What separates good marketers from bad marketers? The ability to understand, contextualise and action data.
In this article, I’ll explain how we leverage pre-purchase, post-purchase and churn insights at Magnet Monster to create email & SMS automation strategies.
The 3 Stages of the Customer Journey
You can slice the customer journey into innumerable facets if you want to go really deep on what’s involved at each stage, but I like to keep it simple and break it down into 3 distinct components.
Pre-purchase: the customer has just discovered you for the first time and has trepidation about whether to trust you. They may have an immediate need for your product or service or a desire to try something new. An example of an immediate need would be a bodybuilder looking for a protein powder to supplement their daily nutritional needs. An example of a non-immediate yet desirable discovery could be stumbling upon a luxury spa day and thinking in the future it may benefit you. Note these points carefully when we come down to crafting the strategy below.
In this scenario, your goal is to convince and convert the customer into trusting you.
Post-purchase: the customer bites the bullet and decides to take a chance with your product. It’s likely that they’ve taken steps to de-risk this investment already, but won’t be completely comfortable until they receive and extract value from your product.
In this scenario, your goal is to eliminate buyer's remorse and ensure product adoption.
Churn risk: the customer stops using your product (which may be for a myriad of reasons) and in the worst-case scenario, has something negative to say about your brand.
In this scenario, your goal is primarily to win the customer back, but when that isn’t feasible (usually due to natural churn), gaining qualitative feedback as to why they stopped purchasing is incredibly important and can help you improve everything from acquisition to post-purchase journeys.
Now that we understand the objectives of each phase clearly, let me show you how to leverage data at each stage to achieve these objectives and craft time-appropriate messaging.
Perhaps paradoxically, some of the most interesting data I’ve observed to determine pre-purchase journeys is in post-purchase surveys with variants of the question “When did you first hear about us?”:
Sourced from Magnet Monster, 2023
Most people would assume that the lion’s share of the responses would overwhelmingly be within a week or on that very day. However, I have continuously observed in these surveys that many customers are aware for quite some time before finally making their initial purchase, suggesting that both timing is not optimal the day they first see an ad/discover the brand and also that the nurturing period needs to be more prolonged.
Impact on Strategy
Here are some considerations you should consider when crafting your strategy.
Examine your welcome series and tell me what you normally see. It’s typically set up to try and convert customers within a 7-day period before discarding them as useless.
This has implications both from a paid media perspective as well as CRM: if the customer can take up to three months before converting (or even a year!), then we should exude a bit more patience in our attempts to convert them and play a longer game.
This leads into my next point nicely. We’re often quick to discard leads that don’t convert and at some points, abstain them from future marketing efforts, including campaigns.
Don’t do this. As long as the customer is interacting with the content (opening/clicking emails), then they’re fair game to be targeted with attempts to convert them in future campaign sends.
This ties into the previous point: don’t be too hasty to discard customers who don’t immediately convert and push them into a sunset flow. Sometimes (quite often, in fact), they need more nurturing.
I still recommend sunsetting people with zero engagement over email who sign up and don’t engage over the course of 2-3 months. However, I advise against ignoring these prospects completely if they don’t convert in an instant.
Retargeting Channels (direct mail)
When the customer isn’t responsive to email or SMS, it’s time to move on to the next logical prospecting channel: direct mail.
Luckily, through technology such as SiteMatch™ from PostPilot, it becomes possible to try to add a last-chance saloon to your flows for a 1-2 digital/physical punch to convert more prospects.
Lifetime Value (LTV) is table stakes these days for DTC brands and should shape everything from your acquisition efforts to post-purchase strategy.
It’s easy to get sucked into repurchase rates here, as you would expect this to be the logical metric to go after. And while this is definitely an important metric in improving product stickiness and adoption, the real focus should be on improving Lifetime Value, preferably within a 60 or 90-day timeframe to enable the brand to scale profitably.
What many also neglect to consider when crafting a retention strategy is that it usually starts with effective acquisition, meaning your offer needs to be right for the customer from the beginning to unlock LTV. If it’s the wrong one, it’s unlikely they’ll come back so make sure to start here.
Looking at basic cohort charts will give you a good starting point to start to see what to focus on:
From here, I then like to slice and dice the data to look at product & channel insights. You’ll start to see some really interesting things happen at this point:
Here you can see that the primary acquisition product doesn’t necessarily generate the highest gross margin over the long term for the brand. It’s a good starting point to begin further investigation as to why.
Impact on Strategy
There are a few considerations here:
You need to experiment with different offers at the top-of-the-funnel to see which drives the most profits for the brand in the long run. Keeping a finger on the pulse of this data may have a dramatic impact on your long-term profitability.
It may also help you to discover channels where you have a better opportunity to become profitable. META is obviously the juggernaut for most, but don’t be surprised to see opportunities elsewhere depending on your industry.
If you discover products that are underappreciated that your customers love, make these more prevalent in your overall brand marketing strategy and post-purchase communication.
Retargeting customer communication
If you drill down by repurchase rate further and look at time lag between orders, you’ll start to get an indication as to when customers come back and repurchase (and when they churn). This can help shift the frequency of your communication strategy.
If customers are seldom coming back post-90 days, then you know you need to optimise this period to give yourself the best opportunity to drive repeat sales.
3: Churn Risk
When does a customer truly churn? It’s very hard to know. Theoretically, they can come back at any time, providing they weren’t poisoned by your product or have a horrible experience!
There are a few things to look at here that can have implications on your retargeting approach, and they follow a similar path to the post-purchase journey in the previous chapter (since theoretically, once that timeframe is passed, the customer can be considered a churn risk).
I like to analyse two specific charts here:
1: Time lag between orders (median & average)
2: Repurchase rates by cohorts
Both of these can throw up interesting findings that help shape when you consider a customer ‘churned’ and how it should impact your retargeting strategy.
Impact on Strategy
Ultimately, the question here is: “When does it not make sense to target somebody again?” - that’s all you really need to know. If you can cast a wide enough net to enable reactivations each time you send a campaign, I don’t see any point to exclude people, unless they meet the following criteria:
1: They’ve left a horrible review for you in the past
It doesn’t make sense to irritate somebody further
2: They’re completely unresponsive across all CRM channels
If somebody never opens or engages with your emails, at some point in time you have to consider them churned. When that is will depend on your unique customer data, but there’s also the consideration that you’ll tank your deliverability by continuing to send to unengaged subscribers. Therefore, it’s a balancing act.
What about if the customer isn’t responsive to email but was a good customer in the past? This is why it’s critical to build retention channels in parallel to each other, as if engagement slumps on one, you have another medium to communicate with them on.
I covered this more on LinkedIn in this post, but I’ll repeat it again here:
“In the first 100 days after a customer signs up, most brands tend to pepper them with offers and a high frequency of emails & SMS.
It's also likely that most brands have an automated winback flow set up over email & SMS around 60-90 days to mitigate churn.
The result? Most subscribers churn over email & SMS but NOT necessarily as a customer.
What is the best course of action here?
In my opinion, it's Direct Mail.
When we consider retention touchpoints, it's important to note that even with an exceptional open rate on email (say, 50%), that means over half of our acquired customers miss our communications post-purchase.
When this happens, we need to move to the next most profitable channel with consent to market (usually SMS), and then failing that, Direct Mail.
While it's important to know drop-off points in the customer journey, it's equally important not to just give up and assume they're lost because they're disengaged with email.”
The takeaway here is to know at which stage somebody is highly unlikely to buy again from you so you don’t dilute your ROI (as costs go up with the database sends), but also to keep a close eye on deliverability. That can be very hard to put an exact number on as it involves a myriad of factors in keeping the ISPs happy.
Let’s wrap things up here before we close things out:
- Get an indication of how long customers know about you before they purchase
- Understand which acquisition offers produce the healthiest LTV
- Slice and dice by products & channel entry routes to see its impact on retention
- Know when customers are highly unlikely to buy again before the net expands indefinitely
- Build your retention channels in parallel and keep a watchful eye on deliverability
And the master hack for everything: identify your best customers, speak to them often, and try to put as many as humanly possible on this journey to maximise profitability.
further in depth reading
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