Do Email & SMS Create Incremental Profit with Josh Tay

In this episode, Nathan and Josh discuss the incremental revenue available through email and SMS marketing. They emphasise that while email and SMS are important communication channels, the true drivers of retention and revenue are merchandising and operations. They explore the concept of purchase intent and how it affects the effectiveness of email and SMS campaigns. They also delve into the importance of understanding the customer journey, leveraging reviews mining for messaging, and creating novelty and exclusivity through merchandising. They highlight the need for a comprehensive retention strategy that goes beyond email and SMS marketing. In this conversation, Josh Tay discusses the importance of novelty and exclusivity in email marketing to drive repeat purchases. He emphasizes the need for brands to create variations and new products to keep customers engaged and interested. Josh also highlights the significance of product consumption and value maximization in retaining customers. He explains the role of segmentation in email flows and the importance of tracking metrics and forecasting for effective email marketing strategies. The conversation concludes with a discussion on the future of email agencies in the face of AI.

Takeaways

- Email and SMS marketing are important communication channels, but the true drivers of retention and revenue are merchandising and operations.
- Understanding purchase intent is crucial for effective email and SMS campaigns.
- Reviews mining can provide valuable insights for messaging and product development.
- Creating novelty and exclusivity through merchandising can drive customer repurchases.
- A comprehensive retention strategy goes beyond email and SMS marketing and involves understanding the customer journey and creating switching barriers. Novelty and exclusivity are crucial in email marketing to maintain customer interest and drive repeat purchases.
- Creating variations and new products helps to keep customers engaged and prevents them from getting bored.
- Product consumption and value maximization are key to retaining customers and creating true retention.
- Segmentation in email flows allows for more targeted and effective communication with different customer segments.
- Tracking metrics and forecasting are essential for understanding the effectiveness of email marketing strategies and setting goals.
- The future of email agencies lies in their ability to provide strategic insights and understand the wider business context, as AI may automate certain aspects of email marketing.

Chapters

00:00 Introduction and Background
02:04 The Role of Merchandising and Operations in Retention and Revenue
06:19 Understanding Purchase Intent for Effective Email and SMS Campaigns
13:50 Leveraging Reviews Mining for Messaging and Product Development
18:14 Creating Novelty and Exclusivity through Merchandising
23:34 Going Beyond Email and SMS: A Comprehensive Retention Strategy
32:38 Driving Repeat Purchases with Novelty and Exclusivity
37:27 The Role of Product Consumption in Retention
46:27 Segmentation and Targeted Communication in Email Flows
51:02 Tracking Metrics and Forecasting for Effective Email Marketing
55:09 The Future of Email Agencies in the Age of AI

Transcript

0:03

Welcome back to the podcast. In this episode, I'm joined with Josh Tate, General Manager of No Limit Email. No Limit Email has been a long time partner of BlueSense Digital. I think I've known Josh for a year, a year and a half ago now. Well, me and Josh hopped on our first call. I'm pretty sure I had nothing in the background. Josh had a white background and now we've come a long way since then. Aye. spent quite a bit of time on my damn background because I realized how ugly it was. Previously I also had a turquoise wall. It's still here actually, it's on the other side of the room. This turquoise wall and clients told me that it was hard to just keep their focus on my face because the wall was so distracting and the wall was ugly. So I decided I gotta do something about Yeah, it's come a long way. I actually reached out to Josh last week and I asked the question that I've sort of started pushing in my own content, but I wanted someone to steel man the other side of it because I end up building these really strong opinions and I negatively spiral myself into them without having anyone push back What that is, I dropped it in last week's episode, I think it was point number six, which was that there's not as much incrementality within SMS and email as most people think, and that it more so lies within the merchandising and operations of the business. And I've started to build a stronger and stronger opinion about And I wanted some pushback. So I reached out to Josh and I said push back, I don't want to go down this rabbit hole. I don't want this opinion. And then we thought, let's just record it. And let's let's go back and forth and go a bit deeper on how much incremental revenue is available through going from nothing to sending emails and then going from sending emails and SMS to having an incredibly strong strategy curated around that. And then how design plays into that our complex flows versus simple flows. plays into that. Maybe we can even talk about like how much attributed revenue as a percentage you should have in Clavio because I know that's a big buzzword and selling point of a lot of agencies is they say, hey, we can get 40 % of attributed revenue to Clavio. And like, what does that even mean? So yeah, I'm gonna I'm gonna pass over to you to start off with how much incremental revenue is available in emails? And is there any validity to my statement and that it also lies in operations and merchandising. You are actually very much right. And I hate to say it because we are an email SMS agency, We reach retention. And email SMS is one of the main drivers of all of our efforts. In terms of incremental revenue, obviously there is. There is an impact. And we do obviously see it. That's why we continue to do it. But if you look at email and SMS as a channel, like as like a sales channel, then no, that's not going to work because it's literally just a communication channel and there's no way to amplify it. So like it's different from ads. With ads, you can put a budget behind it and you can amplify that to a mass audience. a couple of things that we've got to talk about over here, right, which is the first thing I want to talk about is intent and purchase intent would be one of the things. If you follow me on LinkedIn, you know that I have this stance on SMS. So in a lot of pop -ups, there are people who collect email and they collect SMS in exchange for a discount. This is very standard e -commerce practice. So when it comes to SMS, typically the people who do opt into SMS already have a slightly higher purchase intent. Because SMS is a very personal... like a phone number, giving a phone number is quite a personal touch point, right? And if, let's say, you have an option to skip and you have an option to close and whatever, right? And one already knows by now that if you put your email in and you close in the next step, you're still going to get the code. So the people who end up opting into SMS already have a higher chance of purchasing anyway. And that's what we kind of see in all our tests. So it's not that SMS as a channel would be stronger than email. There are a lot of platforms, a lot of software that would say so. Collect SMS because SMS subscribers are lot more valuable than everyone else. I mean, it is technically true. They are more valuable, but it's not because you are sending SMS. That's why the lifetime value of those customers increase. It's because they already have higher purchase intent and it would have high inherent value. That's why they subscribe to SMS. It's exact same conversation as people who subscribe to a loyalty program. People who subscribe and register for a loyalty program, it's not because of the loyalty program. That's why their LTV increases. It's a correlation versus causation thing. So people who subscribe to SMS typically already have that. So that's why you see a much higher LTV. So when they come back to the same conversation on incremental increase, Obviously you're going to see that when it's a new playbook. With SMS, without SMS, you're going to see a huge lift. You're going to see a huge lift with that, but there's not much that you can constantly do to keep on increasing that. So if you're going to do a holdout test, then you will see, okay, yeah, there is a difference, but it's not going to be as much as some of the email marketers claim. And that's a very unfortunate and very sad fact. So that's why email and alone will not be the main retention playbook. On its own, it's not sufficient. Even if you add direct mail, that on its own is not going to be sufficient. Just creating basic flows, welcome flow, replenishment flow, abandonment flows, these are all honestly not the hardest to create. The hard part about retention, I'm steering away from the email versus SMS thing. But the hard part of retention is understanding the entire business and how you are actually supposed to retain customers and not use email, not just like have email marketing and SMS marketing. And this is something that I think is almost absent in the entire market right now. I don't see any smart strategies out there. Unfortunately, I hate to say it, but I don't see many. There are a couple, like a handful of them, but they are the business owners. And then when they pass it on to the teams, nothing is done. It becomes like cookie cutter. It's basic. There's not much that's being implemented. So in terms of improving the retention efforts on a constant basis, we don't really see that. So that's what we try to do differently. And when we think about retention, we do things on a much larger base, on a larger scale, right? And email SMS Direct Mail would simply be a mode of delivery for communication. That's all. So with retention, you obviously have subscription programs. You have membership programs. So subscription and membership programs are slightly different, right? Subscription is on an ongoing basis. How are you going to get... When people subscribe to a program, they get things on a monthly basis, and they also get built on a monthly basis or bi -weekly, or twice a month, whatever, right? And they have paid memberships. Paid memberships will be the exclusive membership... like an exclusive bar or club kind of thing. Pay a fixed amount at the beginning and you get access to certain other things. So one of things that we like to do the most would be to create premium products or exclusive products that are only available to these specific customers. And what we see is that ironically, this is something that we didn't know ourselves, but people are more willing to pay for exclusive products than get on a subscription program. So we said, initially I will follow, and our thought process was, okay, we get people through the door, get them a one -time purchase, we upsell them with a subscription, and then upsell them with membership right at the end. But it turns out that people would, since it's easier, people are happy to pay that premium, let's say 59 bucks a year, on the first purchase to get access to the products, we just push that down. So that becomes part of the welcome flow. There's students' memberships and then we've got auto ship programs. Auto ship would be, let's say they have three months' supply and then you ship it out as it went. And then there's loyalty programs. Loyalty programs, it's not just like point systems and stuff like that. Obviously, yeah, there are point systems. Point systems on its own is a bit lame. No one really subscribes to a program or joins a loyalty program because of some points. And if you are giving an extra 5 people are just going to join the loyalty program because of the 5%, it's not because of anything else. So you've got to structure your loyalty program in way that is enticing, create an ecosystem with that. So one of the main ways that we do loyalty programs, what we like to do is partnerships. Collaboration with other brands, and you get exclusive, as a member, you get exclusive content. When you see people's pop, they say, hey, we'll sign up for exclusive content. It's like, don't lie to me. You're going to get the exact same stuff as everyone else. But in this case for members, loyalty program members, we do actually encourage our clients to sign to create brand partnerships with other brands. So you find complementary products within the ecosystem and it creates a lifestyle kind of thing. So for example, if let's say you were in skincare, for example, right? And then your mainstay product is serums. Let's say you're an anti -aging serum company. What would be a complementary product? It would be supplements. Supplements would be something that people normally take. If they care about anti -aging, they will also be typically taking anti -aging supplements in some way. It might be for the skin, it might not be for the skin, but it could be that they have the same core problem for anti -aging. So it could be NMN. NMN would be something that people use for NAD +, for brain development and to prevent the brain degeneration, stuff like that. It could also be collagen supplements. It could be things for back pains even. As you get older, sometimes your body doesn't respond to the same stuff and then you want to preserve your bone density. You want to do this, you want to do that. All these are the same core problems that people have and you should be cross -selling some of these things. And it's very simple and people don't think about it because they don't want to push other people's brands. They only want to push their own agenda. But it's counterintuitive because people are going to be shopping anyway. And your customers are... Let's face it, no one is really that loyal to you. Unless you are Apple, no one is really that big of a hardcore fan. If they're looking at you, they're likely also looking at a competitor. No matter how much they like your product. Hike your price 50%, they're not going to be a customer anymore. that's just going to move over to someone else. So if we are actually living in a purely commoditized world, we need to understand and create a moat for ourselves. And the only way to create a moat for ourselves is one, create a financial incentive for customers or two, build a really bloody strong brand. But building a really strong brand also takes a bloody long time. So creating a financial incentive that makes it easy for customers to buy, that would be the first place I would go to. So you can easily drop ship products with this. So orders can even come to you, you can co -market for your partners. And this is something that I talked about recently in product seeding for new product launches. How I had like a full SK study, like I think it was like, I couldn't fit it in the post. On how you actually gonna use this and partner with like two, three different brands and create some partnership document so that you can each launch each other's programs because you already have a warm audience in all those other pools. Why spend that extra money on ads? Not shitting on ads, but why spend that extra money on ads? Acquire those customers when you can acquire them from partner brands. There is literally no cannibalization whatsoever. It's the exact same customer pool. So if people are interested in that, this is purely a value ad. then push all these people to look alike audience and get whole traffic, get new people like that. That makes a lot more sense. And now you have momentum rather than getting things from scratch. Starting things from scratch doesn't make sense. So again, this comes to the, I come back again to email and SMS. This is far different from email and SMS conversation, right? But still, you can still use email and SMS as a communication tool to push these things out. But understanding and the broad strategy behind this and how you actually going to retain customers, how you're going to increase the lifetime value, how you're going to work with the ad agency to make things easier for yourself, make things easier for them, how you're going to increase the value proposition for the brand. These are all part of a retention conversation, not just email and SMS. Yeah, I think that was a good answer. So that's what I've been looping in my head for a while as well, which is that because of the lack of incremental improvement available from, let's say in -house emails to going with a high quality email agency, because there isn't that much incremental lift. that there's a lot of value in an agency service or essentially what you guys are doing, which is coming in and instead consulting and potentially even executing on broader retention strategies, which is because when we say like we synonymize retention with email and SMS, but it's, as you said, it's a, it's a messaging platform that facilitates retention, but the retention actually comes from customers actually wanting to come back and buying it. And so it's what is the merchandising and what are the offers in place? that is actually facilitating customers coming back and buying because that's the issue that we should be solving for not simply the distribution channel. Yeah, yeah. I like that you mentioned merchandising and stuff like that. Because one of the main... If you look at yourself as a customer, No data. Put data aside. If you look at yourself as a customer, what makes you come back to the product? What makes you come back to repurchase? It's because the product is good. Purely because the product is good. If the product sucks, you're not going come back. Right? If the product was half -baked, you're not going come back either. You're going to find an alternative. Unless you haven't found an alternative, then you'll buy this because this is the best that you know so far. so that comes back to merchandising and another concept would be quality of audience. The better the quality of audience, the better they retain themselves. Because if you can find someone who really fits the ICP, they're going to repurchase anyway and your emails just serve as a prompt. I mean, yes, the emails will work, but it's also a prompt. And that's why, as I said, not that the email increases the lifetime value. It's that you need to have relevant content first. You must really understand that customer evidence. And that's why we do super, super in -depth reviews mining. do customer. So reviews mining is what we do. We look at the client's page, so a brand's page, brand .com. We look through all the reviews. for every single product. So it could be like 2 ,000, 3 ,000, 4 ,000 reviews. And then we look at your marketplace reviews, look at your competitors brand .com reviews, look at your competitors marketplace reviews, we look at alternatives reviews. Alternatives, let's say you sell pre -workout or whatever. What would an alternative for pre -workout? Coffee. literally just coffee. So coffee is an alternative. What else? Five hour energy, Red Bull, Monster. All these are alternative as well, but no one thinks about this. But these are all things that you have to be considering because they come into a jobs be done framework. It's the exact same job to be done. So understanding the car purchase drivers, understanding the deal breakers, understanding the hidden motivations, what other people in their lives are talking about, how other people influence their decision, what they are seeing, what they are hearing, what they are... All these things come into play and that's how we use reviews mining. We put all these into a GPT extension and it buckets them into different things. So we bucket them. We now know what the call message should be on different emails, on different SMSes. We know what should be highlighted at the top on product pages. We know what angles we can try. that's how we advise our ad partners. They're, hey, have you tried this angle? Have you tried this customer segment? Because people are looking for these things. But if you don't do that, then you literally are just shooting blind. So back to merchandising. This is on quality of audience, right? The better you can frame these things, the better your conversion rate on your site. And people go through your entire funnel and these are already high intent people who are likely to purchase. And if they're likely to purchase, they already fit everything to a tee because everything has resonated from the ad to the product page to the workflow. Everything's resonating and it's much higher chance that they will repurchase anyway. So then now your job is to make sure that you get the timing right. It's the timing of repurchase right. and then what are you gonna do to increase your switching barrier? So a switching barrier is what differentiates you versus anything else? So a loyalty program on its own is a switching barrier, right? Because people feel like they have something to lose because they've accumulated like 10,000 points or whatever, right? And they feel, okay, if I wanted to switch over to new brand, I forego X amount of things. this is what you have to bake into your loyalty program. If it's just purely points, you're not going to stand much. But if let's say you have a good program where you have access to all the other problems that they have, all their products, and that's why I talk about co -marketing, if you have access to all other brands at a discount, and it's something that they will buy anyway, there's no reason why they should go to a competitor with nothing else. Because here, they have everything to gain. So they stand to lose by not purchasing from you. Compare that to anywhere else. So this is just one of the main tactics. You can have many other things. You can have a lot of education. can have physical meetups where you have freebies, blah, blah, blah, blah. So these are some of those things. And now we have merchandising. Merchandising, if you were to look at your campaigns and you were to send out email campaigns, SMS campaigns, you will realize about 80 to 85 % of people who purchase our existing customers. So previously we wanted to do, we split our campaigns between prospect campaigns as well as customer campaigns because we thought, okay, if we are tracking our non -customer segment and we want to reduce our non -customer segment, which means that in your entire list, how much of these people are actually paying customers and we want to reduce the number of people who are non -paying customers. So if we want to reduce this, it would make sense for us to monetize these people by setting specific messaging to prospects. So that's what we tried to do for about two months for two or three different brands. We tried that and then we sent the exact same campaigns out first. We split our campaigns out into a pure 180 -day engaged and then we split it out to 180-day prospects and 180 -day customers. And what we ended up seeing was that 85 % of people who were buying were existing customers. when we decide to switch our messaging up to prospect campaigns, specific prospect like, no, seems like you haven't bought, like, hey, buyer from a skeptic, right? There's this type of message, right? We didn't see that much of a difference. Obviously, there was an increase in conversion rate. There was an increase in about 13%, 14 % conversion rate compared to a general 180 -day engaged campaign. But the number of and the volume of transactions you get don't outweigh the amount of resources, amount of thinking that you put into creating all that content. Because don't forget, if you are sending 20 campaigns a month to your entire list, it also means that if you are splitting it based on prospect versus customer, you are now sending 40 campaigns. 40 campaigns is an extra load on your internal team or 40 campaigns, an extra 20 campaigns. is something that you'd be paying an external agency. Can they handle this load, one. And should you even be paying people to handle this load? Because there are lot better things that you can do with a much bigger impact rather than setting feet to prospects. And I challenge everyone, I don't want you to just believe whatever I say. I want you to test it for yourself and see that impact. It's not very hard, just create two different segments, right? So everyone who's watching it, just wanted your homework for this, will be just split your campaigns on the two, and see the exact same thing that I'm saying, so that you know and you can believe for yourself, this is the exact same behavior for your brand. So if you do see that, customers, if most people come back as customers, it means that if your campaigns are for people who are already convinced of your product, what makes them repurchase again? New products. Asking them to repurchase when they are not going to repurchase does not make any sense. It's like asking a child to drink water when they are not thirsty. No child is going to want to drink water. They just want to continue playing in the playground. Right? So it's exact same thing with customers. If they don't want to purchase, they're not going to purchase. No matter how many emails you send, how many SMS, no matter how many retimely ads you send, they are not going to repurchase. So what gets people to come back is novelty. And that's what we see very well with accessory brands and with fashion brands. And when I say fashion brands, I don't just mean like clothing fashion. If you sell water bottles, you are in fashion. Because people don't really buy water bottles because of the function. Like, I can drink water from this bottle. I will buy it. I'm not going to spend 50 bucks, 60 bucks on this. Just because you have thermal insulator and double wall. blah blah blah with a sippy straw. So what? I'll just get a straw from anywhere that cost me like two cents, put that straw in there, I serve the exact same function. But no, people are going to buy it because it looks good. And you'll see the same thing, like they see women with an entire cabinet full of bottles. Different colors for different outfits that they have. It blows my mind. But it's true. there are people who repurchase bottles not because the bottle is spoiled but because there's new design and that's how important merchandising is because people come back because something's interesting same thing for how you see with that rich wallet I used to have rich wallet I bought rich when I was I think it was like six, seven years ago when they were still on Kickstarter I like to flex that like I'm a first mover you know like I'm so cool ha ha ha ha ha ha ha Yeah, but I bought that and then I bought it when it was the first design. So it was pretty ugly. And then when they came out with newer designs, they came out with like graphite and like the carbon stuff. And then they came out with this ninja black and like gloss and this and that. And now they have like 50 different designs and stuff like that. I was like, shit, I got to get a new one. But I have the quality is so good. I have no reason to buy another one. I don't have a single scratch on it. I don't have a single scratch. The elastic band is tight as hell. The metal has not peeled nothing. It's so good. But I just want to be cool. So I'm buying another one. And I spent an extra 110 bucks. Did I have to? No, not at all. But I got it because it was cool. Even if, like, you don't even have to add it to your mainstay collection. It can literally just be a limited time, a limited run drop that you have. you have... Same thing, I think Barbie does this quite well. Barbie, like Mattel. So if you don't know, Barbie has different collections. They have like the pink collection, which is what is available to everybody. Like the mass market, it's in the pink box. and they also have a white collection or something and a silver collection and a black collection. So all of these have limited runs. Some of them have a production run of only like a few hundred pieces in the entire world. Some of them have a few thousand pieces. Some of them are just like unlimited. Just keep on producing. And these things drive urgency and drive scarcity like mad. And people buy... And these are collector items, Whether people play with it or not is not their problem. They don't really care. So the same thing for your product. Does it really matter if people use a product that much? In the case of an accessory, or in the case of a fashion item, does it really matter if people don't use it? The fact of the matter is they've already used it once, and they like it enough, and they want to repurchase again. Let them. create a novelty factor because people want to come back for something interesting. And this is why you see like Disney Collabs and Marvel Collabs. These things do so well because people want all these cool stuff that's only available one time, two times. Yesterday, I literally just dropped like 10K on a new watch and it was for, it's an Omega no time to die, like a Seamaster. So Omega Seamaster has a collab with 007 and one of the latest shows, they have one with Spectre. Spectre was the, I think it was a couple of years, 2019, they had No Time to Die, which was 2021. And they were stopping production next month. And I was like, shit, I gotta get it now. So I went into Omega and I bought I didn't have to. I didn't have to buy a watch. I already have a watch. If you have an Apple watch, an Apple watch serves just fine. But like knowing that I've got a limited edition thing and knowing that it looks cool, right? I could always get a normal Omega Seamaster, but no, I wanted a cool one because it's a cool story to tell. It's something that when people see, they'll be just like, shit, that is cool. Right? Same thing, even if it's a bottle and you were wearing a pink outfit and you carry a pink bottle, people will be like, girl. You look cute, right? That is something that you want to go for. You're not going to carry like a, I don't know, a gold bottle, right? With pink. Like, this is not going to look nice. Or you're going to have like this super colorful thing when you are wearing all black. Like, it's not cool. So, merchandising, super, super important. And this is something that if you look at your sales cycles in Shopify, you'll see that you typically only have two or three different points. but you see natural sales spikes, probably two. One, for most brands, Black Friday, another one would likely be if you are gifting or whatever you see, like graduation or Mother's Day or Father's Day, or if let's say you are in the auto space from Memorial Day, Independence Day, you see a spike and then BFCM. So you only see about two, typically two or free at most if you're good. This is natural spikes that people would buy regardless. And then your job would be to find points where you see a dip. Because when you have a spike, also have a dip, right? And then you have those dry seasons. So how can you create other spikes and other moments? I think I learned this concept from a common thread collective from Tail Holiday called the Four Peaks Theory. And it actually absolutely works and merchandising should be a part, should play a key part in understanding this and creating other peaks so that you can boost and increase your revenue during the slow periods. Because what most people defect to, and I mean logically it makes sense, like if you have a sale, if have a promotion, people will come back and yeah, it works. It works until it doesn't. Every single time you run a promotion and if you run it too close, you'll see diminishing returns every single time. And this is something that I just thought for a new client that we had. They had one for Mother's Day and then they had one for, they had a summer sale and then the Mother's Day sale and then they had a warehouse closing sale and then they had a Fourth of July sale and then they had an Amazon Prime sale. and then they're waiting for another Labor Day sale. And it's all the exact same promo mechanics. even if it changes, it's very marginal. And what we ended up seeing was a reduced in revenue per recipient by about 10 to 15 % each time a campaign was run. So if you are doing that, it means that your customers are getting less and less value. What's the point of doing this? Yes, you might satisfy your revenue requirement for a short period of time. for this campaign only, but it's going to cannibalize into your next. Because all they are doing right now with every single promotion you run, it's not increasing lifetime value at all. It's only front loading the value. So that means for every promotion you run, if let's say a customer has a lifetime value and expectancy of 200 bucks, by running promotions like this, you are bringing that 200 bucks earlier on. So if let's say they were to buy it within one year, You are front -loading that into, let's say, four months, right? And it means that you've lost them for the next eight months. They're not going to buy it anyway. Because every customer already has a death date. can say that, right? They're not going to purchase after some time. So by front -loading it, yes, you get that. You reach the objective, but you also erode your brand equity or whatever you've built off it. You've also reduced the need for them to buy another item because if your collection is just this, people are just going to get tired of this. They're going to see it and they're going be like, okay, whatever. It's another email from XXX Company. And they also know that during this time, if you keep on doing a promotion, there is no more urgency for you to buy again. So they buy whenever they want to buy. You're not going to see the same amount of spike that you would like to. So if you have investors that you need to satisfy, sure, you might see a revenue increase, but after a it will get less and less and less and said your investors are not going to be happy and then you just want to do more and more more discounts against the world. So you can have promotional variations with bundles and whatnot, but again, if you have the same things, people are going to get bored. So novelty is going to be something that comes into play. But with novelty and with new products that you create also means that you have new risk. You got new cash that you got to pump into R &D, whatever, right? So you just create variations of your Create some exclusivity there or create a collab with a partner with another brand. When you have a limited time run, is increased visibility for yourself because people are going to talk about it because it's cool. You can run a new campaign to cold orders because of that. You've got a proper landing page for this and everything. And everyone genuinely knows that this is real scarcity. People will buy. And you see that lift. Yeah, I think there was so much value in the last 15 minutes of what you said, I think most of it's just going to go over people's heads and won't get applied. But I definitely recommend people go back 15 minutes and rewatch that. One thing you said, and you really like touched on exactly my thought process over the last three months in this journey that I've gone on, trying to learn retention, and trying to see what is required on the retention strategy, which is the incremental revenue lift from segmenting or going to an extra level. So when you were saying segmenting campaigns from prospecting versus customers, it doubles the workload, it's going to double the design required, it's going to double the copywriters, it's going to double the technical people to actually build out those campaigns and segment. And then for what incremental lift. And in most instances, it's$800 and you're like, well, with all of those, all of that manpower that went into that level of segmentation, it's like, was it worth it? Was it worth having a 30 split flow? Like, is there incrementality there? Probably maybe one, 2%. But are we going to realize that across the cost that it actually costs to do so anytime soon? In most instances, I'd argue like probably not. And so I think what actually got me thinking about so much recently was on Meta. Meta rolled out Advantage Plus like six months ago. And one new feature in Advantage Plus was, and I'm not sure how dialed into paid ads you are at the moment, but one feature there was you can put an existing customer budget cap. And so you can specify how much of the budget do we want to go to existing customers. And I think that forced a lot of paid media and acquisition agencies as well as actually come operators to start to think about that question, which is a question they've never thought about before, which is, actually, yeah, how much budget should we be putting towards existing customers? And is there a material uplift from having budget allocated there? And so people started throwing out no one knew everyone was like, maybe 10%, or maybe five, maybe 20. We'll just set it at what we think is relevant. And then I sat there and sort of just went, why anything? Why are we putting any paid spend? towards existing customers when there's no novelty in any of the ads that we're serving to the existing customer database. Like, why are these people going to repeat buy except if you're a consumable and you're somehow having an additional touch point that's reminding them to come back? But aren't we doing that through better communication channels like email and SMS anyway? And so our approach pretty quickly just turned to 0 % never retarget existing customers across any paid because I refuse to believe that there's much profitable incrementality there. And I haven't really seen much data to support it either. Do you have an opinion at all on because obviously that still ties into retention strategy is you saying how much should you put into paid? Yeah, actually most of your returning traffic, if you look and if you tag all your customers, you will see that most of your returning traffic actually comes from email and SMS. People will receive the emails and people will click on it, people will open it. And that's why you should still, again, I'm not saying that emails and SMS don't work, they absolutely work. And you direct traffic back into the site and you will see that. If you are tracking it right and you're looking at GA4 and stuff like that, you will see that most of returning traffic people actually come from campaigns, if people come from flows. Maybe not so much flows. Flows would be for first -time customers, one -time customers at least. Returning customers normally come from campaigns. So you should still be sending out campaigns and you should still be sending out a decently high volume of campaigns. So to answer your question again on incrementality, I think you see a higher uplift. when your segment flows, actually. again, if you were to look at your list and the proportion of that, so as I mentioned, most of your list would be people with 70 % of people, 75 % of people would be non-customers, right? So which means 25 % of people would be paying customers. Of these paying customers, maybe about 70 % of them are one -time customers, and they're never gonna repurchase again. And the remaining would be repeat customers. So your job as an operator, as a marketer or whatever, is one, to reduce the number of people who are not paying, and converting people from order zero to order one. And the second biggest point would be converting people from order one to order two. Because once they are buying two or more items, they are probably going to buy again and again and again. they are probably at that point very convinced of the brand's value and the product's value in the life as well. And they are probably also huge proponents of yourself. So getting people to order one and order two would be the first step. The other one, getting people and monetizing these people, this would be probably a slightly harder part because if people are not gonna purchase, they're not gonna purchase anyway. And we've already collected zero -party data. If you want to, you can also test it. People who would buy would normally buy within the first 24 hours, typically. People who opt into a form, would purchase within the first 24 hours. And we collect zero -party data, and we match that with our first -party data to understand this. So people are going to buy. They're going to buy within the first 24 hours. And this is about 70 % of people, 70 % to 75%. and the remaining 20 % are people who buy within the next seven days. So means there is zero need for you to be pushing prospect campaigns any more than that because then you are spending all that resource on 10 % of people who are not buyers. For what? Right? It's not that much of a priority right now. So I don't know where I was going with that. non -customers, right? So then the next one will be moving... first time customers into repeat customers. So if you are first time customer, you probably still haven't gotten used to it yet, used to the product yet, and you need the product to be sticky in your life. The more a customer uses the product, the more they see the value in the product. The more value they see the product, the more often they use it. The more often they use it, the more embedded it becomes in their lives, the harder it is to get the product out. And that's how you create true retention. And so true retention is created from onboarding a product and from product consumption, not from pushing a product. It's a slightly different concept and it's a mental shift, right? From getting sales to making sure a customer is using the product, which is why, know, there was a brand that we collabed with before that, and we decided they wanted to do a 30-day challenge because that was what we found. to be the way to get people to consume that product. I think that worked quite well. Before that, we were getting people on the subscription program. We'd tell them, hey, keep eating this, keep eating this. the subscription program is about to end. Get another one, because you will see weight loss and whatever. OK, cool. But will people actually repurchase it if didn't use the product enough? Probably not. Getting people from order one to order two actually starts with product consumption and making sure that one, they are excited about the product arriving, even before the product arrives. They haven't used the product yet. Make sure that they're excited about the product arriving. Second one, making sure that time to first value is as short as possible. So that means the time to which they start seeing the benefits for themselves. The first signs of improvement in their life, the faster this the higher the chance that they will use the product on a constant basis. Then the second one, and the third one, sorry, would be how do we get a person to get in the groove of using this product every single day? Or, yeah, every single day. So if it's supplements, how to get them taking it every morning consistently? If it's twice a day, in the morning and at night, right? How do we reduce the friction points? How do we create a schedule for them? How do we integrate this into life? Right, this is point number three. Point number How do we get them to see extra value from this product beyond whatever the product is normally known for? So if you're very commonly, products don't only have one benefit. If your product only has one benefit, it kind of sucks probably. If let's say you have a collagen supplement, it's good for your hair, it's good for your skin, it might be also good for your gut, it might be good for longevity, it might be good for your bones, might be good for blah, blah, blah, right? So if all these things, but most people might come in, based on, let's say, your reviews mining, you realize, most people come in because they want better skin, for example, right? Better skin is the main priority, but it also comes along with these things. So how are you going to help your customer understand and realize all this extra value? This is called value maximization. So value maximization comes with tracking. So how do you get a customer to track their progress and see the changes in their lives? especially for skincare and things like that, you absolutely want people to be taking before and after pictures because one, it's UGC for yourself and two, because people cannot tell when they look at themselves in mirror every single day. They can't tell the difference. They will need to see a friend after three months and the friend says, hey, your skin is glowing. But how often do people just say that? So in order for them to see this on a constant basis and see it for themselves and believe it, they need to do it for themselves. So they take a before picture and take an after picture and then they can compare after, let's say, two months. If you can guarantee that you have a lot of customers who see effects within two months, then you say, okay, cool, right? This extra stuff, right? This means, it's worked. By this time, you have been fully convinced. Why don't you buy another one? Right? It makes the most sense. Then last one will be, how do you value acceleration? Which is, how do you get value faster? it means that you're combining products with other products. So if let's say you have back to the collagen supplements and for your skin, let's say if you have always been doing this alone and taking just this supplement, imagine how much more improvement you see and how much faster improvement you see if you were also taking it with whatever else. Like if you were putting this serum, for example, on your face. or if you were taking it with magnesium, because magnesium improves your blood flow and if you have increased blood circulation or the zinc or whatever, it improves sleep. Typically, you also see an increase in radiance. And that also means that nutrients is getting shut out to your cells and your receptors a lot more efficiently. And because of that, you'll see better effects. This is value acceleration because now you are stacking products and this is also a chance for you to cross -cell stuff. if you cross -cell stuff, it also means that you increasing your lifetime value, which also means that the faster you can do this and compress this time, it means that you've got more cash available to yourself, more free cash flow that you can pump back into your ads, and also means that you can afford to increase your ad budget and even increase your cap if there's a need to. If the market becomes a lot more competitive, you need to increase the audience segment. It's okay if your merch is not as efficient, because now you have X amount more LTV and you can acquire more customers like this. So this customer has paid for themselves and you can do it so you should absolutely do all of these things for first time customers and that's why I say segmented flows actually make a lot of impact in terms of incrementality. So we segment flows for all our our pre -purchase flows. All our pre -purchase flows have a prospect flow versus existing customer flow so we prevent existing customers from seeing discounts again. And then for all our post -purchase flows, have a one -time purchase. We split by one -time purchase, two -time purchase, three -time purchase. And then we further split that based on products that they've bought. So it depends on how extensive the collection, the catalog is. You might have a collection split. It might be a product split. It could be a collection and then a product split. It depends on how extensive it is and how much of an impact that is. Check all that back against a general fallback flow to see what's increased. And some of these things, see an improvement in conversion rate of about 18%, 19%. So it absolutely makes sense. 18%, 19 % on a constant basis for flows, it's a no -brainer. That was good context. That was probably the pushback that I needed to have more nuance in my understanding of flows versus campaigns and where incremental effort should be put for long -term gain. I'm gonna wrap up with one last question and this wasn't even a question that I originally had for you, but I think it's an interesting question to ask nonetheless, which is one thing you mentioned at the start was, and I've just dropped my headphones as I say, If you have a bad product, people aren't coming back anyway. As an email agency, how do you vet clients for whether they have a product that's going to drive repeat rates anyway? Because during the audit process, you might look at a cohort analysis, see marginal uplift on a CPG brand and go, okay, this is a fantastic opportunity. These guys, we can drive huge incremental growth on the backend of these cohorts. when in reality it may just be a product issue. How do you look for that? How do you get it? It's simple, reviews. If the reviews absolutely suck, we don't work with them. We don't want to work with shitty brands. Art reviews are artificially propped up. You can argue that, but for the most part, no. Okay. So mean, if you have, if it's a decent brand that's been in existence for like last four or five years, right? Chances are they've got tens of thousands of reviews, right? Or at least five, 6 ,000 reviews. Five, 6 ,000 reviews, if their site only has like a couple of hundred reviews, it's an alarm. It's kind of a red flag. It means like, what's going on? And there are many people who don't even need a prompt to leave a review. If they like the product that much, they're going to leave the review anyway. The review flows and everything like that that we do would be an incentive if, let's say, you are actually lacking on it. But it's not a priority flow because it doesn't generate much revenue. It is social proof, but it doesn't generate much revenue. So it's not something that we would do off the bat. So if again, if the product is good enough, people will leave reviews. And if you only have a couple of hundred, 200 reviews after being in existence for like last four or five years, it's a little bit suspicious, right? And then when we get access to their Shopify, like we might work with them for a month or two months, but if we don't like working with them because we think that maybe know that product sucks, we just drop them off the wall. Yeah, makes sense. I was gonna wrap it there, but I've got one more that I really want to ask you, which is that I spoke to John Ivanko on the podcast. It was like the fourth podcast we ever put out. And one thing that he was pushing to me offline quite a bit, which is He had the notion that all email agencies are going to die because AI will mean just one click. can automatically create copy automatically does the creative. You choose a few products that it's going to be based on. You put a prompt in and then the email goes out. It'll auto segment as well based on whatever prompt you put What are your thoughts? I know what your thoughts are probably going to be, which is that there's always going to be that additional nuance of overarching retention strategy, which is going to be required. But AI might simplify some of the actual actionable stuff that goes off the back of that. But what are your thoughts on that? I think there's a lot of truth in it and there's a lot of threat of AI, but with a lot of threat also means there's a lot of opportunity with AI. It means that you do have a lot of reduced overheads when it comes to a much shorter production time for a copy for design. Yeah, but again, it also requires someone who's smart enough to put in the prompts. And yes, you can have templated stuff, but templates and everything can only work for a short period of time. So if you were building stuff as if you never had an email system and now you have an email system, yeah, okay, sure, use AI for all you want. But how is someone going to look at all the metrics and understand and make sense of the data? you probably can't really have a software that can do that. mean, Fontoro is amazing. Fontoro has got superb recommendations already built in. But so some of these things. product recommendations, right? It's not a strategic recommendation. So different brands at different points of the stage of the business will have different requirements. Sometimes they have inventory shortages, sometimes they need to move certain products, sometimes their cash conversion cycle might be a bit too long. They could have a requirement for Let's say certain portions of the customer segment is too high, then you move it. It's inefficient in converting prospects into customers. There is still an element of brain that is needed from a strategist. And that's why I still think that retention agencies will still live, provided the marketer or whoever the strategist is attached to the brand can think. If they can't think, yes, they are gone. The other one would be how, yes, so data analytics is gonna be extremely important, making sure, so zero party data, first party data, understanding this, and the retention agency that just does email and SMS will die. And I'm hoping that they will die. I'm hoping all of them die. Because if they can't think more than the channel, I don't believe that they should even be in business. Because why are you advising a brand owner to do certain things when you know jack shit about anything else? That's not fair. It's not fair at all. It's a huge risk on the business owner to take this advice and to believe it when there was actually no experience and no data to back it up. You've got no skin in the game. It's just not fair that they should ever be an agency providing a service. So... If AI comes to replace them, much better. Yeah, like everything you've just said completely mirrors into paid ads as well, which is all those agencies that are just in a Facebook and in a Google account clicking buttons. like they're gone in the next one to two years, because the button clicking volume is just decreasing month on month. But the agencies that actually look at the entire P &L and understand all of the levers that exist within marketing and looking at ad accounts as tools for acquisition rather than that's all we're doing. gives you a lot better context to actually drive better financial outcomes for clients and see the full picture, which I think is exactly what you're saying across retention, which is just looking at the messaging channels and saying, yeah, we click the buttons. It has no incremental value. It's in the understanding and actually, like to put it bluntly, being able to think. and understand what's happening across the wider business. That's where the value is going to continue coming from. And that's where I think the entire agency market will consolidate into, which will be, that'll be interesting to watch, that's for sure. Yeah, I like the part that you mentioned about translating into financial outcomes, because I think that's absolutely crucial. And that's something that's just been missing in marketing for the longest time. Being able to forecast that, being able to understand historical trends, and then be able to execute this on present terms in order to hit future outcomes, that is going to be something that is extremely valuable. And that's something that we also do, right? So we are also looking at obviously trends in the past. We are calculating brands' unit economics. And then we are forecasting every single thing that we do. So we do have this thing called a PowerStack dashboard. And we use it to track all the key metrics that we have. So we have got the customer segments that we are tracking. We've got the core flows that we are tracking in terms of conversion rate. We're also tracking like So like pop -ups, right? So we don't just track the pop -up opting rate, and we also track the actual conversion into paying customers. So we have lead to customer conversion rate. And then we also have a forecasting sheet that we use. So this forecasting sheet that we use is very much based on how much ad spend a client has, because how much revenue a flow generates. it's actually very much predetermined by how much traffic is going through. So if let's say a brand drops traffic by 50%, you're also probably gonna see a drop in 50% plus in your welcome flow. And it's not because the email marketing sucked or whatever, it's just because of decrease in traffic. But... In order for you to fully understand the effectiveness of your welcome flow and of all your different flows, you must be able to forecast this revenue. You must be able to also see the inefficiencies in conversion. So as much as you see we do track MER, Air agencies track MER on the front end, you also should be tracking efficiency and conversion at the back So how well are you converting these people into actual paying customers with your flows? How well are you converting someone from a first -time customer into a second -time customer with your replacement flow and with your campaigns? whenever you add an extra variable, it makes things a lot more complicated, but you must be able to forecast this as well. So how can we forecast this and forecast the conversion rate depending on the certain amount of ad spend they can have? Because if not, then every brand is just going to say, let's just have this email program. and this email is going to run at the back. And then what? For what purpose? You obviously also still want revenue, but if you can't set a goal for that, then it's like playing. Why are you playing with your business? You shouldn't be just having email there and then reporting on the stats at the end of the month and then say, okay, let's just do this. Dude, that's an entire month that was wasted. And you weren't actively working on a goal to reach that. Without that goal and without a forecast, it is dumb. It is dumb to be running any marketing without a goal and without any forecasting. So this is why we work with ad agencies, we work with our client brands, we ask, OK, how much budget are you putting here? How much expected new, unique visitors are you pushing in there? And then because of that, we work it through the entire funnel. Based on this, what is a pop -up opt -in Based on our existing effectiveness of our pop -up, what is our lead to customer conversion rate? So how many of these people are going to moving into our existing flows, right? And then our welcome flow. Based on this, what is the expected conversion rate? How many recipients are we going to get? And what's the expected revenue outcome of that? And the same thing for all the different flows and all the different abandonment flows. Then we can see the exact effectiveness of each flow and determine, is this flow actually worth working on right now or and what flow should we be working on? Or should we even be working on flows? Or should we just be working on campaigns? Or should we be working on something completely different? Should we be working with you to push a new membership program? Should we be working with you on a subscription program? What else? There are so many other things that can be done. But if you're just looking at things in terms of flows and campaigns, sorry, there's not much that you're going to do there. Yeah, I completely agree with that approach. I think we'll leave that one there. Where can people find LinkedIn. LinkedIn is the best place. I'm there every single day. Just hit me up in my DMs. I'm always going to be there open for Perfect. And I'll make sure to link Josh's LinkedIn in the description below. Thanks for coming on, Josh. Thanks for having me, Nathan. Catch you around.