How segmentation and automation drive email marketing
Successful eCommerce companies figured out newsletter marketing isn’t just an effective way of communicating with their (brand) fans. Newsletter marketing is still an enormous revenue driver if utilised smartly. The foremost issue most entrepreneurs struggle with is TIME. There’s just never a sufficient amount of hours in a day. Because of this fact, we tend to focus on what we think are the most critical parts of our business and simply leave the rest for some other day. If you are one of these eCommerce entrepreneurs, this article might be one you won’t regret reading. So here goes: When it comes to growing eCommerce revenue, many entrepreneurs, in most cases, simply spend more money on advertising. Increasing your marketing spend will increase sales but only until you are out of budget. It’s like a slot machine in a casino: As long as you feed the slot machine with it’s food (your money) it will keep the wheel spinning. The first question I am going to ask you: How long can you keep that slot machine spinning? You know you can’t spend indefinitely, so then what? You could hire an SEO ‘specialist’ to try and compensate the marketing costs but for SEO to really kick can take months to accomplish. And even if your rankings are top-notch, do you really believe your positions will remain in-tact? Online marketing is complicated. Not a day goes by some new shiny software launched guaranteing excellent success. At best, these software publishers will screenshot reviews from social media as substantial evidence why you need to sign-up. While this tactic seems to work for many companies, we don’t believe reviews any more. We’ve spent thousands on ‘guaranteed success’ software and the only thing they have costed us is more wastage of time. I’m not implying, you can’t trust anything anymore, but when it’s too good to be true, it always is. The one big issue most eCommerce entrepreneurs face is building meaningful relationships with their customers. It’s not a sales pitch of mine, it’s a fact. The main issue with building relationships has little to do which software you use. It has to do with the fact that you don’t know what to do regarding relationship building, in an online environment. So, let’s take it slow and start from the top.
Building (digital) relationships
All living creatures are in one or more relationships. As soon as us humans see the first light until the day we die, we are in multiple relationships with our parents, friends, hobbies. You name it, it’s a relationship. Animals, insects and even flowers and plants have meaningful relationships. As humans, we know what relationships are, but we find it hard to explain what a relationship really is. We know what the definition of a relationship is, but it’s like being in love. What does that mean, being in love? How can you find one conclusive description that entails the feeling of being in love? Each individual has their personal take on a relationship, and that’s fine. Luckily with technology, we can build relationships whatever a clients definition of a relationship is. In marketing terms, it’s commonly known as ‘Segmentation”. Segmentation is none other than adding a label to each of your clients’ profile. With that label, you can then segment them and improve your relationship by sending specific information relevant to all the clients with the same label. Let’s take a well known and one of my favourite brands: Nespresso.
I drink quite a lot of coffee. Yes, I know it’s not good to drink too much, but it’s my only guilty pleasure. Because it’s my only guilty pleasure, I chose to drink Nespresso coffee because all other coffee I’ve tried just doesn’t rock my boat. I guess it’s an unexplainable matter of taste. Just like a relationship: there’s no accurate description and therefor extremely fuzzy. Every time I drink bad tasting coffee, it reminds me of the slogan: Nespresso, what else? This slogan really positively rubs me. It’s slightly cocky but, again to me personally, it’s spot on. Nespresso just has excellent coffee, so why anything else. Nespresso may have the best coffee on the planet, but marketing to their clients could do with some improvement (if I might be this bold) Whether you are a new or existing client, as a member, you enrol into one tiered benefit system. When you are new or order very little, you are enrolled into a member status named: Connoisseur You can level up to the mighty Ambassador status if you order as much as I do. Besides the perks you get, that’s just about it when it comes to building a meaningful relationship with one of their better clients. The Ambassador Member Benefits have pretty much remained unchained since I’ve reached this elite status. Take a deeper dive into the benefits, there’s nothing really that special. Ok, a free descaling kit which is sold for something like $9 but in regular stores, you can buy a bottle of descaling juice for 1/3 of the price. Free delivery? C’mon Nespresso. Most web shops supply free delivery when you order for €20 or more. That ain’t something to be proud of. That’s like mentioning you get a free seat when flying with us. As you can see, I’ve been a Nespresso coffee drinker for already 9 years. Talk about brand loyalty! The only time Nespresso communicates with me is when they have a new taste or new product that has launched. Sometimes I get a few free pods with the next order or an early bird discount, but I can’t remember any other communication besides when it’s something in it for them. That’s not building a relationship. This tactic is trying to squeeze as much revenue as they can from their clients. To be completely honest: it might work for some clients, but I am one of their Ambassadors. Shouldn’t they start treating me like one? If you create an ambassador tier, then you would want them to be ambassadors for your products. There’s no better way than marketing than creating a buzz. Especially with social media. Let’s say they would stimulate their heavy drinkers to create a buzz about their new blend by sending 10 pods for free? What do you think would happen, in terms of revenue, if let’s say 10.000 Nespresso ambassadors would talk about the new blend. Think of this tactic for a second. How much marketing spend would this costs compared to a full blow radio, tv, print and internet marketing campaign? It’s crazy, right? While Nespresso is a highly respected brand, and I think they produce the best coffee I have tasted, they are really dropping the ball in terms of marketing. It doesn’t take a well-educated person to understand Nespresso is making a fortune on each cup. For me personally, I order about 300 pods a month. I don’t drink it all by myself, but I’m sure about 8 a day should be about the right amount. I don’t want to get into the discussion about the amount I drink, but I do want to show the benefits of my client data Nespresso is ignoring. My intention here is not to make fun of Nespresso specifically nor their marketing team. I’m writing this article to show you what they could do with all the data they have. Nespresso isn’t the only company in the world that doesn’t really build a relationship with their clients. Most don’t. It’s not easy building a relationship with one individual, let alone millions of customers. But instead of looking at what’s hard and tough to do, how about we look at what our approach and I’ll let you decide which makes more sense to you.
How to build meaningful relationships with your current client data?
You own a webshop, and before clients purchase products, they need to create an account. Besides the basics such as name, address, email and phone you shouldn’t really want to ask anything else at this stage. You have to understand that not all of your clients are clients because they love you. They may simply purchase an item because you were the cheapest or had the product in stock. Having said this, your job is to nurture your clients into a returning client. Turning visitors into clients and clients into returning clients. It doesn’t matter if you just started your webshop or you’ve been around for years. That’s all you should be doing all day long. Believe me, nurturing clients is a full-time job, and it’s well worth it. In marketing terms losing clients is also referred to as churn. There are many ways to prevent churn, but in the end, it all boils down to keeping your customers satisfied. But before you can keep your clients satisfied, you need to get to know them first. You need to understand them, anticipate their specific needs and provide solutions to cater to their desires. If you don’t know your customers, how are you going to communicate effectively? I hope this makes sense to you? To gain revenue, besides wasting spending more money on advertising, let’s take a quick look into why customers churn in the first place.
You’re targeting the wrong type of customer.
Products you are selling don’t long meet the customers’ expectations
Competitors have a better offering
Your website is poorly built, slow or not mobile ready
Payment possibilities lack (only accepting PayPal, for example)
You aren’t building a relationship with your clients
Let’s dive into how to create a relationship with your clients. To continue with the Nespresso case; my profile should like something like this to the marketer: I’m an ambassador client
Client years: 9
Order average: 4500 cups a year
Client lifetime value: (9 x 4500 x 0,40 price per cup) = €16.200
Average spending per year is 16.200 / 9 years: €1800
They know where I live, my age, they now when I order and they should also be able to predict my next order date.
Nespresso knows the machine I have, the blend (also which not) and my contact preferences.
Maybe they have more information stored in their profile but I gather this is about it. What really rubs me the wrong way is, just about every time I order a new batch of my favourite coffee, a few days later I get a discount by mail. The discount has typically to do with some new blend. If I order 400 cups or more within a specific time limit, I’m eligible for 10 free samples. You can imagine that this frustrates me enormously because I just spent €120 on a new batch. By the time I run out of coffee, the deal is over. If only they would invest in customer relationship marketing, they could predict when I am going to purchase again. Based on that intelligence, they could offer the discount a week before I usually purchase, definitely not afterwards. Just think about it for a minute in terms of a relationship. The way I feel treated, is this going to boost the relationship, or is it doing the opposite? I’m sure your answer is: the opposite. If not….oooh boy :o) Is this marketing tactic going to increase my spend with Nespresso? I can only speak for myself, but the only reason I purchase Nespresso coffee is that all other coffee I’ve tried (different brands) tastes like rubbish. I’ve tried them all, Starbucks has cups for the Nespresso machine, and there are Swiss brands I’ve tried, but they all suck in taste. To be honest, the prices are incredibly close to the Nespresso pricing, so there’s no real reason to leave. Anyways, back to the customer relationship: It seems they don’t do anything with the client data they have. At least nothing that I can see. They should also be noticing I’m not interacting with the rest of their site (products) but have bought physical products in their brick and mortar stores. By combining all of the data they have and yes I’ve consented to it (as far as I know) they could be increasing their AOV and CLTV at least 20% (guesstimate) But they don’t, and this is where most e-shops fail. They have the data and just sit on it. And that marketing team of yours has no clue what to do and how to improve your revenue besides investing more of your hard-earned money into advertising. But what if I told you there is light in the tunnel? What if I showed you how you can increase your revenue by investing in relationship marketing? Would this sound interesting to you?
Welcoming new clients
I’ve signed up to many newsletters, especially since innotrends launched. Not because I am necessarily interested in their business, but I wanted to check out approaches to welcoming a new client. I’m based in The Netherlands, and I have selected 2 electronic stores and signed up to their newsletters.
Both of these stores are considered to be one of largest online retailers over here. Both have brick and mortar stores and advertise on radio, tv, print and more. These two stores are my personal favourites when purchasing online. In fact, I bought my washing machine at Coolblue just a few months back. Here’s the welcome series sign up flow for both stores
As you can see, both stores have the same process for signing up. Both double opt-in according to GDPR and both confirm I will receive their weekly newsletters. I will wait at least 24 hours from the moment of writing just to see if MediaMarkt of Coolblue attempt to hook me into their store by offering something irresistible. This doesn’t necessarily have to be a discount either. Hooking me up to a quiz which will improve their client data, in return for free delivery or maybe even a small gift voucher, will be an effective way to increase my customer loyalty. [Update] 1 hour after I signed up to the MediaMarkt newsletter, they just sent a one-day-deal. I went to their website to check if this is newcomer welcome deal – but it isn’t. They have this deal on their site. So this isn’t anything unique or related to a welcome series trying to get me hooked into spending money. MediaMarkt is not building a relationship with me either. What they have just done, is burned down any confidence I had in the usefulness of their newsletter. With intense competition, you would expect one of these stores to be creative with the people that bother to sign up to their newsletters. So let’s wait and see what happens in the coming 24 hours. Here’s another example for you. I buy my shopping with Albert Heijn (I don’t expect you to pronounce this right), but it’s one of the largest supermarket chain stores in Europe. I signed up to their newsletter, not sure why any more but every Sunday they send me an email with the latest deals. They refer to their deals as “Bonus”. Great, each Sunday I have a quick look, and they really lock me in. You see, AH (Albert Heijn) is a pretty modern supermarket. For years now they introduced ‘self-checkout’. When you walk in, you grab a scanner, and you just scan the barcodes by yourself. When you’re done you walk over to the check-out stand, pay and leave. Staff randomly will check people before they pay, just to make they have scanned all of the products. They do this be scanning 5 random products. It’s a significant time saver, and I really like the fact they trust their shoppers enough to allow this. Not all AH stores offer this, and I’m guessing because of theft levels in particular areas. Anyways, all though you probably don’t understand the exact content of the email next to the big orange coloured 8 it says “Personal offers.” Yes, besides all other offers, I get 8 weekly personal offers. How cool is that? How they match the personal offers to my profile, you might wonder? Real simple. AH has a bonus card which you get for free. They made this card extremely worthwhile because many discounts will be granted if you are a Bonus cardholder. I don’t know exact numbers of bonus cardholders, but I’m guessing 98% of frequent AH shoppers have this card. If not, they’re idiots 😀 These 8 personalised deals are based on the food that I’ve purchased in the past. They can ‘see’ what and how often I’ve purchased these products. Because of my client data, they can offer appropriate content. When my kids were younger, I would receive deals related to babies. Pampers, baby oil, wipes you name it, they offered it in a newsletter. If you compare this email to the generic emails I will be receiving from CoolBlue and MediaMarkt, you can see the difference between the AH strategy and that of the two electronic stores. Ask yourself, which type of email is more effective? The electronic stores’ emails or that of my supermarket? Albert Heijn clearly invests much more into segmentation than the two other examples. Here’s the other great plus point; it’s fully automated. There’s not one person involved in generating these emails. Of course, there had to be someone to set the flow, automation and segmentation, but that’s just about it. I am also confident AH has a complete team of marketers analysing and optimising the data ensuring clients receive the correct deals. Their newsletter would decrease interest if, for example, they would push a pamper deal while my kids are now teenagers. But, and now it becomes really interesting. AH sends this great email to me on Sundays around 1pm and the deals are limited to the following week. If they were really smart they could segment me as a Sunday shopper (because that’s when I normally go grocery shopping) and send me this email Sunday morning. The could do this by predicting the day and time slot I usually shop at their store But besides that they have an effective newsletter.
I have added some industry benchmarks in the post from our partner Klaviyo (our preferred Email Marketing Software). Side note: We use Klaviyo because they focus on automation and email marketing for eCommerce companies. innotrends is a silver partner agency. It’s not easy to become a partner agency because Klaviyo is extremely picky when it comes to offering the benefits they supply to their partners, such as workshops and training. innotrends has followed their extensive parter training and has passed all exams you need to take after each training session. Back to the benchmark: Klaviyo reviewed the email performance of more than 18,000 customers, across 13 different industries, during the full 2018 calendar year. Klaviyo looked at campaigns and automated flows, including welcome emails, abandoned cart emails, browse abandonment emails, and win-back emails. You can read the full post here I’m not going to post all of the benchmarks here but below are the welcome series results. Can you see the massive revenue potential the MediaMarkt and Coolblue examples are missing? So let’s take the Computers, Electronics & Accessories as an example. What do these statistics mean: Out of all welcome emails sent, 13.8 per cent open the email. 1.1 per cent click on one or more links and are directed to the website. 0.06 per cent of the clickers purchase. The Revenue Per Recipient (RPR) is $0.06, and the Average Order Value (AOV) is $77.23. You might think these percentages are relatively low and you might be right. But think about the opportunity you have by creating a super encouraging welcome series for your new fans. Mind you, these statistics show revenue derived from the welcome series emails, not from any other source. This is the revenue you could be generating as well, and the best part of it all is, you can hire us to set it all up. You won’t even have to do anything by yourself. These email series work while you sleep. This is not some sales pitch here, the statistics prove the effectiveness of automating your welcome series. But let’s put aside the benchmarks percentages and whatnot. Just think for a second: What has more impact? A simple double opt-in and a follow-up email with a generic discount or a 7 step welcome series with quizzes (to get to know your visitors), personalised deals, customer service information, and so on? The goal isn’t to irritate your new fans by sending generic newsletters. Your goals are to nurture your clients into becoming brand fans. You can’t buy fans, you really have to nurture them, and the only way you can ‘push’ them into becoming a brand fan is proving you care. If you care about your clients, you will do anything to improve your relationship with your clients. The basics of a good and healthy relationship, whether it’s a romantic relationship or a client relationship is:
Have common interests
Keep disappointment levels to the minimum
Be there when they are in need
If you fail on any one of these relationship basics you can expect your (romantic) relationship to sink faster than the Titanic. By automating, segmenting and optimising your client data your client and your business will prevail big time. I’m not saying this because I feel the need to sell the idea. I’m saying this because there are many eCommerce entrepreneurs I have spoken to that wonder how they can compete with their competitors. Take the two electronic stores as an example: You don’t need to compete with them just on price, you can win clients by showing you care by building a relationship with your clients. So, how about it? Are you ready to talk about your business with me?