Rajesh Jain

Test Customers

Here is what I had written earlier about Test Customers:

We can think of the long tail of customers as comprising of one or all of the following:

• The bottom 50% of customers
• Leads who have not yet matured into customers
• Offline customers who are unknown to the brand

Each requires a different strategy.

Here are some ideas for the bottom 50% of customers:

• Generate more transactions and reduce service costs via ‘multiple and wide nets’
• Possible segmentation: value customers (coupon/discount) or niche buyers
• Capture additional data at time of (first) transaction
• Use martech to ensure tech-led engagement to reduce service costs
• Capture engagement data and work towards replica of BCG (Best Customer Genome)

What I had not discussed then is the how. How can the long tail of customers be targeted and engaged? How can they be persuaded to give the brand another try? While it is possible that some of this segment may have come only for a specific objective to the brand site or app, the important point to note is that they did engage. The brand is not an unknown. So, perhaps with the right approach, the relationship can be reactivated. The question of course is how.

The current approach taken by brands is to push promotional emails or SMSes (assuming the customer or visitor shared the email address or mobile number). There is nothing special done for this cohort. Promotional emails typically are a list of periodic offers focused on enticing some action. After some time, these promotional emails tend to look the same to the customer and are ignored – as happens to 85% of brand emails. The marketer then stops sending emails – worried about impacting the domain reputation because of low engagement. And thus, a relationship is broken and lost forever.

And here’s the rub: it is entirely possible that the brand’s acquisition programmes will perhaps target and try to reacquire the same customer again! This is a cycle that continues. The only  beneficiaries are the digital media companies like Google and Facebook who make good money from lazy marketers.

We have all experienced this: the same promotional emails or notifications that flood our inbox from brands we had engaged at some time. And we know what to do with such messages – ignore or delete. So, what is the answer? Is there a better way to engage with Test customers? Is there a more cost-effective way to reawaken them? Yes. The answer is microns.

Best-Rest-Test-Next Customers

In my earlier writings on Velvet Rope Marketing, I had created a framework to think about customers: Best-Rest-Test-Next. I wrote: “A possible approach can be to consider three segments: Best (top 20%), Rest (middle 30%) and Test (bottom 50%). This 20-30-50 split may vary based on actual numbers for different companies but is quite indicative of the 60-20-20 revenue contribution.” I added: “The Best Customers make up the head of the Customer Lifetime Value curve. The bottom 50% or so of customers in most circumstances make a negative contribution to profitability. These ‘Test Customers’ make up the long tail.” Next customers are the brand’s future customers.

A marketer’s focus for each of the segments should be as follows:

• Best: retention and revenue expansion. A term used for B2B SaaS companies – Net revenue Retention (NRR) – can be very helpful to measure success. An NRR of 110% means that there was a 10% increase in the revenues of the same customers even after factoring in churn. Velvet Rope Marketing is one of the themes I have explored in how to ensure the Best customers stay and spend. In fact, brands should create a separate business unit to focus on their Best customers because this cohort of 20% customers is likely to account for 60% of revenues and upto 200% of profits. Even a small increase in the revenues of these customers can lead to a substantial increase in profits.
• Rest: next best action. The 30% or so customers in this segment generate about 20% of revenue. They are familiar with the brand and many have the potential to become tomorrow’s Best customers. So, it becomes imperative to nudge them on what they should do next. This is where the Best Customer Genome can guide marketers on what is the next product or action that a specific customer should take in the purchase journey. The right recommendations can delight and deepen the customer relationship.
• Test: action and reactivation. The bottom 50% of customers are not yet loyal. They may have registered but not purchased or done a small number of purchases. Marketers do not know enough about these customers. From a relationship standpoint, this segment is either dormant or dead. Just sending repeated communications similar to what is sent to Best and Rest is unlikely to make an impact. A different approach is needed – what I call “action and reactivation”. The brand needs to be re-introduced to the Test customers and simple actions need to be targeted – opening an email, SMS or push notification, and clicking through to the website or app. This is where microns (micro newsletters/nudges/nuggets) can play a very important role.
• Next: targeted acquisition of Best lookalikes. Marketers spend a lot of money on new customer acquisition. This is the exciting part with big budgets and lots of ads. Here is where marketers are missing a trick. The focus tends to be on acquiring customers like the ones which are there rather than replicating the attributes of the Best customers in the new acquisitions. By narrowing the acquisition to lookalikes of the Best via an adtech-martech bridge, brands can reduce their marketing spend and get more profitable customers. Referral marketing programmes targeted at the Best can become another useful cost-effective acquisition vehicle.

The right implementation of the Best-Rest-Next-Test customer framework can improve customer relationships and boost profitability. My earlier essays have discussed many ideas to make this happen:

• Velvet Rope Marketing
• Becoming Chief Profitability Officer
• The One Number to Predict Profits
• Rethinking Referral Marketing
• How Velvet Rope Marketing can transform Customer Loyalty
• Best Customers and Velvet Rope Marketing

In this series, I will focus on the Test customers – how to drive action and reactivation. Money has already been spent in ‘acquiring’ them so they are a net loss if they cannot be driven to repeated transactions. Microns are the key to unlock value from Test customers.

For Employees Eyes

Brands want to build deep and engaged relationships with their customers. As businesses, they also have another type of customer – their employees. Microns can play a very positive role in enhancing the business-employee relationship also. The same building blocks can be used by businesses to communicate, engage and interact with their internal ‘customers’.

Here are some ideas to improve the business-employee engagement:

• A daily micron can be sent with some news – a new order won, profile of a new hire, an exciting development in an employee’s personal life, new product features launched, key milestones achieved, and so on. Of course, all of this can be via newsletters but they tend to be too long and therefore take a lot of time to create – sometimes causing a number of newsworthy items to be bunched together in a single mail. Think of microns as sending WhatsApp or Slack messages – we do it so easily. (A daily micron which takes 15 minutes to create leaves no reason to postpone such information to be shared only once a week or month. The idea then becomes to share information in almost real-time or at least with no more than 24-hour lag – rather than waiting for the end of the week or end of the month.) In a future hybrid workplace where in-person interactions of all the team members will be rare, microns can become the equivalent of the pantry or water-cooler – for sharing but in a controlled manner so one is overwhelmed with the inflow.
• The daily micron can also have an interactive component like a quiz or survey. A quiz can help the HR department get insights into what employees know about the company. A survey can help gauge mood. Because these interactions take 10-15 seconds only, they are more likely to get acted on than long multi-question surveys which become chores and are therefore ignored until repeatedly reminded.
• Microns can also be used to reinforce company or team targets through the year. Everyone starts the year with big goals (like New Year Resolutions) but the routine soon takes over and the big objectives are forgotten – and therefore may end up not getting done. A short reminder every so often can help keep everyone on track and aligned.
• Microns can be used to educate new hires about the company history. While most companies have induction programmes, they tend to cram in a lot in a few hours or days. Instead, microcontent sent daily can help build the story in a manner that is more likely to be remembered. (An equivalent idea can be used for new customer onboarding.)
• The same idea can be used for pre-joining: employees who have accepted the offer but not yet joined as they have to serve their notice period at the previous company. The HR department of the company that has just hired them is always worried whether they will join or not. In this period, daily microns about the company they are joining can create a bond with the employee telling stories about the company’s history, its culture and its vision for the future.

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There can be many more such ideas. The simple point is this: microns can have widespread usage because of their simplicity and brevity. They take 15 minutes to create and 15 seconds to consume. They come right into the inbox – which we all check many times during a day. When we think of emails, we think long, boring, never-ending newsletters, with lots of scrolling. When we think of microns, we should think short, exciting, fun, interactive content, available on a single mobile screen (no scrolling required). This is what will take the 15% open rate of emails to 100%. Whether for customers or employees, microns can help brands and businesses open a richer world of greater engagement and interaction. Welcome to the micron-verse and the 100% opens movement!

Building Blocks

A series of technologies and actions can bring the micron-verse to life in the coming years.

The first building block is a micron publishing platform. Most email campaign management platforms tend to be quite complicated because emails themselves have become complex to create over time. Microns are simple: short and with a single element (text or image or an interactive component). The publishing platform also enables “story microns” – a sequenced set of microns where every subscription starts with the first in the series. This contrasts to the “daily fresh” microns where all subscribers get the same micron on any given day. Every micron should have an ‘AMPlet’ – an AMP-enabled element which converts static content into dynamic interaction. This also brings in that extra surprise and excitement in every micron – making it more likely that every micron gets opened.

The second complementary block is subscription management. This will typically happen via the brand – an email address is what is needed to activate the subscription. Every micron also has a clearly visible “Unsubscribe” option putting the control with the recipient. Email addresses can also be added automatically by brands via an API – thus logged in users don’t have to re-enter email addresses.

The pubsub (publish-subscribe) blocks are what get the micron system going for both brands and their subscribers. The next set of blocks improve on both publishing and consumption.

The third block is a toolkit to improve micron making. Microns can be automatically created from existing content which can be serialised. Microns can also be made by humans – connected to brand managers via a marketplace. What’s needed is a content factory that keeps the microns coming. An added touch can be a no-code AMP publishing system that simplifies the creation of standard AMP elements like quizzes, surveys and feedback.

The fourth block is a rewards system. As we saw earlier, just 1 in 7 brand emails are opened. Our objective with microns is to eliminate waste (unopened emails). Gamifying the process wherein every micron is opened and each action earns points which can then be encashed for rewards is a way to incentivise the right customer behaviour (from a brand’s perspective). Additional points can be given for ‘streaks’ – consistently opening brand mails daily without a break.

The fifth block is the micronbox, a custom inbox for viewing and engaging with microns. Brands should be able to directly publish to this micronbox – as long as they have permission to do so. Customers can get a significantly upgraded viewing experience than the conventional email inbox with its linear list of incoming emails. The micronbox has the potential to transform brand-customer engagement the way WhatsApp upgraded person-to-person mobile communications from the SMS inbox.

The sixth and final block is the profile sharing system. Every individual can maintain a catalogue of personal information which they can selectively share with brands based on trust and rewards. The more the profile sharing, the better will be the incoming microns. At a basic level, it could just be age, gender and location. At the next level, it could be static preferences. At an even higher level, it could be my current requirements – where the brand gets to know that there is a near-term product or service need they can fulfil.

These six building blocks offer a significant and mutually beneficial upgrade to the brand-customer relationship and bring the full power of the micron-verse to life. They also offer new opportunities for entrepreneurs to construct the different components. There are many more ideas from our current world that we can re-imagine in this new micron-powered future: paid microns (where content creators become the ‘brands’ and offer microcontent for a fee rather than free), affiliates (who can provide a smoother middle layer for connecting buyers and sellers), game developers (who can fill those gaps with puzzles and creative interludes) and product-led agencies (who can offer micron publishing for free in return for a success fee for specific outcomes like reactivation of a dormant subscriber base).

The 15% Inbox

85%. That is the percentage of emails sent by brands to their customers that are ignored. This means 6 out of 7 emails are not opened. That email is still such a powerful and critical communications channel despite this waste is because of the low cost of sending emails. The return on investment (RoI) is the best as compared to all other channels.

The question I have been thinking about is: what would it take to bring the 85% down to 0? How can every brand email be opened by customers? It would mean not just increasing the numerator (the number of emails opened) but also reducing the denominator (the number of emails sent). What would a new world of 100% opens and therefore 0% waste look like? Is it worth striving to create such a world?

Email inboxes are a free-for-all. Anyone with your email ID can send you a message. At times, it becomes difficult to distinguish fake messages from real ones leading to loss of trust – and in some cases, money. Email lists get sold as is evident in the rise of incoming spam. Gmail and other email service providers have worked hard to create algorithms to maintain a clean inbox but many irrelevant and spurious emails still get through and some good emails get re-routed to other folders.

If we look at our email inboxes, we will all agree that much can be done to improve the inflow. Gmail has now created multiple folders to automatically redirect emails based on its assessment of the importance and our previous actions. This makes it harder for brand communications to make it to the primary inbox folder – which is a lose-lose scenario for both brands and customers. Customers may miss out on relevant information and brands miss out on their communication and potentially future transactions.

Consumer attention has also moved away from the cluttered inbox to other channels – Twitter, Instagram, Pinterest, WhatsApp and other social channels. Brands are also moving to these platforms and devoting some of their serious attention there. Many businesses are making WhatsApp their primary mode of communication; there are many instances of businesses run solely on Instagram. Innovation on email has also slowed – its simplicity and openness which helped widespread adoption has also meant that there isn’t much to be done. A few ideas in recent years (BIMI and AMP) have come up but not yet been adopted widely.

The other big change in recent times has been the shift to mobile and the reduction in our attention span. Most emails tend to be viewed on the small screen yet brand marketers tend to design them for the desktop. Customers too have adapted by reducing the time they take to decide whether to open or ignore – 2-3 seconds is all that we take to make that call.

It is against this backdrop that I have been thinking about the idea of microns – micro newsletters (or nudges / nuggets). Making emails short, informational, subscription-led, story-format, sent once daily to create a habit, and identified are some of the starting ideas which can create a better inbox experience and higher open rates. But microns will still compete with all the other emails that are being sent. Is it possible to move from the current state to a new future state which makes for happy brands and customers? In other words, what will it take to bring this new micron-verse to life? That is the roadmap I will lay out next.