Episode 265 | The Absolute Bare Minimum You Should Know About Segmenting Your Email List

Show Notes

In this episode of Startups For The Rest Of Us, Rob and Mike talk about the bare minimum you should know about segmenting your email list. They discuss the different stages your customers can be categorized as and how to target them specifically in order to get them to the next stage.

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Transcript

Rob [00:00:27]: In this episode of “Startups for the Rest of Us,” Mike and I discuss the absolute bare minimum you should know about segmenting your email list. This is “Startups for the Rest of Us,” episode 265.

Welcome to “Startups for the Rest of Us,” the podcast that helps developers, designers and entrepreneurs be awesome at launching software products whether you’ve built your first product, or you’re just thinking about it. I’m Rob.

Mike [00:00:28 ]: And I’m Mike.

Rob [00:00:33]: – and we’re here to share our experiences to help you avoid the same mistakes that we’ve made. What’s the word this week, Mike?

Mike [00:01:06]: Well, we got a really interesting listener question from Chris Koenig, and he says, “Hi, Rob and Mike, I really enjoy the show. My question stems from your FAQ on startupsfortherestofus.com, specifically the part about transcription. You’ve switched transcription services in the past and mentioned how each one seems to decline in quality over time. When you see a pattern like that, what, if anything, does it tell you about the market? Does significant customer turnover mean these companies are having trouble scaling up? Or, might it be a deliberate tactic to focus their attention on the newest customers for that initial trial period? Hope it’s not too inside-baseball for the show, but I’m curious about the space and would be interested to hear your viewpoint.”

Rob [00:01:39]: My take on it is that people come into transcriptions because it’s easy to enter, and there’s no barrier to entry, and that’s a problem. It’s basically a commodity business, and people underprice themselves at the start because there’s no other way to compete in a commodity business, right? It has to just be cheap; but then they get in three months, six months, 12 months and realize, “I’m not making any money. This is a lot of work,” and they either just bail on it; or, maybe they’ve raised prices, but they’ve grandfathered, and so those grandfathered people, they’re giving less service to because they’re not making as much money. That would be my take on it.

Do you have a sense?

Mike [00:02:37]: Yeah, that was going to be my guess, was the grandfathering of existing customers because if you’re offering a commodity like that and and the price point’s really low, it’s difficult to justify raising your prices to the existing customer base. So, when they find that they need to raise prices because they’re not getting the people to do the transcribing that they need to, or things are just not working out as well in terms of quality, then their pricing model basically goes to heck in a hand basket. So, it makes it difficult for them just to make ends meet. And I think that that’s it more than anything else, because most of these – I think the ones that we’ve gone to tend to be newer. It’s not like there are transcription services out there that we’ve used that have been around for a very long time, so obviously there’s going to be that issue of trying to go up-market with it and keep your existing customers happy while also trying to charge them more. I think that most of them just – I don’t think any of them have ever come to us and said, “Hey, we need to raise our prices.” I think they’ve all just capped it at, like, a dollar a minute or something like that.

Rob [00:03:40]: I know, and if I was doing a productized consulting service or, I guess, even as these guys are, really, at just an hourly service, I don’t think you can grandfather the way that you do a SaaS; because the reason you can grandfather with SaaS is because a lot of the effort and the time is spent up front acquiring the customer and then onboarding them and supporting them early on. After that, the marginal cost to support them is very low, and so grandfathering them at an older, cheaper price is pretty easy to do. But in terms of ongoing consulting engagements, where you’re literally paying someone to do an hourly or a by-the-minute task, I do think that you need to raise prices over time. Just the way it needs to go in order to maintain a viable business. I do think that your better customers are going to understand that.

We did have some pretty reliable services transcribing over the years, and if they had come to us and said, “Look, we need to raise 10 percent, 20 percent,” we would’ve done it; because the switching cost is painful. If they needed to double their price, that might’ve been a problem, but the fact that the quality has declined over time pretty much across the board – I think we’ve used six or seven, different transcription services in the last five years because within about six to nine months, they all eventually flail around.

Mike [00:04:27]: I think the other thing that factors into that is when you are running a service like this, you have employees or contractors that are working for you, and they’re working for a set wage. Let’s call it $10 an hour just for a nice, round number. At some point in the future, you’re probably going to want to pay the people who’re doing a really good job more, and it’s difficult to raise their salary if you’re not bringing in any more revenue from the customers. And that is a fixed cost. If it’s $10 an hour, if you’re only making $11 an hour from the customer, it’s hard to raise what you’re paying that person in order to retain them as a good employee or a good contractor and still make ends meet. I think that also factors into it as well just in terms of the timeline, because you’re right. We’ve gone through a bunch of these, and over time, without fail, they eventually go downhill.

Rob [00:05:23]: That was a good question. Thanks for writing in.

On my end, just kind of as an update, my chaos is definitely subsiding. Some things have wrapped themselves up. There was a big sale I was working on that closed last week, and so I do feel like a nice exhale coming about in my life as kind of the overwhelm has dissipated. I feel like I’m able to get back to focusing on things that matter instead of just rushing around like I was for the past few weeks. Things are clear, and it’s end of the year. Not a ton happens in terms of business stuff here end of November and December, but this is the time when I’m going to take to really focus on what 2016 needs to look like; and I’ll probably be doing my personal/business retreat here in the next, I’d say five or six weeks, taking notes, figuring out what my goals are. You and I need to record a goals episode, where we look back at the goals we had for last year and plan our goals for 2016. I’m going to be honest. I’m kind of looking forward to what I’m hoping is the quiet of December.

Mike [00:05:30]: Cool. Well, on my end, I’m actively taking pre-orders for the new product that I’m working on, and I’ve got about half a dozen pre-orders so far.

Rob [00:05:31]: Nice.

Mike [00:05:48]: The product itself is aimed at automating the process of moving people through your sales pipeline. If it’s a high-touch sales pipeline, it helps to automate the process of moving them through it so that you can essentially focus on your own work as opposed to going back and continually following up with people.

Rob [00:05:54]: Very nice. When you say “taking pre-orders,” do you mean that you’re getting verbal commitments, or are you actually charging credit cards?”

Mike [00:05:56]: No, I’ve actually charged half a dozen credit cards so far.

Rob [00:05:57]: Bravo.

Mike [00:06:09]: Yeah, it’s going well so far. I’ve still got a bunch of conversations that are scheduled over the next couple of weeks, and I’m hoping to reach my internal goals for financial commitments. And once that’s been reached, then going to start breaking ground on the code.

Rob [00:07:00]: Sounds good, man. It’s exciting stuff.

We have a slew of new iTunes reviews, 456 worldwide reviews. Thank you so much for going into iTunes and clicking that five-star rating. We also have some really good comments. Crispin Hennace [ph] says, “Do not launch a bootstrap business without Rob and Mike on your team.” He says, “I recently discovered this podcast and have been listening to old episodes on double speed. There’s a lot of great material, and it’s fresh and relevant each week. Listening to the archived episodes is like picking up gold nuggets on the street. Every entrepreneur, bootstrapped or not, should make this valuable resource a part of your week.”

And then a nice review from Jamie Hillfield in the UK. He says, “Great podcast. My absolute favorite startup podcast, by a country mile.”

So, thanks so much for your comments, for your five-star reviews. This helps us continue to grow the user base, gives us motivation to continue to do it. If you haven’t logged into iTunes and clicked that five-star, we’d encourage you to do so this week.

Mike [00:07:01]: What are we talking about this week?

Rob [00:09:24]: This week, we’re talking about the bare minimum that everyone should know about segmenting your email list. The idea here – obviously, I run Drip, which is about segmenting emails and sending targeted communications to people based on the things they’ve done and what you know about them. It’s actually funny. When we’ve demoed Drip at, let’s say, conferences, or went to the Microsoft Build conference last year, people say, “Oh, so you guys send spam or something?” Developers especially would come up and joke about that, and we said, “Actually, no. We ensure you get fewer emails that are more targeted to you rather than just getting these blasts from these big companies.”

So, that’s really what we’re talking about today, is the fact that one-to-many email, you know, just the broadcast email, sending it out to your massive list, is really dead, or it’s dying. The businesses that are really savvy at it these days are moving towards one-to-few and one-to-one email, and what that means is that the more you know about someone, the more customized that email can be to them, and the more customized the flow that they follow through your app and your email sequence will go. It’s not magic. It’s not like it’s some AI thing cranking out these magical emails. You have to write these emails, and you have to build certain flows and move people in and out based on tags, or based on what they click; but the idea is it’s about sending people the exact message they want to hear at the right time, to encourage them to take the next step.

That’s what email segmenting is about. It’s about figuring out, “How many buckets do I need to drop people into?” because it’s not as complicated as it sounds, right? It’s not like you need 100 different buckets for your list. Really, what we’re going to talk about is there’s essentially four stages, or four buckets, that I start with. You can go more complex than this, but the minimum you’ll want to know is you’re going to have a marketing list. And these are people that have not signed up for a trial. They have not downloaded a sample of your product. They’re people who are just hanging around, and they’re going to want top-of-the-funnel educational content: maybe blog posts and updates on your product from a high level, like feature stuff, but not in detail how to use it. It’s not super educational. That’s the first bucket, or first stage, is marketing.

The next one I call them a “trial user.” This applies mostly to SaaS, but it also applies to – let’s say you’re selling an eBook and you have a sample chapter. I consider them a trial user, because they have downloaded something, hopefully consumed it. You’re going to need to encourage them to consume it via email, and that’s your second book. It is, in essence, a trial user; and your goal there is to nurture them through that trial path to becoming a customer. That’s, of course, the third stage, is someone paying you. Then the fourth stage is someone becoming a repeat customer.

Mike [00:09:54]: I think there’s different subsections of these stages that you can have as well. For example, if somebody’s a trial user at that second stage that Rob just talked about, they could be somebody who basically fell out of the bucket at that point. They signed up for a trial, and then they decided not to proceed, for whatever reason. That, in essence, becomes something of a subset of that particular stage, and you may want to market to them differently. But at a high level, these four stages generally capture the bulk of your audience.

Rob [00:11:50]: Yeah, and if you’re listening to this, wondering who does this actually apply to, I think there’s three or four markets that I thought about when I outlined this episode; and they are, of course, SaaS and downloadable software. That’s the first. Second is consultants and freelancers. The third are people selling information, basically eBooks, online courses; if you have a personal brand, or you’re a blogger, that kind of thing. All of this heavily, heavily applies to you and you really need to be doing this, moving forward or, else, you’re going to fall behind.

The other two that I thought of that this applies to, but it’s not necessarily what I was thinking when I outlined this, e-commerce. E-commerce tends to be quite good at this. If you have an online store, you basically have your friend list and then people who are hot leads, and then you have your customers and then your repeat customers.

And lastly, even – in Drip and, frankly, in HitTail we’ve had a lot of folks who are lawyers and real estate agents, and it’s the more tech-savvy of those groups. For them, it applies as much as it does for consultants, as much as it does for SaaS. You may not be doing it, but it really puts you ahead of your competition if you are segmenting your list like this and really sending people exactly what they want to hear.

So, let’s dive in. Like I said, there’s these four stages. It’s basically marketing, the trial user, customer and then your best or your repeat customers. Let’s start with this first bucket of marketing. These are the people that really you want to be educating about your space, your industry. You want to be educating them a little bit about your product, but you’re not doing necessarily a hard pitch very often. You’re going to be capturing these emails using a lead magnet, some type of opt-in reward. I always recommend an email mini-course over something like a PDF, because the course is nice because it’s over five or seven days, and it gets them used to opening your emails and reading them. People are more likely to consume something if it’s in their email inbox, because they can just do it right on their phone; whereas, a PDF, they’ll typically download it, put in Dropbox and then not read it unless you ping them again and encourage them to do so. A PDF tools list is a really good start to capture that email. But I prefer, if you have the time, to instead put together an email mini-course.

Mike [00:12:32]: The other thing, I think, that is overlooked in terms of the tools, especially in terms of PDFs, is just Excel spreadsheets that allow people to calculate different things. I think when we had Jesse Mecham on the show, he talked about how his very first product was actually just a Excel spreadsheet that people could download and he would charge them for it, and people were more than happy to pay for that because it would help them do their household budgeting. That essentially morphed into youneedabudget.com and the product that he sells today, but it was a tool that people could use. And Excel is notoriously useful in a variety of different circumstances, and if there are ways to build a simplistic tool out of Excel, then you could offer that as a download as well.

Rob [00:13:12]: Right, and if I was going to do that, what I would do is offer the Excel as a download. Just as a reminder, you don’t want to attach that to the email, because spam filters and all types of stuff choke at that. You definitely want to have it up on a server somewhere and then link to it within the email. Once they download that, well, then you put them in a sequence to hear from you the next day and be like, “Hey, what did you think of that?” “Did you notice that cell 35 does this?” “Here’s a quick use case for it.” Then you ping them two days later, and you say, “Hey, by the way, with that thing do you know there’s this other feature you can do in that Excel spreadsheet that I gave you?”

In essence, you turn it into a mini-course even though they really opted in for that core thing; but you’re kind of educating and teaching them how to use it and how to get value out of the thing that they downloaded from you.

Mike [00:13:36]: Why don’t you expand a little bit on that, because I think that some people don’t necessarily realize that just the nature of attachments – not just that they get blocked on a regular basis, but also the fact that you don’t know if they’ve opened it or not? You don’t know if they were interested in that attachment. Why don’t you talk a little bit about the process of, for example, tagging people when they click on those links? Obviously, if it’s hosted someplace, how do you know that they downloaded it?

Rob [00:15:00]: Yeah, that’s right. That’s a good point, actually. With an automation tool like a Drip or an Infusionsoft, you can basically just put a little rule in that says, “If someone clicked on this link in the email, then tag them with downloaded Excel spreadsheet,” right, or, “downloaded X, Y, Z report.” Like you said, you can’t tell with an attachment, so you lose out on that reporting.

What you can do later on with the information of whether or not someone actually downloaded it is if they didn’t download it, then you can send them another email the next day, or two or three days later. You can say, “Hey, I noticed that you got the email and you didn’t actually download the thing. I wanted to give you another opportunity to do so.” If they do at that point, then you’ve now pulled them into your funnel, and you can send them more information about how to use it. If they don’t, then that may be time to write them off. You don’t want unqualified prospects in your funnel, because that just kind of wrecks your numbers and over time, if they’re not opening your emails, not clicking your links – the ESPs are pretty smart these days, like Google and with Gmail and Hotmail on Yahoo, they’re starting to get smarter and smarter, and if people are not interacting with your emails, not opening them and not reading them, over time Google knows that; and they start putting your stuff into promotion and eventually will just put your stuff in spam if you even get a small number of spam complaints.

It’s valuable to know who on your list is doing what so that: a) you can target them differently. That’s really what we’re talking about here, right, is segmenting them; and b) so that your deliverability and your placement in these email inboxes remains high.

Mike [00:15:39]: What I like to do in those cases is, if you see that somebody hasn’t downloaded something that you sent to them that you wanted them to, you just send them a reminder email so it doesn’t say, “Hey, I noticed that you didn’t do this,” because it depends on your audience a little bit, but it can come across as, “Oh, my God. You’re tracking me,” or, “You’re looking at everything I’m doing.” Well, yeah, you are, but at the same time, you don’t necessarily want them to feel that way. So, I like to just send them an email that says, “Hey, just wanted to remind you about X.” But if they downloaded it, then they wouldn’t get that reminder. So, that’s a neat way to be able to get around those. And those are all psychological objections. They’re not technical limitations or technical objections. It’s just how you are interacting with the people that are on your list.

Rob [00:15:58]: Yeah, that’s a good point, actually, is knowing your list and knowing how they’re going to react to this stuff because, if you’re emailing marketers, they know. They know that you know if they opened it or not. But if you’re emailing less technical folks, or maybe developers, or people who aren’t necessarily in tune with all the fancy tools that we have in a tool like Drip or Infusionsoft, then you’re right. You may need to couch it a little differently.

Mike [00:17:09]: Part of what you can do in addition to just tagging people is you can use mechanism for what’s called “lead scoring.” The lead scoring allows you to figure out who is engaging with your emails. You can use that lead scoring mechanism to subscribe them to additional sequences, and you might use that in cases where, if somebody has opened every, single one of your emails. Then chances are good that they are really engaged with the content, and you might want to send them a special offer. So, if their score reaches a certain level, you send them into a different sequence in order to either make an offer for an upsell, or a special bonus or something like that. It doesn’t even need to be something that you’re selling to them. It could just be something that you’re giving to them as a reward for interacting with your emails. But those lead scoring mechanisms can help you to determine who you should be approaching with some of your different products or different services that you’re offering. You tend to not want to send an email to somebody saying, “Hey, buy my thousand-dollar products,” if they’ve only ever opened up one of your emails before. So, in a way, this lead scoring allows you to get a lot more intelligent about who you are targeting with the different emails that are in your different campaigns.

Rob [00:20:45]: Yeah. If you’ve never used lead scoring, it is mind-blowing to basically be able to have a score that tells you how engaged someone is with your website and with your emails. The concept behind lead scoring is you can set a point value that, when someone opens your email, let’s say they get +1 point. That’s typically the default, and there’s kind of a generally agreed-upon marketing automation thing. I think Pardot and Marketo published things, and they said open is worth one point. A click is worth three points, and then visits to your pricing page is often worth five points. And so we have that, of course, all built into Drip. We built lead scoring into it pretty early on.

And then you can configure it as well. Our tour page, we give folks three points if they visit it. If they visit your careers page or your job listing page, you typically deduct ten points, because it’s indicating that they’re probably looking for a job. You can then add custom events, like, hey, they signed up for a trial, maybe, or, even if you had maybe used a tool. Like, if you have a tool where you’re doing a website grader, or a speed test, and they entered their URL, that could be an event that, hey, they pushed that through, and you could give them five or ten points for that. Downloaded a report.

And then you basically set a lead threshold where you say, “This person, when they’re below 65, let’s say – and that’s, again, typically the default – when they’re below 65 points, they’re really considered just a prospect. They’re hanging around. When they bump above 65, now we’re going to call them a lead, and you can do stuff with them.

One thing we do with Drip is if you get on our list and you’re really engaging with our stuff, in addition to the educational content that we’re sending you, we also subscribe you to a second campaign at the same time, that we call our – it’s our RTB sequence, “Ready to Buy.” That one has a little more Drip-specific stuff. It’s less education about marketing automation and less segmentation, and it’s more about, “Hey, this is why Drip is for you,” and, “This is what Drip can do for you,” and, “This is a comparison of Drip and MailChimp,” “Drip and Infusionsoft.” “Here’s how to sign up for a trial.” “Here’s how to click to get a demo.” There’s a little more sales talk. It’s not high-pressure, but it definitely leans in a little bit. The reason we can do that and feel comfortable is because these are the folks who are really engaged with our emails, so it’s indicating that they are actually interested in hearing about us.

The last piece in the marketing stage is something that you can do. Again, this is optional, but it’s interesting that, if you’re asking folks to do a live demo, what you often find is you have a lot of unqualified folks signing up for demos. If you can figure out what that pivot point is, where someone is a really heavily qualified lead, or that they’re worth doing a one-on-one demo, it’s pretty easy to segment them just by – you give them the form where they enter their email to sign up for a demo, their first name, last name. Then you ask them one question that’s basically like, “How many subscribers do you have?” or, “How many invoices do you send per month?” It’s whatever that pivot point is for you that, hey, if they send ten invoices a month, this person is worth doing a real, live one-on-one demo. And, again, when they fill out that form, they’ll select it, and that goes right into marketing automation. Obviously, Drip does this. Infusionsoft does this, ONTRAPORT. Then right in there, you can just say, “Hey, if that person filled out this value, then let’s send them a [Calendly?] link where they can sign up to have a one-on-one demo.” “And if it’s less than that value, then let’s actually send them over to do more of an automated demo,” because you’re going to get – 70 percent, 80 percent of your people are going to be less than that value because they’re just a lower-end tier, and you may not have the manpower to be able to do all the one-on-one demos.

That’s something we actually do at Drip. We’ve had a lot of success with it, and it’s something that you can only do if you’re segmenting. You can’t do this with older-school newsletter tools, like an AWeber, a MailChimp, a Constant Contact. They just don’t have the capability to be able to do this lead scoring and then to very simply, without writing any code, be able to put them in different buckets and send them different emails to move them along into the trial phase.

Mike [00:20:56]: Let’s start talking about the trial phase. What’s involved in treating somebody like a trial user? Obviously, they have to sign up for a trial, or download a sample chapter of an eBook; but what are the different things that you can do in there?

Rob [00:22:30]: Yeah, this is where you make the switch, right? You’ve segmented them into someone who has a lot of interest, and they have interest in your product now, not just in your space. They’re not just thinking, “Oh, I might need an email marketing provider.” They’re actually saying, “All right. I’m really going to dive in. I’m going to either compare you to other things I’m already using, or I’m doing hardcore evaluation.” The goal here is that you want to really convince them to consume the material or try the product, right? So, if they’ve downloaded a sample chapter, you want to switch from that marketing lens of “I’m just trying to educate now.” You want to totally cut that stuff off, in general, and you want to switch to now, “Hey, did you see what was in that first chapter?” “Have you done the exercise at the end of the chapter?” “Here’s some more information.” “Here’s chapter two,” maybe, even, if they’re engaged.

Or, if they’re trying your SaaS app, you need to find out that “minimum path to awesome,” that MPA that I’ve talked about before, which is what does this person need to do during their trial to get that endorphin rush of, “Oh, my gosh. My head is about to explode?” If it means that they need to activate an email campaign with a couple emails in it and get a form installed on their website and get at least one subscriber, then you figure out how to guide them through that. You’ve really switched modes here from marketing and education into much more trying to show them how to use the product.

It’s not an easy problem. It’s not an easy thing to do. Really, if you summarize it, it’s onboarding. You can onboard someone with a sample chapter. You can onboard someone with a SaaS app. You can onboard someone as a consultant to try to get them to spec out their project, or whatever; but each of those things is the mind-frame that you have to switch into when you’re treating someone like a trial user instead of just as a cold prospect, like you would with marketing.

Mike [00:24:01]: I think one of the key pieces of treating somebody as a trial user is essentially giving them an experience that they are going to be comfortable with such that they will give you money, and that ultimately boils down to trust. You want them to trust that you’re not only going to deliver, but that you know what you’re talking about, that your product does what it’s supposed to do, that you’re going to be responsive if there’s any problems. You want to make sure that, if there’s any sort of time pressure or time deadline associated with it, especially for, like, a time-limited trial, that you are giving them all the information that they need in order to succeed during that time frame. The last thing you want to do is give them the product and just say, “Okay. Let me know if you have questions,” because that’s generally not going to work. People are going to need a little bit of hand holding and, in fact, they want that hand holding. So, if you know that somebody has just converted into a trial user, then you want to give them the information that they need in order to succeed.

Along with that, I mentioned this earlier, if somebody essentially falls out of that trial user bucket, you treat them as a lost trial. That’s kind of a subset of this. You can also treat somebody as somebody who is a trial user who may be having some problems. Have they not done certain things? If they haven’t done certain things, you can use that with either lead scoring or tags to essentially notify your email automation system that this activity, or lack of activity, is going on and go back and reach out to those people to try and help them figure out what is holding them back from being successful with the product.

Rob [00:25:17]: Exactly. Those are all really good points. One thing I’ll add, and then we’ll move on to customer communication, is another tactic that you can use with trial users is figuring out which track someone is one. There might be multiple ways to get onboarded in your app, depending on the person’s goals. In Drip, for example, when you first log into your account, the very first time we have a guided setup. It says, “Are you trying to send emails to your marketing list, or are you trying to send emails to your trial users and customers?” There’s two buckets we put people in, and if you click that marketing list, then we send you down a different path of emails because it’s a different setup process, right? You don’t need to connect the API to Drip. You just need to get the form on your website; whereas, if you’re doing trial users and customers, then you either need to do an import, or you need to do some type of API interaction. There’s a number of different ways to do this.

But figuring out early on and then sending that one-to-few or one-to-one communication that I talked about earlier will have an impact on your conversion rates of people who actually do get onboarded. The cool part is I’ve watched it over time with all of my SaaS apps that I’ve worked with. And the number of people who actually do get onboarded and get to that “minimum path to awesome” that you define, it highly, highly correlates with the number of people who convert to paying customer.

Mike [00:25:18]: What’s next after trial user?

Rob [00:26:32]: The next two stages are customer and then your best, or your repeat, customers. There’s actually a lot less to do with these folks. You definitely want to keep them engaged, and you want to let them know how you’re improving the product. That’s something big that we do with SaaS is that, since they’re continuing to pay the same amount month to month and you’re improving the product, they’re actually getting better value over time. I think that’s probably one of the first things that you’ll want to keep communicating to customers, because basically you’re trying to retain them and you want to show them that they’re continuing to get value and that they stick around. So, sending out a feature email every four to six weeks, based on what you’ve launched, showing them what you’re doing for them so that they do stick around is one thing that you’ll want to be sending to your customer list.

You want to send similar emails to your trial list, but it’ll be couched a little differently, right? It’ll say, “Hey, look at the cool stuff we just released. Maybe check it out,” but you’re phrasing it differently than you would, say, to customers, which is, “Look what we’ve done for you,” and, “You should really stick around.” You can send that same email to your marketing list, but with your marketing list you want to go much less in-depth. You don’t want to really show them how to get onboarded with it, because they don’t care yet. Right? They haven’t used your app. They haven’t logged into it. You just want to give them a high-level view with some flashy screenshots of, “These are the cool things we’ve rolled out.” But it is a different thing, so having that segmentation is powerful.

Mike [00:27:03]: And that essentially allows you to reuse the existing content that you’re creating, so instead of just educating your existing user base about what new features you’re adding, you are educating your marketing list about what new features that they could potentially have access to if they were to sign up for a trial of your product and start using it. As you said, it’s a difference in how you present it to them, but, in essence, the basic concept behind those emails that you’re sending is going to be very similar.

Rob [00:28:16]: Right. And then something else you’ll want to do is, if they’ve done a one-time purchase, let’s say they purchased an eBook, then you’ll want to lead them down the product path, right? You want to pitch your next product, because if they purchase an eBook, then maybe they want to attend live training, or a conference, or purchase a video course. You basically want to pitch them on your next product, because these people are much more likely to buy that next, maybe more expensive product that you do have. If you’re a SaaS app, that’s obviously not what you doing, right? You’re not going to tend to pitch them on the next product, but maybe you want to pitch them on an annual plan: get 12 months for the price of ten, and you get all that cash up front so that you’re able to go out and buy ads and do other things.

Basically, you’re offering them some value by showing them how the app’s improving, and then you’re basically pitching them on some other ways that they can become deeper engaged into your funnel, become more committed users and generate more cash for you in the short term.

The other thing that I like to do is to ask for referrals. This is the point where, if people are in and they’re engaged and they’re pretty happy – you don’t want to ask someone for a referral when they’re two weeks into their trial, so don’t do it then. You want to ask for referrals really when they become customers and then definitely again once you’ve determined that they are one of your best or repeat customers.

Mike [00:29:11]: A lot of that capability has to do with the timing of the emails that you’re sending, so a lot of this is going to be based on sometimes just customer actions; but sometimes it is going to be situational, based on what your business is doing. Other times, it’s situational based on what the customer themselves are doing. For example, if their credit card is coming up for a renewal, that might be a good time for you to pitch an annual plan so that they won’t have to worry too much about their credit card expiring. It may be one of those things where you get them to not only upgrade to an annual plan, but you get their updated credit card information as well. Because you’re giving them a discount, then it helps to push them in the right direction.

But all of this is just simply about having a little bit more intelligence about what your prospective customers are doing and what level of activity they have and really being aware of where they are in your marketing funnel.

Rob [00:30:13]: And then to wrap this up, there’s this next level of customer, and these are your best customers, your repeat customers, depending on what you’re selling. If it’s one time, these are going to be your repeat customers who’ve bought a lot of your stuff. You get to know these folks by name. In SaaS, your best customers are maybe people who are on your bigger plans, folks who give you a lot of helpful feedback and work with you and spread the word. These are folks that you want to reward with some stuff.

Something that we do is we’ll often give our best customers early access to new features or inside information, so I have a small group with a tag called “Drip Insiders.” These are consultants who are actively getting people onto Drip, and I’ll send them stuff several weeks before other people are going to know about it. They love to have the inside track so they can look to their customers like they’re knowledgeable. We give them alpha access to new features we’re rolling out; and so, again, you’re giving them value. You’re not just always pitching and asking for stuff.

So, think about what you can offer your best customers in a way that makes them feel like they have exclusive access to something and like they’re maybe getting a little more than just the other customers.

Mike [00:30:39]: And on that note, one of the pieces that you want to make sure of is that you’re treating this like a relationship. A relationship will go both ways, so you don’t always want to be taking. You want to be giving as well. If these people are already customers, if you’re already charging them, then you want to be giving them as much value as possible so that they feel like they’re being taken care of, and they feel like not just a good customer, but they are getting value out of it and it’s in their favor.

Rob [00:32:12]: Right. What you’ll find over time is that you develop a genuine relationship with these folks. You don’t view them as subscribers or some aggregate thing. Everyone on that list is a person. I think that beginning marketers, early marketers often make that mistake of just thinking too much in terms of aggregate numbers. Pretty quickly, you’re going to realize that everyone on your list is a person and that this is about building a relationship. So, by giving these best or repeat customers something exclusive and making them feel good, then you can sometimes ask for stuff. Sometimes you can pitch a higher-end product, or a higher-end tier or a done-for-you, productized consulting service that adds on to your SaaS that’s very expensive, but that these folks are much more likely to use. Or, again, you can ask for referrals. That’s another thing that we commonly do in our best customer lists. We say, “Hey, obviously, you guys rave about us. You tell a lot of people. What’s another way that you can get the word out? Can we do a joint-venture email?” “Can we do a co-webinar?” “Can you tell three friends?”

There’s a bunch of different ways to do this, but this is when it’s valuable to know who these people are. Because, again, you don’t want to send any of those emails to people in your marketing list, or people in your trial list. You have one goal for them, and it’s to get them to the next stage. And by the time they’re here, your goals change, and that’s why we wanted to talk about segmenting your email list today because this is so critical, and so many people are not doing it. And with the tools that are coming out now, these email marketing automation tools, it’s becoming easier and easier to do it.

It’s just a no-brainer. The benefit that you get from this is tremendous. If you’re listening to this, and you’re thinking, “Oh, my gosh. This is blowing my mind,” it really is. The more you do it, the better results you will get.

Mike [00:33:08]: I think the last piece of being able to know who your best customers are is that it allows you essentially a focus group of people who you can talk to and reach out to on an individual basis to ask them questions about what other things that they need. In essence, to them it looks as though you’re reaching out to the to help provide more value; but at the same time, moving forward, if you’re able to provide that value to them and if they are your best customers – however you define “best customer,” whether it’s the amount of money that they’re paying you, or the amount of usage on the product. It depends on what stage your business is. I think later on down the road, you’re more interested in the amount of money versus earlier on, you want the most active people so you can gain knowledge; but that knowledge will help you to direct the future development of the products to gain more of those type of people. That’s really what you want, is you want to be able to identify who your best customers are, whatever the criteria for that is; and to be able to zero in on those people and get more of them.

Rob [00:33:54]: And I was very careful, as I’ve outlined this episode and as we went through it, to not make this just a big sales pitch for Drip because that’s not the intent. The intent is to give you tools that you can take and use with any automation provider. So, there is ActiveCampaign and Infusionsoft and Drip and ONTRAPORT, and there’s others out there. In my opinion, if you’re listening to this podcast, Drip is probably the best one for you. We’ve heavily focused on SaaS apps, downloadable software, consultant freelancers, and people selling online information products, like eBooks, online courses or, if you’re a blogger, selling a digital product online.

So, I’d encourage you, if this does pique your interest and you’re either unhappy with your current provider, they don’t give you the automation you need, or that you haven’t tried an automation provider before, I’d encourage you to come check out Drip: getdrip.com, and we will definitely take good care of you.

Mike [00:34:15]: I think that about wraps us up. If you have a question for us you can call it in to our voicemail number at 1.888.801.9690 or you can email it to us at questions@startupsfortherestofus.com. Our theme music is an except from “We’re Outta Control” by MoOt, used under Creative Commons. Subscribe to us on iTunes by searching for “startups” and visit startupsfortherestofus.com for a full transcript of each episode.

Thanks for listening, and we’ll see you next time.

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