop launched its Partner Network in 2022, along with its Upscribe recommendation widget allowing newsletter publishers with Partner Programs to pay other newsletters in their partner network for qualified, approved subscribers.

Beehiiv just launched its Boosts feature to do the same in its network. One would imagine it’s only a matter of time before Substack (and others?) follow suit.

These platforms are trying to solve the “big problem” for newsletter publishers: newsletters are notoriously hard to grow. So, the temptation to jump in and start blowing budgets to get new subscribers is real.

But before you do, there are a few things you need to figure out.

You can pay for newsletter subscribers — but should you?

First, will more subscribers help you reach your newsletter goals?

A bigger email list can help you…

→ sell more of your own products & services
→ convert more subscribers to a paid newsletter subscription
→ charge a higher advertising & sponsorship rate
→ make more affiliate sales & commission

So if you have revenue goals, a bigger list can help. But before you start swiping your credit card for more subscribers, there are a few key factors to consider…

  • Subscriber Quality
  • Subscriber Lifetime Value
  • CAC Payback Period

If you’re not careful, you could wind up paying for subscribers who…

❌ don’t engage
❌ cost you more than you can afford
❌ and inevitably get deleted during your next cold subscriber cull

So let’s get strategic and not burn cash.

Subscriber quality (rejection segments)

Done right, your newsletter is for a niche audience. And you don’t want to pay for subscribers outside that niche.

That’s a risk you take running social media ads for your newsletter: you give them your money, and they send you subscribers. Doesn’t matter if 80% of them unsubscribe or go cold. You pay either way.

But with newsletter referrals via a SparkLoop partner program, it’s different: you only pay for high-quality, engaged subscribers — at the CPA you choose 🤯

As the newsletter operator, YOU set the conditions:

  • Don’t pay for a subscriber who unsubscribes during the pending referral period (for up to 30 days, your choice)
  • Don’t pay for a subscriber outside of your geographic restrictions (only want US-based subscribers? You got it)
  • Don’t pay for a subscriber you remove from your ESP — whether manually or through automation and/or rejection segments (didn’t open your Welcome sequence? *delete*)

Getting even more granular on that last point…

Some ESPs have rejection segments and automation that will unsubscribe/remove new subscribers who don’t engage with your newsletter under specified conditions.

SparkLoop doesn’t do this for you — it needs to be managed within your ESP. But when your ESP removes/unsubscribes someone, the referral appears “rejected” in your partner program, and you don’t pay for them.

NOTE: just be sure to set this up so referrals are vetted and removed within the pending duration period or you *will* pay for them.

So now that you know how high the quality of a subscriber you can acquire, it’s time to figure out your Subscriber Lifetime Value (aka Customer Lifetime Value or CLV).

Subscriber Lifetime Value (CLV)

Don’t pay for subscribers if you don’t know what they’re worth. That’s where your Subscriber Lifetime Value or CLV comes in.

Worth noting: if you haven’t monetized your newsletter yet, you’ll have to estimate revenue for this calculation.

HOW TO CALCULATE CLV

You can use one of the following calculators to figure this out:

» SparkLoop CLV Calculator

» Beehiiv's Newsletter Navigator

Or plug in your newsletter figures into ChatGPT to figure it out.

No matter what method you use, it’s important to figure out your CLV if you want to pay for subscribers, or you could end up paying more than they’re worth. This would be bad business, which would also very much suck.

The CAC Payback Period

The Customer Acquisition Cost (CAC) Payback Period is the last thing to consider when figuring out your subscriber acquisition budget.

This period is the length of time it takes for the revenue generated per subscriber to cover the cost of acquiring and retaining them.

Why is this important? Because spending money to acquire subscribers faster than those subscribers make you money is just digging giant debt hole.

You’ll find yourself with a big, shiny, expensive email list that isn’t paying you back.

HOW TO CALCULATE IT

Here are the two most helpful articles I found to help you better understand and calculate your CAC Payback Period:

» CAC Payback Period: Understanding, Formula & How to Calculate

» CAC Payback Period: Formula, Importance & How To Reduce It

Wrapping Up

So, what do you think? Does it make sense for you to start paying for subscribers? Take some time to reflect on these metrics (determining your subscriber quality, calculating your CLV, and evaluating your CAC payback period).

The path to newsletter success starts with strategic subscriber acquisition — and you’re now armed with the insights & tools to make smart decisions and grow your newsletter in a way that maximizes both impact and profitability.

More stuff from me.

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