Drive and Convert

Announcer:
You're listening to Drive and Convert, a podcast about helping online brands to build a better e-commerce growth engine with Jon MacDonald and Ryan Garrow.

Jon:
Hey, Ryan. So much energy is focused on driving traffic to a site via different channels and I know that the short term goal is always to convert that traffic into paying customers. A lot of why we have Drive and Convert as a podcast, but look, the long term goal is always to grow a list that you can continually remarket, generally done via email, because after you have that list, you can produce more profit, have more company value, recurring visitors. So let's just say that email is a more profitable marketing channel in a business than a lot of other ones. That fair?

Ryan:
Yeah. I would even probably even go a step further and say email should be your most profitable marketing channel that you have. If it's not-

Jon:
Yes, I agree.

Ryan:
... there's probably problems in your email and/or your other channels that are producing more profit based on ROAS profit. Overall profit might be slightly different depending on what you're doing to grow, but profitability per channel, if you're spending 10,000 on email, it's probably producing a lot of profit.

Jon:
This flies in the face of my whole pop-up hatred, but I will say I agree.

Ryan:
Pop-ups may not be the profit generator, but people think they are.

Jon:
Well, I will agree that email should be your most profitable traffic acquisition channel, so look, it sounds really simple, but it never really is, so will you have five points for a successful email and how brands should be thinking about this? And so I'm interested to learn more about this and maybe I'll come to the dark side. We'll see, but I get this question a lot. When you're just starting a business, new e-comm site, you don't have any emails, so if you are not going to do a pop-up, well, I just want to put that on there.

Ryan:
Yeah. You're not going to do a pop-up.

Jon:
Okay. How do you get that channel going? What do you do?

Ryan:
Okay. Step one, don't ever buy a list. I get that a lot, like, "Oh, I get these emails of [inaudible 00:02:13] and data providers." I think daily, my email probably gets four or five of companies trying to sell me big commerce users, or Shopify users. Buying a list is maybe illegal even depending on where that list is sourced, but don't buy a list. It can be frustrating, but starting a business is a grind and unless you get lucky, it can happen quicker, but it takes time and it's going to be a struggle and a slog to get an email list built and building a business. But if you don't have an email list, you're not doing email, most of the points won't be for you yet, but you need to start somewhere and so you're going to start small and a lot of email systems for e-commerce when you're small are free.
They use the freemium model. Mailchimp's been one that's been around for years. They weren't built for e-comm, but they have a free one there. Klaviyo, which was generally built e-comm first, does have a free one, up to 500 emails a month, so if I'm starting an e-comm business now and we start with Klaviyo, it has some really good out-of-the box automatic flows that you can just enable. You say I want to enable it and then you make it yours, you personalize it, but there's abandoned cart emails, there's some welcome series that you can get going pretty easily and there's even some other things that would be kind of classified as an email, like this new shop app, which in many ways, drives me crazy.
I understand what they're doing and I get it, but it doesn't mean it's less frustrating for me, but it does do some emailing and automatic flows out of that, just abandoned cart things. So just know you're going to start small and it's not going to be exciting. You're not going to flip a free email program on and get $10,000 in revenue a month likely, but it's going to be there, get it going and so just start, essentially.

Jon:
Okay. All right. So there's going to be a big gap here, because as you said, really, this episode is more for brands who have an email list. It doesn't have to be a large one, but they got to have something to start with. So maybe in another episode, we'll cover how to build that list if you're just starting out. We talked a little bit today about how not to, but let's go into, okay, you have a emails list, you're up and running. How do you scale it? So this is you're past that initial market validation. You have an e-comm site that is doing some revenue. At least you're moving forward. You're collecting emails that way. What do you do from here?

Ryan:
Keep acquiring customers and I get a lot of brands and it needs to be said though. A lot of brands will be like, "Oh, we're trying to save money, so we're just going to run an email and let our organic run and we're not going to have acquisition channels running." Well, unfortunately, once you stop adding customers to an email list, it starts dying. It's like if you're not growing, you're dying. That's the same mantra you would have as an email list. If you're not adding to it, it's going to die, because you always will be losing and churning customers, whether they opt out of the list, or you get stuck in forever spam, so they never see it, or they just ignore you over time. So you've got to have a lifeblood of continued new customers coming into your email database to make it work.
And some of that is logic, where the lifetime value of a customer, they buy now, they're going to buy a few times in the next six months and they gradually peter off potentially and they get new brands that they buy from, but lifeblood, so keep acquiring customers and set appropriate goals. I don't know how many times I've talked about goals in this podcast or just in life over the last 15 years of digital marketing, but set acquisition goals that allow scale for new customers. You're not trying to generate profit from Google Ads, or Facebook ads, or TikTok ads necessarily. You're trying to acquire customers, because your email list is where you're going to get way more profit. And I say it probably two or three times a day. Email on its worst day is going to be better than Google or Facebook on its best day from a return on spend standpoint, so take less profit now to get way more profit later, because 100 new customers now with a little less profit is better than 10 new customers at a higher profit per customer, so acquire customers.

Jon:
Okay. Okay. So yeah, I totally see what you're saying, because just the return on that spend is once you have the list, you own it. It costs you pennies to send another email blast versus having to go back to Google and spend thousands just to get in front of those same people, so it definitely makes sense.

Ryan:
And if you're building a business for a goal of exit, or even just to give it to your kids or something, there's more value to a business that has a larger email database that I can nurture and buy with the business.

Jon:
Yeah. That reminds me, I recently saw somebody get sued, because they sold a business and said it had all of these emails, but they dove in and 80% of them bounced right away, so yeah.

Ryan:
Ouch. Mm-hmm. Yeah. When you're buying a business, look at their email system to see what the value of that is first.

Jon:
Yeah. I was wondering how that got passed due diligence. So number one is to just acquire more customers. Makes sense. What about number two?

Ryan:
Number two, once you've got customers in your database, or you've got a database you're working, segment your customers. All customers are not equal. Even just you and I, you live in an urban household, your buying habits, your lifestyle habits are going to be different than me that lives on nine acres in the deep suburbs.

Jon:
I was going to say that's pushing it.

Ryan:
Suburbs. I might not be considered a suburb. I'm unincorporated, so it's deep, but my taxes are better.

Jon:
There you go.

Ryan:
But you're going to nurture each customer different based on what they bought, based on where they're located. If you've got a massive list, you may be segmenting based on geographic, because people on the East Coast have different ways of saying things than people on the West Coast. If you've got a big enough database, you have to be thinking through that to get the best return possible. Most email systems for e-commerce will help create those segments automatically and they'll start putting them together and then you go in and you can refine them or say, "Hey, this is a better segment based on what they purchased." Men versus women in the gifting space. If you have people during a holiday period, like right now we're leading up to Mother's Day, if somebody's buying a gift now and the shipping address is different than the billing address, that's probably a gifter.
You might want to message that person differently than somebody that bought it and going to their same address. Not always, because I'll buy something and it gets shipped to our house and it's for my wife on Mother's Day, but if I'm buying for my mom, it may get shipped to her. So look at that data, segment them differently and make sure your message is different For those. Most businesses will have customers that are VIPs and those customers, you probably want a message differently based on what they bought, or maybe they get different levels of customer discounts. I know we hate discounts generally, because it's [inaudible 00:08:52] erosion, but if somebody hasn't bought in six months and the average customer buys every month, that person's at risk of churning, so send them 10% off. Looking at certain segments of how you need to be messaging people different. If everybody's getting the same email in your database, something's wrong.

Jon:
Yeah. Yeah. It doesn't have to be a discount. You could easily just send them a promotion of some sort that's special for them. Free gift with purchase, free expedited shipping. Something that others won't get, so yeah, you're never going to get me off that discounting soapbox, so [inaudible 00:09:20].

Ryan:
Nope. Nope. There's better ways of making your price look more attractive. It's not complicated. We have a whole podcast on it. I think we have a couple on it [inaudible 00:09:28].

Jon:
There you go. Yeah. I'm sure we do. I'm sure we do.

Announcer:
You're listening to Drive and Convert, a podcast focused on e-commerce growth. Your hosts are Jon MacDonald, founder of The Good, a conversion rate optimization agency that works with e-commerce brands to help convert more of their visitors into buyers, and Ryan Garrow of Logical Position, the digital marketing agency offering pay-per-click management, search engine optimization and website design services to brands of all sizes. If you find this podcast helpful, please help us out by leaving a review on Apple Podcasts and sharing it with a friend or colleague. Thank you.

Jon:
Okay. So today, we're talking about you have an email program, you're trying to scale it up. You've got five ideas. First, was acquire customers. Second is segment your customers. Third is...

Ryan:
Use your email data to guide acquisition channels. Now, I think of all my points, this is the one that is least utilized, because most people see acquire customer, nurture customer, go acquire more customers and that's the model, but they don't turn the circle in reverse necessarily and say, "Great. This is working really well. People are buying this. How can I go find more of those customers?" So email systems are a trove of data that is often overlooked in how customer A purchased product C and then they purchased product D, E, F, G. Well, great. They moved to a valuable customer segment of ours. How do I reverse that? I probably need to get people to buy that product, so maybe I can get more aggressive on the product that starts that relationship.
So I go back to the Google Ads team and say, "Hey, I want more people buying this product. What can I do? Can I get more aggressive on my return on ad spend goal, or do I get top of funnel on Facebook or Instagram to find people that are going to buy that product?" Go to your acquisition channels and try to reverse engineer those acquisitions, so you can build more valuable customers in your email database. There'll be just commonalities you don't expect and I think it can be the channel that came from, time of year can be a big one.
We worked in the gift basket space for years and that is a hyper-competitive one, but that group of the analysis that team did on customers was crazy and their email team led the organization essentially on every other channel, because the email was the most valuable piece of that company. They knew that if somebody bought a gift basket in the two weeks leading up to a holiday, except in the Christmas time period where you've got three to four weeks, that was a holiday purchaser and that value of that customer was massive. They would come back and buy two more times over the next 18 months through email, which for them, was almost free because their email list was so massive and so they could say, "Yeah. We were willing to lose money on that first order, knowing they're going to come back and buy two more times."
And so that can be hugely valuable to see that and get that insights. Whereas if I bought a gift basket August 3rd, there's no holiday around that. They don't know if I'm buying the gift basket for a birthday. They don't know if I'm buying for a funeral. The potential for bringing up that purchase next year and getting a repeat is low, because we don't know what that was tied to. You can base it on somewhat of the basket purchased, but just because it says sympathy basket, you just might have liked what was in that basket and you were sending it to somebody for a birthday, just because that happened to be better.
So push that data and challenge acquisition teams with some of that information. I like this especially for SEO teams and this is, I think, where it's probably not utilized often at all, but when you've got these really valuable customers that you can see in your email database, they're active, they're buying regularly, having your SEO team go and create long-term content strategies around those most valuable customers can be huge, because if you've got that insight and you're leveraging it and your competitors aren't, you might have some really high ranking blogs or pieces of content that can capture the eyeballs of those customers when they're upper mid-funnel before they go search and acquire them without the really competitive high cost per click that would be down at the bottom of the funnel.

Jon:
So understanding your email data and using that as a research tool for your other marketing channels, yeah, that's really interesting. You're talking about the gifting space and using that as a way to control every other medium that you're marketing on. That's awesome. And you're right, you start out by saying this is one that you don't see utilized very often and I agree. I don't see it utilized at all. I never hear about companies doing that. It's a untapped marketplace.

Ryan:
Yeah. Most companies will set a return on ad spend goal on their acquisition channels and leave it and it has no bearing on the type of customer coming in. It's like, "Yeah. They bought. Great." What type of customer is that going to be? Is it more valuable or less valuable?

Jon:
I love it. All right. So what is number four?

Ryan:
Number four is the basics we talk about, you and I constantly. Test and measure. Test and measure. If you're not testing something in your email, you're falling behind your competitors, so you're going to have tests whether they fail or succeed. It doesn't really matter in my mind, as long as you're constantly testing, because you're going to be getting better and better. When you realize something doesn't work, great, you're better off than somebody that didn't do that test. And you'll figure it out more and more, but it'll be from hero images to calls to action, to promotional things in the emails, to how you're segmenting your lists.
Even releasing test products through email. You don't have to put a product publicly visible on the site. You could have it on a page that's hidden from navigation, but available only through email to say, "Does this resonate?" Before I go make a massive investment in purchase a container shipment of these, does it work through my email list? Takes very little risk, but you get a group of customers that already like you. If they don't buy it, chances of people that don't know you and don't trust you buying it is much lower.

Jon:
That's interesting. I like that approach. I think a lot of the platforms like Klaviyo, et cetera, have a variation of A/B or multivariate testing within them as well.

Ryan:
Yes.

Jon:
And so that is something I think that you should be doing as a brand. Now, you need to have enough emails for it to make sense, but even HubSpot has this. We do this with our weekly email sends at The Good. We do A/B testing with our email sends. And again, you have to have enough to on your list to make it worthwhile, but they handle all the math and you just set a threshold and then it sends the variant out that performs better for clicks or opens. Whatever you wish. So yeah, there's some ways there to test and measure for sure. Okay. So acquire customers, segment those folks then use that data to help guide other acquisition channels, then you should test and measure. What's number five?

Ryan:
Number five, it's not necessarily email, but it's being bundled in almost every platform. It's SMS. You've got to be texting, you've got to be testing that and so most email systems have it built in. SMS does not make sense probably for every business out there. Certain B2B businesses, maybe not. Most direct to consumer businesses should at least have some data that they've tested to say, "Does it work or not and have you tested it?" You've got to do some double validation to make sure that they're okay to text. So I would say generally, small businesses, which in my mind would be anything under generally 10 million a year online would probably be fine using your email system as your SMS system as well. Keeps your data all in there.
Larger brands, you may need to start segmenting your systems and getting an attentive in there that's SMS focused only, because of the advantages there of deliverability potentially, or just how you're messaging somebody on such a small screen in text can be different than maybe you want to be messaging some email things, so test. And my wife and I used SMS in our local retail store really just for VIPs and I was like, "Hey, we're going to have a special night event with champagne. Come shop the store. It's exclusive to you only. RSVP here so we know you're coming, so we can make sure we have enough champagne or snacks." For me, I hate SMS, personally for me. I don't like being nurtured on the SMS. I find most of them annoying and so maybe it's a fault of the SMS people that are giving me bad texts and bad content.

Jon:
I will say I've had a lot of success and I love SMS for subscription-based products. "Hey, your next order's coming up. Click here if you want to change the date or change the order of some sort." There's a really great case study up on our site about Olipop, the direct to consumer soda brand that did that through SMS and it's their number one sales channel. Now, they send a renewal text out and it converts at such a high rate that it becomes a retention tool, where a email can get lost and it doesn't feel as immediate. With text, it feels immediate still for consumers, most of them, and what happens is you send it and you say, "Hey, your order's coming up. Do you want it?"
Now you're getting in the good graces of that consumer, because your product isn't going to going to just show up at the door and you're like, "Oh, shoot, I didn't want that right now." Now, you have the option to push it back and retain that customer. They would've just canceled, because maybe they're on vacation, or they're not going to be home that week. Whatever it is. So there's some great options there for utilizing SMS as another channel. But I think you make a great point that it doesn't make sense for all businesses, because I see so many small brands collecting SMS info and not doing anything with it.

Ryan:
Or what they do with it is just annoying and it's like I signed up with one, just because I want to be able to be in it and if it is working, I want to be a part of it, so I can advise brands on it. But a few of them that I signed up for was 100% discounts and it was every week. And the product I did, it was a workout product, a pre-workout thing I'd take in the mornings before I work out, or have a more difficult workout and it was weekly. Just the boxes I buy are either I buy two for two months, or one for one month and they last me about that, but it was every week, didn't matter when I purchased, "20% off today. 10% off this week for random day of whatever it was." It was just annoying.
I'm like, "You are not looking at my data at all about when I purchased last, when I'm going to purchase again, when it's time to get another box." It was just a blast discount, because they saw the revenue likely and said, "Oh, every time we send an SMS, we get revenue. This is great." And then they just kept abusing it and discounting their brand. So I'm like, "I'm never paying full price for that brand, because I know I'm going to get a text next week." And if I ever opt out of the list, because it's annoying, I just go back to the website and give them my phone number, get the coupon, opt out again. It's just so easy to abuse that.

Jon:
Well, it's still in its infancy, I think. I think there's still a lot of good options there for brands who are of a decent size and are going to do the right things with it, but I do think it's a channel that can convert quite well, because there's not a lot of noise on it.

Ryan:
Yep. Just know that I think you have to do is if you don't have a unique strategy outside of email for it, you're probably doing it wrong, because it's not the way you've used email. And I think that's probably how a lot of them are doing it, or they're just like, "We don't want to come up with a strategy, because we're lazy, so we're just going to give them a discount and blast every week and everybody gets the same text." No. It's segmented like email. Everybody gets different text messages and if you're giving a discount, again, you're probably doing it wrong.

Jon:
Stop hitting that easy button, right?

Ryan:
Yes. It's not good long term.

Jon:
All right. So that was five. I think you have a bonus for us as well. What's your bonus way to scale email?

Ryan:
You've got to have a bonus. Jon does, so I got to keep up with him. So for me, it's app push notifications. Not everybody has an app out there and not every email platform can do push notifications, but if they do, like for example, we use Klaviyo a lot at Logical Position. They can do app push notifications and so we've got a decent amount of clients with apps and push notifications can be so awesome. It's like text, but it's easier to get into notifications for an app. Can easily get that when they give it to me, or I can get a notification without much difficulty and so I liken it to SMS essentially. You got to have an app though to check out and so if they've given permission for that notification, it's extremely valuable. My best example personally is Nike. I give Nike permission on the sneakers app to notify me when there's a pair of Jordans coming up that I might want.
Even if I'm not in the market to buy, I like knowing, because maybe I will go and buy them again on some secondary marketplace. But great delivery rate. It's pretty simple now to get an app up. If you have a business account or a business email for longer than a year, you've got people messaging you about their mobile app abilities constantly, or if you're in e-comm, if you're on Shopify, tap card can get you a quick app. But again, it's the same idea. Don't abuse it and understand those customers are likely different. If they've downloaded your app, they've taken the time to go download it, because they want to have a deeper relationship with you as a brand, that's a really special thing that I think you need to not abuse.
So again, test and measure how people are going to interact with you. Those people already like you enough to put an app on their phone, that's not a discount customer. Nike's never had to push a discount for me to go buy a pair of Jordans. I just know I want them. So test that. You have an app. I think your push notifications going to those same customers, keeping that data in one spot can be pretty powerful.

Jon:
That's great. All right. So five. No. No. Six with a bonus ways to scale your email, which should be your most valuable channel, acquire customers, segment your customers, use your email data to guide other acquisition channels, test and measure, use SMS and as a bonus, use app push notifications. Ryan, this has been really helpful for me. Lots of great stuff in here today. Thank you for sharing.

Ryan:
Thank you, Jon. Appreciate it.

Announcer:
Thanks for listening to Drive and Convert with Jon MacDonald and Ryan Garrow. To keep up to date with new episodes, you can subscribe at driveandconvert.com.