How to Move Prospective Customers Deeper Into the ARC Reactor with Segmentation

Are you sending the right people, the right messages, at the right time? Or are you annoying people with irrelevant, unhelpful clutter?

In this episode Chris and Tony reveal:

• How to get started with segmentation.
• What segmentation can do for your business and also your customer experience.
• Why you should go beyond simple email suppression
• How to turn your email segmentation into a choose your own adventure.
• The magic of onboarding and how it could be your secret weapon.

The Show Notes

Clarify your appeal:

1) Who do you help?
2) How do you help?
3) What impact does it have?
4) Why you versus anyone else?
5) What is the next step?

How to Move Prospective Customers Deeper into the ARC Reactor with Segmentation

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Tony Clark: This is The Mainframe. Welcome back to the ARC Reactor series, everyone. Today, we’re talking about moving prospects deeper into the ARC Reactor with segmentation. How are you doing, Chris?

Chris Garrett: I’m doing good. I’m on my second coffee, and it’s good coffee as well, so hopefully I’ll get through this one without any yawning.

Tony Clark: Yeah, we’ve been doing these on Sundays because of some things that are going on in both of our households, and it’s hard to get motivated on Sundays. But this is cool stuff to talk about, so it’s just a matter of finding a nice, quiet time to do it more than getting motivated to talk about it, because this is the kind of stuff that you and I can talk about all day.

How to Get Started with Segmentation

Chris Garrett: Yeah, and it’s the sort of thing we’ve alluded to. I think we’ve mentioned segmentation a couple of times, and some of the ideas from today you may recognize. But we wanted to go deeper into this, because it’s one of the ways that you can take a business and really make it more efficient. What we want to do is do more with less. This is one of the ways that you can compete very efficiently.

Tony Clark: Exactly. One of the benefits of segmentation is that it’s the next best thing to being able to clone your business. If you can Orphan Black your business, you’d be in good shape. One way to do that is to start with a single list and split it out so you’re really targeting or focusing on one area, almost like you’re several individuals or several business models focusing on one individual area, right? That’s the whole concept of segmentation in general.

Chris Garrett: Yeah. It’s what we talked about before with the right message at the right time to the right people, and a one-size-fits-all list isn’t going to be efficient. Now, when you’re starting out, that’s really all you can do. You haven’t got time for much of anything else. So you’ll start with a list, and then you might add an auto-responder sequence. But really, everybody is getting the same messages. They’re getting the same messages in the same order, and it’s not really identifying who they are and what they need.

You do need to start splitting off that messaging just so you don’t annoy people, so it’s highly relevant, and so it’s timely. The most obvious place to start with is to split customers off, because you don’t want to send promotions to people who’ve already purchased.

Tony Clark: Yeah, that’s right. One of the things that you’re trying to do here is identify the different types of people, the different segments, starting out with a single list. This is just a natural progression. As Chris was saying earlier, this is not something you’re going to do right away. This is something that’s a natural progression as you’re building your list, building your community, building up your product. As you’re progressing, you start to identify these different areas that you can segment out, and customers is an obvious first choice.

What Segmentation Can Do for Your Business and Also Your Customer Experience

Chris Garrett: Yeah. Then there are different types of customers. You’ve got different products. You’ve got different upsells, different cross-sells, and different sequences that you might want to do.

First of all, the really easy thing you can do is, as people purchase, as people check out, you add them to a list so that at the very least, you can suppress sales messages to people who either have already purchased or, even more dangerous, have purchased at a higher price. Because if you’re sending a discount, you don’t want to make people feel bad about their purchase. You don’t want buyer’s remorse.

Tony Clark: The great idea about segmenting customers and suppression is this is another element of what we talked about — right message at the right time. This is post-sale talking to the right customer at the right time, so you’re not giving information away or providing information that would confuse or alienate certain customers based on price point and what you’re getting.

A lot of times, you’ll see this type of thing happen where you will offer a discount, and a customer that bought a long time ago wants that discount. How do you handle that? The best way is to suppress the list so you’re not sending out to this wide list of customers, “Hey, guess what? We’re now offering a discount.” That’s a good way to think about how you’re going to send a message to the specific customer at the right time.

Then you may offer, say, a repeat buyer’s discount. So on the other side, you want to maybe reward your customers with a discount for further purchases. That’s something you want to do maybe for specific groups of customers, so customers that bought at a certain price, or customers that bought at a certain time. You’re now going to reward them with additional discounts on other offers or upsells. That’s another way to do it on the other side.

So that you’re focusing on non-customers and giving discounts to draw people in, and then you’re focusing on your existing customers and rewarding them for being a customer for additional purchases.

Chris Garrett: Exactly. We talk about attraction, retention, and conversion. Retaining your customers, we’ve mentioned before, is super important. It’s a lot more efficient to retain an existing customer than to try to attract a new one, and making existing customers super happy is how you create advocates and referrals.

You really do want to reward people who are good customers. You absolutely don’t want to annoy them. Then, that’s another opportunity for segmentation, because you might want to put affiliates and referral partners into separate lists. You can tell them about upcoming promotions, why it’s a good thing to promote to their own audiences. That’s another way of attracting more prospects and customers into your business, and it’s a way of keeping loyalty with those referral partners. Because if you don’t treat them well, they’re going to go on to somebody else.

Tony Clark: Exactly. This is list segmentation, where you’re really focusing on either a single list or a group of lists, and you’re focusing on how that is going to go out, how the message is going to be applied to those different segments. That’s one way. What are some other segmentation options that are available for things other than just your list?

Why You Should Go beyond Simple Email Suppression

Chris Garrett: We’ve talked before about how you have different audiences. You might have different verticals. You might have different products. They’re a good place to segment lists, but it’s also a good place to segment content, because you need to look at the right content for the right people at the right time, as we said before. It’s not just the list, it’s also content.

By using membership models, it allows you to actually segment the content to the end customer in a way that lists can’t necessarily do, because one of the things with lists is somebody might check out with a different email address than the one that they’re subscribed to on the list. For example, in our business, Sean, our CFO, often does a lot of purchasing because he’s the CFO, but he’s not the end user.

One of us will be on a list. We’ll say, “Hey, Sean, this looks really cool.” He’ll go ahead and buy it and send us the user account. You can’t suppress that email address, because the purchaser isn’t the person who was on the list. With a membership software, the login is the same, so you can segment using content, the list. Everything is tied to a login. It’s not based on cookies. It’s not based on the email addresses, even, necessarily.

Then you can go further. We talked about Facebook pixels. You can segment in that manner for the advertising. That’s another different attraction strategy. Really, going deeper, look at it as a whole segmented funnel. That’s where it gets really exciting.

Tony Clark: Exactly, because we’re talking about everything that we’ve spoken about in this series the entire time.

We’re talking about the attraction and splitting that off using content, and adaptive content is one way to do that. We’ll go into detail on that a little bit in a future episode. Then, the retention, as we talked about, when you’re rewarding existing customers or providing offers for upsells, that sort of thing. Then, conversion, when you get to the point of moving them further into the funnel.

That’s where the segmented funnels really become an interesting way to drive people further down into the funnel, but using the split segmented strategy based on not only the customer and the type of person, but where they are in the process — the attraction, the retention, and the conversion. Right?

Chris Garrett: Exactly. As Tony says, we’ve been building up to this moment. Everything comes together, because it’s not just content, not just their demographic, not just the list they’re on, but it’s their behavior. It’s trying to get the point where, what would you do if they were with you in person and you were having a conversation? You would say something like, “Is this a problem you have? Is this something that feels familiar to you?” and they would say ‘yes’ or ‘no.’ That yes or no is kind of like we’re creating these alternate universes.

I don’t know if you ever saw the Community episode where they rolled a dice and then it split off into these six different universes with evil Abed. It was very funny. Each yes or no is a split universe. When you don’t do this, what you end up doing is only tailoring to the people who say yes, but most people are going to say no.

Did they click? Did they not click? Did they sign up for the webinar? Did they not sign up for the webinar? Did they purchase the first product? Are they showing interest in the second product? Did they view this video? Did they spend more than five minutes on this page? All of those things can be added as decision points, and that’s where you can get really deep into it, because you can nurture the action-takers, and you can nurture the unresponsive in a different way with different content, different sequences. You can get even more detailed with it by tweaking your metrics and actually monitoring those metrics. That’s something we should talk about as the most advanced version of this.

How to Turn Your Email Segmentation into a Choose Your Own Adventure

Tony Clark: Right, because really what we’re talking about — and you and I use this term all the time — is the ‘choose your own adventure’ approach to this. When you’re looking at flows, you’re looking at them as “What choices are they making?” So they choose their own adventure, and they’re splitting off.

We’re going on this buyer’s journey, this customer journey, and the choose your own adventure approach is, again, getting that right message at the right time. It’s a little bit different than your typical decision tree. It’s more of a journey. If you look at it that way, it’s easier to understand what it is you’re trying to segment or how you’re trying to segment the different decisions that they’re trying to make. If you’re trying to think of it as a decision tree versus a choose your own adventure, it’s a different mindset, because what they’re trying to do is get further along in the process that you’re providing them.

Each choice they make moves them farther along or moves them farther away from where you need them to be. So you provide these different options that get them back on track for the funnel that you’re trying to get them on, whether it’s to get them on a prospect list or it’s ultimately to get them to buy at that point. You really need to think about it as this journey.

Chris Garrett: Exactly. There’s the overall journey, and then there’s micro-journeys within it. I’m going to use Dungeons and Dragons as a perfect example, because it is a choose your own adventure, but there’s the long-term campaign, and within that, there are adventures. What happens in an individual adventure affects the overall campaign, and how the campaign is structured impacts the adventures.

You look at the overall journey that the customer or prospect is on. That’s their end goal, that’s the thing that they want to get out of all of this. Within that, you could have individual sequences. You could think of those as little mini-adventures. What are the decision points? What is the content? What’s the setup and the hook for that? How does the sequence progress? What is the outcome or the decision at the end of that, and then how does that tie into the next one?

That means that if you have multiple sequences, people can move between them, and it means you never really lose somebody. It means that they’re never lost or ignored or, even worse, distracted and confused, because their decisions allow them to choose their own adventure, but also choose their route through the entire campaign. That’s a really complicated funnel, but you can get there just incrementally by adding decision points, adding content, and incrementally tweaking and optimizing as you go along.

Tony Clark: Exactly, because really what you’re ending up with, even with all these complex decision points, are your best customers and prospects, those most likely to buy or repeat purchase, and then the least responsive — those that either haven’t gotten off the list yet for whatever reason, or maybe they’re just confused and they need more information.

When you end up with those two piles, you have to figure out how to further segment those out so you can give them their right information. Because those non-responsive people may just be confused and not sure what the next step, or they may just be somebody who hasn’t unsubscribed yet, and they really need to get off the list so that you can start to whittle this down to serious buyers only. You need to look at those two options, those two clear distinctions, of where you’re getting people to.

Chris Garrett: Exactly. Let’s drill down into a really advanced method, which is analyzing your best to least responsive prospects, and how that can apply to the long-term growth of your business.

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Chris Garrett: A while ago, Tony actually did a lot of research and development around our onboarding process. Tony, can you explain what onboarding is and why it was so important to our business and probably is important to the listeners?

The Magic of Onboarding and How It Could Be Your Secret Weapon

Tony Clark: Onboarding is what I consider the next phase of conversion. Once somebody’s purchased, a lot of times, people’s conversion strategies stop at that point. I believe in taking it further, and that is providing specific tools, steps, information, and content to not only let people feel comfortable about their purchase, but give them the next steps that they need to take.

Think of it as a new branch of the funnel after purchase. An onboarding process is how to get them further into that so that they’re now not only a customer, but they are a comfortable, successful customer. Really, onboarding is about making your customer feel successful so that they don’t have buyer’s remorse, so that you don’t have to worry about refunds, so that they don’t get confused, and so that they can actually start using your product effectively.

Chris Garrett: It’s really a crucial part of customer retention. If you look around, some do this fantastically well, and some do this terribly well. Seeing as how we’re on a Dungeons and Dragons theme, the Roll20.net onboarding process. Really cool, right? It helps you into the system and actually makes you think you could enjoy it.

Tony Clark: Exactly. They did a really good job of providing, “Here’s the next step, here’s something you might want to explore, and here’s the type of information that you’re going to need to take this further and actually start using the product.”

Chris Garrett: That, I think, was just a simple sequence, but the way we took it a little bit further is our onboarding for Rainmaker is personalized around the actions you would take within Rainmaker. This leads us to some ideas that you can implement into your own business.

For example, consumption. That’s super important. If somebody purchases and they haven’t complained, they haven’t refunded, but also they haven’t actually viewed anything, they haven’t logged in maybe, or they don’t log in for a while, or they don’t spend much time in there, that is potentially a lost sale. That is potentially a sale that you might need to recover, because they’re not consuming. Consumption is super-important. It’s how you get, at the very least, your testimonials and your case studies, right?

Tony Clark: Exactly, because if nobody’s using the product, then they’re probably not going to be successful at it. The more successful somebody is at using your product, the more likely they’re going to talk about it, and they’re going to purchase additional products. And if you’re on a subscription model, you’re going to retain them longer.

Chris Garrett: You need to know, is this an education problem? Is it a problem with your sales materials or that you’re mistargeting? Or is it just that you need to encourage consumption? What we did was we said, “Hey, we noticed you haven’t logged in for a while. Here’s some help for you,” or, “Here’s some tutorials. Here’s the next step. Here’s how to break it down, because we know it could be overwhelming for you. Here’s the simple steps you can take.” That really improved our onboarding process. It reduced the customer service demand. And it made people happier.

How can you, in your own business, think about what it takes for somebody to really get their first successes? All it needs is a few quick wins at the start, and it can transform their experience.

Tony Clark: Right. How do you start? How do you measure that? What are some of the strategies you can use to measure that?

Chris Garrett: In the CRM world and in the world of customer retention, customer service, and customer experience, there is a set of metrics that are called RFM. That’s recency, frequency, and monetary value. A lot of people use this to work out who your most valuable customers are, and it’s very good for that. It’s very good for working out who your 20 percent who are going to make the 80 percent difference to your business are, both at the top and the bottom, so you’d have a quintile.

You’d have 20 percent at the top who are probably worth 80 percent of your business, and you need to lavish attention. So you need to segment those people. At the bottom are going to be the people who might be 80 percent of your cost. At an extreme, 20 percent of your business is going to be taken up tailoring and servicing some people who are very expensive or are not as responsive or not as good customers. When I say ‘good customer,’ that’s a whole spectrum of things. We’re not saying they’re bad people. We’re just saying for your business, they might not be the best fit.

RFM is a great way of doing that. It’s recency, which is how long ago did they take an action? Frequency — how often do they take an action? Monetary value is an obvious one: how much does that add up to?

In StudioPress, we would say, “Did they just buy Genesis? Did they just buy Genesis recently? How often do they buy things from us, and how much does that add up to?” Again, we’re not saying that people are bad customers if they do one thing or another. We’re just trying to identify and segment them.

Outside of transactions, you can say, “When was the last time they logged in? How often do they log in? How long do they log in for?” It’s another way of looking at it in terms of behavior to see, are they engaged, or are they disengaged? Really, if they’re disengaged, you do need to recover them. Remind them to log in again, because they could be about to cancel, or worse, defect.

Tony Clark: Right. This is where onboarding comes a long way to track that thing, but you could also do this in the form of prospects to identify your most likely prospects that are going to buy based on activity. That kind of activity could be the content they’ve consumed, what lists they’re on, how responsive they are with click-throughs on emails, or other types of tracking that you can do.

You do this as a way of tracking customers, but you can also identify those prospects that are closest to the point, that are ready to buy. By tracking those, you’re making sure that you’re getting the right message at the right time. This goes back to that adaptive content approach that we’ve talked about in sum, and we’ll talk about in more detail as we go on. Because we love this approach of adapting content to prospects to allow them to feel like they have been nurtured enough that they’re ready to make that next step, to make that purchase, versus somebody who maybe is not a right fit, and they’re just staying on the list and reading the content, but they’re never going to make a purchase.

That goes back to that 80/20 as well, because that 20 percent of prospects are going to ultimately be the ones who become better customers and further their goals. They’re the serious buyer.

You’re always going to run into people who like the idea or the concept of what it is that you’re offering. However, they’re never going to take the action necessary to further that along. Maybe not in your own business, so they’re not going to actually purchase. But if they purchase, they might not even actually utilize the product that you’ve given them or that you’ve sold to them to further their goals.

You need to think about it that way as a way of identifying these prospects who are serious about moving along the process to buy, and then, once they become customers, serious about staying on, utilizing the product, and especially if you’re using a subscription model, that you’re going to retain them by making sure that they’re feeling successful and using your product effectively.

Chris Garrett: Exactly. In a way, what we’re doing is, again, trying to replicate what a human being would do. A human salesperson would try to qualify the prospect, and they would try to work out, “Are they a fit at all? Are they disqualified as a prospect? Then, how urgent is the need? How warm is this prospect? How eager are they? How enthusiastic are they?” and give them appropriate cues, messages, content, and answers for their place within the system.

You’re automating your qualification process, but you’re also giving them a better customer experience. You’re giving them a lot more control over what they see and how they consume it and the pace at which they consume it.

Tony Clark: Exactly. These are different ways to segment. What are the main takeaways of this, Chris?

Chris Garrett: The main takeaway is to not overwhelm yourself with what is possible. Start with where you are at, and try to get more sophisticated as your business needs. You don’t have to go whole hog, but start with one list, and then at the very least, you don’t want to be talking to customers the same way as you’re talking to prospects.

Next, you need to segment your funnels. We talked about that in previous episodes. You need the right message at the right time to the right people. That’s giving people the topics they’re interested in and the offers at the right time. You can do that by segmenting your funnels.

If you want to get really advanced, then you need to look at who your best prospects are, who your most likely best customers are, and give them the ultimate best experience and trigger — using marketing automation — based on the actions they take, the decisions they make, and how they’re progressing as a customer within your system.

If you do nothing else, look at your onboarding process. After somebody purchases, what do you do? How can you make that better?

Tony Clark: Yeah. In our next episode, we’ll actually look at that onboarding in a little bit more detail and how you can use that as an extension of your conversion funnel. Then, in an upcoming episode, we’re going to talk about segmenting more through adaptive content model and how we can do that. Until then, thanks everyone.

Chris Garrett: Please do give us a rating on iTunes, and we’ll see you next time.