A few days ago I stumbled upon this tweet and almost spit out my drink …
Another customer shared the same frustration:
I thought there were a couple valuable lessons for retention marketers here…
First one being:
Your product category determines most of your LTV.
If you sell a non-consumable item like wallets, the chances of a customer coming back for a second order are naturally much lower vs if you sell supplements.
There’s simply no amount of post-purchase marketing that will make someone “need another wallet.”
If your goal is to increase LTV, you need to have a strong merchandising strategy.
The second point, which will be the focus of today’s newsletter, is that most best practice segmentation advice is highly misleading.
Where Most Segmentation Strategies Fall Short
Conventional wisdom tells us to segment our email list based on engagement.
When a subscriber regularly opens your campaigns, it must signal the content is relevant, which means they’re more likely to buy again?
Not necessarily.
The problem with most “best practice” segmentation strategies is that they completely ignore the customer lifecycle.
Your 120-days active engaged segment in Klaviyo will have highly skeptical customers who have only bought once, and VIP customers who are completely sold on your brand.
That’s how you end up with angry customers who just wanted to buy one wallet, but were spammed into oblivion. These people simply react to different types of content and offers.
Let’s break it down…
3 Phases of the Customer Lifecycle
Acquisition Phase (1x buyer)
This is someone who clicked on your Meta ad. They liked what they saw on your website. Your brand seemed trustworthy enough for them to buy (most likely on a whim).
Marketing focus: Deliver on your promises
It’s important to remember 70-80% of these customers will buy once and forget about your brand.
Despite converting, these customers are still highly skeptical. One bad experience with the product or fulfillment, and they’ll never buy from you again.
Your goal should be to try and re-convert them, ideally within 30 days. Present them with complimentary cross-sells or direct them back to your best-sellers.
If your product is more complex, make sure you onboard these customers with an educational post-purchase sequence.
Nurture Phase (2-3x buyer)
These customers had a good experience the first time. Trust is naturally higher. Some of them are curious about the other products you have, and some of them have the disposable income to make another purchase.
Marketing focus: Keep up the momentum
We’re still in the “don’t anger the customer” phase. Great CX and product experience will be key to prevent them from churning.
Make it your mission to introduce them to the “other stuff” you sell. You can also start presenting them with bigger asks — higher AUR items, subscription upsells, and bundles.
Loyalty Phase (4x or more buyer)
These are your biggest fans. The heavy users. The ride-or-dies. Whatever you wanna call them.
Marketing focus: Treat them like royalty
Give them the preferential treatment. When they have a question, connect them to an actual human. If you see they’re about to churn, send them a handwritten postcard or call them up.
These customers are already shopping frequently so it will be difficult to squeeze more profits out of them.
You can either try and increase their AOV, or make them need you more often (which is impossible if you sell a non-consumable like wallets).
Converting these customers to a subscription is more realistic. You can also do cross-category selling here.
A Realistic Approach To Implementing This Strategy
Now, I’m not suggesting you should create a separate campaign every single time to cater to each lifecycle segment.
Instead, here are a few simple things I’d do to implement this strategy:
1) Encourage new customers to unsubscribe
Realistically speaking, most customers aren’t that enthusiastic about your category.
If I bought a wallet with the intention of not buying another one for the foreseeable future, and received a post-purchase message saying…
“Hey, just so you know, we’re super passionate about wallets, if you wish to stay on our email list and get exclusive offers and product updates…”
Honestly, I’d be kinda flattered.
This does two things. It removes frustration for people who were never going to buy again. And it reinforces the value proposition for people who stay.
The same logic applies to VIP customers. Some of them would rather hear from you once a week, instead of 4 times a week.
Let them choose the cadence.
2) Plan email/SMS content for all segments
When you plan your monthly email calendar, make sure you include content that covers both segments.
That might mean educational content and relevant product highlights for 1-3x buyers, and a subscription upsell/exclusive offer for VIP customers.
If you email your list every other day, you can easily create 4 campaigns for the week and deliver relevant content for everyone.
3) Use email templates
Not every campaign you send has to go through a 100-point Figma checklist. If it takes you 12 hours to write and design one email campaign, you need to take a hard look at your workflow.
Mix your designed emails up with plain text campaigns. Have templates in Klaviyo ready, so you can easily replace image slices and speed up your delivery.
What’s Next
If you need help implementing this strategy for your brand, or even better…
You want someone to dig deep into these channels, find out the real reasons why customers are churning, and deliver highly relevant content to your list.
I’m taking on new projects from the 25th of May.
Click here to apply for a free audit >>>
Siim Pettai
