I’ve been talking to Growth, GTM, and Retention marketing teams for years now, and the thing that repeatedly has me floored is the difficulty that these teams face when it comes to doing absolutely anything simpler than basic post-purchase retargeting. Let me give you an example.
We were working with a +$40M e-commerce brand last year that sold coffee and tea online, and we found that their customer re-targeting strategy amounted to taking every person who hadn’t purchased in the last 6 months and sending them a coupon for 10% off the highest selling product that the brand had (or sometimes a product that was in overstock). This, while better than nothing, was leaving money on the table.
We’ve also found this on the SaaS side. The retention strategy for surprisingly large companies can whittle down to effectively a poke/prod to anyone who hasn’t logged in in a few weeks. We’ve found that you can increase engagement by double digit percentages by making sure that you target the right customers at the right time.
To explain a little bit further, if you were to walk into an electronics store for the first time and the salesperson, without asking, immediately tried to sell you a $10,000 home theater system by telling you, “It’s 5% off today if you buy it now!”, you’d think they were off their rocker. However, if you came into the store again and again to buy an HDMI cord, then a Sonos speaker, and then a TV, the salesperson might surmise that you’re upgrading your home theater system. That’s the way you need to treat your e-commerce customers, but with a twist - you can automate the salesperson.
Customer segmentation is the way to do this. We’ve alluded to this in previous blog posts, but you need to adequately understand which customers are new, which are repeat purchasers, and who hasn’t been back in a while. Understanding where these users are in their journey and timing marketing outreach the right way makes the probability of any one campaign much higher.
Calvin the Champion
Who they are:
Your Calvins are your best customers - they’re the ones that bring you up at dinner parties and buy all of your new products. They’re also the definition of the 80/20 rule - even if they make up a small percentage of your user base, they drive a much larger percentage of yearly revenue. If you’re running a software product, they’re the ones that are utilizing the largest portion of the individual time spent on your platform. If you start a loyalty program, you need to benchmark it off of these champion customers. You need to make sure these folks stay happy and engaged.
How to talk to them:
Your Calvins are going to buy from you no matter what, and they’re not there because of the discounts. They’re likely to buy new products or engage with new content, so make sure you notify them whenever there’s something new that they’re able to purchase or interact with (based off of previous interaction details). They’re likely to engage extra during peak times, so ensure that they’re always kept up to date with information when there’s a special event.
Dora the Dependable
Who they are:
Dora is your dependable customer. They are exactly “middle of the pack,” and while they aren’t spending the most money or shouting about you from the rooftops, they represent a strong segment of customers that come back to you over and over again. They may need a reminder that you’re there for them from time to time, but they’re likely to engage if you make it worth their while.
How to talk to them:
Doras are likely to respond to incentives. These are the folks that are likely to come back and buy during sale times, and they’re on the hunt for a deal. In advertising parlance, you’re likely to be a “reach brand” for them, so they usually respond well to discounts and promotions. If you’re running a software platform, low-hanging fruit incentives are usually a way to activate this group to bring others into the fold (e.g. free month of subscription if you refer a friend).
Nathan the New Arriver
Who they are:
Nathan’s new to the party. We don’t know much about them outside of the attribution logic, but ensuring that these folks are well taken care of is important. Getting them to convert the first time is the easiest way to ensure that you recover your CAC, but making sure that you’re interacting with them soon after delivery or upselling products to them that similar folks have bought soon after their first purchase is incredibly important.
How to talk to them:
Some brands strictly refer to Nathan as someone who’s purchased at least once, whereas other brands will classify Nathans as anyone who’s ever put items in a cart. Ensuring that you have a solid onboarding flow to get as much information to your “New Arrivers” as possible is really important, and ensuring that you build good habits early in their lifecycle will be the difference between keeping them a Dora or a Calvin, instead of a Sleeping Sam (more on that later).
Sara the Strong Signal
Who they are:
Sara is a new customer who’s showing signs of being a long-term fan, either due to a small handful of rapid succession purchases or one or two high dollar orders. If a “New Arriver Nathan” cannot return (Inattentive or Sleeping) or become repeat customers (Dependable or Champion), Sara’s definitely trending towards the latter.
How to talk to them:
Ensure that your product recommendations are always tight for the Saras in your customer group. They should follow a similar notification chain to your “Calvin the Champion” customers, but make sure that you’re also adding in incentives.
Ian the Inattentive
Who they are:
Ians used to be strong customers, but they haven’t shown up in a while. This could be because of a bad recent customer experience, because they’ve forgotten about you, or because you’ve lost them to your competitors. If you get creative, you might be able to get them to come back, but you have to make sure that not too much time has passed before they get something from you. Letting your Champions and Dependables fall into the Sleeping category is the biggest loss of proverbial LTV that can happen. Taking strong action on the Inattentives is incredibly important.
How to talk to them:
Go with what you know - coupons and incentives based on products that they’ve had a good experience with is the easiest way to get them back in the fold. We’ve seen folks use NPS and survey data for this. For example, if you know that there’s been a positive order experience, chances are they may buy similar products again if you give them reason to do so.
Sammy the Sleeper
Who they are:
Sammy’s are asleep customers. They’re at the highest likelihood to have turned off your marketing emails and unsubscribed, a result of a variety of factors. Most companies we work with consider the price of re-engaging these folks to be similar to the CAC that it took to activate them in the first place, so your best approach is to make sure that customers don’t get here in the first place.
How to talk to them:
These are the most expensive folks to re-engage. Try to re-target them through all channels, including paid media. One strategy we’ve seen work is hyper-targeting through advertising platforms.
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One thing to note: you don’t have to treat the above as ground truth. Your business might need one or two more, or you may benefit from taking a simpler approach and reducing the number of categories. Either way, though, treating folks that are in different stages of your lifecycle with different techniques not only improves repeat order conversion, but also makes them more likely to pay more attention to your marketing in the future as well.