Published January 22-27, 2024
1
Missed Opportunities
I visited the online site of a retailer from where I had bought a pair of pants some months ago. I wanted to buy a similar pair of pants in a different colour. It took a few searches to get to the item I wanted. And then, as I was checking out, I was informed that my cart ($34.99) was less than their $35 minimum needed for free shipping. Shipping would cost me another $6. So, I searched for a $1 item (took more time than necessary since many items shown were more than a dollar) to add to my cart to cross the threshold of free shipping. Friction both in the search process and shipping rules where none was needed.
When I was checking out at a bookstore recently, the person at the counter asked me if I would like to sign-up for a card through which I could earn points for my purchases and then redeem those for discounts. I said Yes. She then asked me for my email address, and whether I would like to receive promotions. To the latter question, I replied No. Later, I wondered what would have been my response if she had asked, “Would you like to receive book recommendations like the ones you just bought, and also excerpts, quizzes, and connects with the authors?” I would have said yes. With me declining the “promotions” offer, the bookstore has lost an opportunity to build a hotline to me, and potentially increase future revenues. Waste which should not have happened.
An eCommerce platform through which I buy often cannot distinguish between who is browsing because the same account is used by other family members for their purchases also. So, I end up seeing recommendations which are ‘contaminated’ and therefore less useful. Why could it not create personas like many OTT platforms have to ensure better relevance? Better still, why not ask me what I would like to shop for next? We all like to be surprised with good recommendations. So, why not take shopper input and make them better? Data that can help drive more sales is not asked – and not given.
Zero friction funnels. Zero marketing waste. Zero party data. These are the “three zeros” problem. The first helps shoppers, while the other two help marketers. The question to ask about the experiences I have described is: why are they not commonplace? Why do marketers leave money on the table? Or even worse, why do they send their customers to competitors? I have written about the need for new ideas in marketing to eliminate the over-reliance on new customer acquisition and focus more on existing customers to improve profitability. And yet, day after day, click after click, marketers continue to make elementary errors which prevent their organisation from driving exponential forever profitable growth and creating a “profipoly”, a profits monopoly.
The solution lies in a “progency”, a product-led agency born out of B2C martech platforms which can help marketers do these actions and let them keep their focus on the ABC of marketing: acquisition, branding, and campaigns. In this series, we will discuss how a progency partner can help solve the three zeros problems of marketing – friction, waste, and data.
Postscript: The title is inspired by “The Three-Body Problem” book series, authored by Liu Cixin. The story commences with the Chinese Cultural Revolution, leading to the establishment of a secret military project that makes contact with the Trisolaris civilization from a distant star system. The “three bodies” refer to the three suns of Trisolaris, whose unpredictable movement causes extreme conditions on the planet, driving its inhabitants to seek a new home.
2
Zero Friction Funnels – 1
I have written about funnel frictions in previous essays: ProfitXL to Profipoly: Solving the Four Funnel Frictions, and Solving eCommerce’s Fifth Funnel Friction: Identifying Unknown Shoppers.
The essays considered the friction problem from the point of view of marketers. Let us look at the same frictions from the lens of shoppers. We will focus on the shopping experience and skip the discussion on products, pricing, discounts, delivery, and service.
So, what do shoppers want? When they come to a site (or open an app), they have two choices: they can either search for what they are looking for or browse through category pages. As has been said, loyalists search, first-timers browse. So, the site needs to offer three things: relevance and ranking in search, and personalisation while browsing. These are critical to ensure that customers continue their journey and don’t drop off. Recommendations from the aggregated behaviour of other shoppers and the individual shopper’s previous history can go a long way in accelerating the conversion process.
The second problem is in the engagement funnel. Shoppers land on a site or app organically either by connecting the brand to a problem they have (“job to be done”) or by clicking on incoming messages from the brand. The channels used for the messages are email, SMS, push notifications, WhatsApp, and RCS. The identities used are an email address, mobile number, or a device ID. Lack of personalisation and creativity in messaging has led to low open rates, especially for the traditional channels of email and SMS. Many shoppers also block app notifications. This leads to the “attention recession” problem in shoppers – a lose-lose situation because shoppers don’t get the info they want, and marketers are unable to build hotlines to their existing customers.
The point to note is that these funnel frictions impact the brand’s most important shoppers: what I have termed as Best and Rest (B&R). Best customers are the top 20% who deliver 60% of revenue and probably more than 100% of profits. Rest customers are the next 40% who deliver 30% of revenue and have the potential to be future Best customers.
So, how can brands solve the funnel frictions problems of Best and Rest customers via a Progency?
3
Zero Friction Funnels – 2
As I have written in previous essays, a progency is a product-led agency which can work with the marketing department to solve problems beyond its scope. This way, the marketing department is not distracted from its core focus areas. A progency works as a performance agency, and thus has skin in the game to ensure outcomes. It can get started quickly bypassing the process of RFPs and replacement cycles. There is no downside to using a progency – think of it as “free money” for a brand.
In the case of zero friction funnels, brands are already wedded to martech solutions and stacks. But there are a few interventions that a progency can do which can be greatly beneficial.
As we discussed, a big challenge for marketing departments is the search, browse, and recs (recommendations) which can reduce customer journey friction. A progency can begin by powering the long tail of searches along with low-performance and null searches. It can also power recs on specific pages. All that this needs is a Javascript integration. A progency will be better able to optimise results than a brand’s own marketing department. The key is to ensure that more visitors convert.
A second track for a progency in the customer funnel can be in-channel conversion via inbox commerce. Email 2.0 can be used to deliver emails from specific triggers where the actions are performed in the email itself eliminating the need for a clickthrough to the website or app. There is a whole range of “abandonment” points where Email 2.0 can fast-track conversion: search, browse, and cart are three examples. In addition, a range of merchandising triggers can also be very helpful – for example, price drop, and back in stock.
The key for these progency interventions is to combine elements of a martech stack with a search and product discovery solution – in other words, bring together customer and catalog information. Most eCommerce brands do not do this, and thus they introduce friction in the journeys. A progency can combine these data points to convert “red journeys” to “green journeys.”
What the marketing department should do on its own is to upgrade its martech 1.0 stack of point solutions with a martech 2.0 stack which unifies data, experience, and channels (Unistack and Unichannel) to provide a single customer view. Such a stack should also be able to create a digital twin of every customer, and thus be able to predict the next best action. Such a “profipoly” stack combined with “velvet rope marketing” (VRM) to provide differentiated experiences for Best customers can go a long way in maximising lifetime value.
To summarise, the key actionables for marketers for Best and Rest customers for zero friction funnels are:
- Internal: Profipoly stack and VRM
- Progency: Low-value searches, recs on pages, in-channel conversion for triggered emails
4
Zero Waste Marketing
The next target base are the Test and Left (T&L) customers. Test customers are the bottom 40% of active customers who contribute 10% of revenue, while Left customers are those who have churned. Together, they are largely dormant. What marketers do today is send this pool of customers for reacquisition via the adtech platforms. This is a waste because brands still have right-of-way to these customers, and what is needed is reactivation through own channels rather than reacquisition via paid channels. My estimate is that a quarter of adtech budgets are invested (a better word may be “in-wasted”) on reacquisition.
Marketers do not pay much attention to the Test and Left customers. Their focus tends to be on the new acquisitions and the Best and Rest customers. This is where an Email 2.0 reactivation progency (E2RP) can come in and work its magic. It can generate treasure from trash (or gold from gutter). By work being compensated on performance, there are no costs for the brand until revenues are generated. Think of the E2RP as the step prior to sending the T&L to expensive adtech platforms.
How would an E2RP work?
The E2RP would use the email opt-in of the brand to send a new type of email to the dormant customers. Atomic Rewards in the form of Mu in the subject line incentivises opens. Each email would have a single email-only offer (“Daily Deal”). The next block would have a search bar and recs to enable the addition of more items in the in-mail “magic cart”. Ideally, payments could also be made in-place but that may require tech integration. So, in the short-term, a click would take the customer to the checkout page on the website.
The email does not end there. The footer also makes it exciting for the customer to give these extra few seconds of attention. [See Dynamic Engaging Footers.] A content unit would offer something to learn or a game to play. An ad unit (Action Ad) would enable a monetisation opportunity for the progency (and therefore the brand). As we have discussed earlier, this ad unit is different because it can be personalised, is in-place (no clickthrough needed to a landing page), and a payment option can also be integrated.
Reactivating dormant customers on a brand’s own channel (email, in this case) has never been done before. By leveraging two ideas – Email 2.0 and a progency – the waste of reacquiring one’s own customer via adtech can be mitigated.
To summarise, the key actionables for marketers for Test and Rest customers for zero waste marketing are:
- Internal: Stop reacquisition on paid media, and create lists of T&L customers for the E2RP
- Progency: use of Email 2.0 innovation for reactivation
5
Zero Party Data
The final categories of customers are what I call Next and Guest. (This completes the BRTLNG framework for customers: Best, Rest, Test, Left, Next, Guest.] Next customers are those which have been newly acquired via paid media. Guest customers are those who have come on the site on their own – either through search engines, social media, or word-of-mouth. What is common to all of them is that the brand knows almost nothing about them when they land up on the website (or download an app). If a “hotline” linked to some identity information cannot be built, then that prospect could be lost forever. (While cookies could be used for retargeting, this option is likely to be deprecated soon because of privacy restrictions.)
The key lies in collecting “zero party data” from N&G customers (prospects). This enables the brand to create a line of communication with them if they leave the website without making a purchase or creating a login. Most websites do tend to have a pop-up which offers some discount on a purchase or giving an email ID. This is where brands are missing a trick and a progency can come in.
What a progency would do differently is offer a range of useful content as short daily emails (“microns”) for a period of 7-10 days. We are more likely to subscribe for interesting content than simply a discount code. Atomic Rewards in the form of Mu could be an additional incentive. In effect, it should be the job of the progency to recruit, get data, and perhaps even monetise new customers.
When brands think of maximising “first purchase profitability”, they are inherently assuming that the probability of the visitor buying a second time is low. As such, the aim is to sell one-off products which would be profitable rather than working to build a relationship across time which would increase the odds of a new customer becoming a future Best customer and thus maximise lifetime value.
The progency can take a longer-term view. Microns and Mu would help gamify the initial hotline creation. Then, more zero-party data can be connected in the footer of the emails. Within days, highly targeted products could be recommended via the push channel of email rather than awaiting the next website click or app open.
The progency’s actions can also be complemented by the brand itself asking for referrals and using Best Customer Genome to improve the quality of new acquisition and reduce wasteful wrong acquisition. By working towards “near-zero cost acquisition”, the brand will further reduce AdWaste.
To summarise, the key actionables for marketers for Next and Guest customers for zero-party data are:
- Internal: Drive referrals from Best customers and use Best Customer Genome for ad platforms
- Progency: use of Microns and Mu for building hotlines at first contact
6
The Future
Brands (and marketers) are leaving a lot of money on the table. All one has to do is to look at one’s own experience as a customer. Funnels with friction. Adtech AdWaste. Missed moments. Lack of personalisation. Incorrect search results. Limited data. Every one of these is a profit killer. The combination of a next-gen Profipoly Stack from martech vendors and a Progency can transform outcomes for digital businesses.
Here is a summary of the ideas we have discussed in this (and previous columns):
Marketers have a lot on their plate. By augmenting their capacity with a progency focused on the three zeros challenges: reducing friction in funnels, eliminating waste in marketing, and harnessing the power of zero-party data. In fact, done right, the combination of stack (product), service (progency), and sharing (“profishare”, as I wrote previously) can put brands on the path to creating a profits monopoly, a “profipoly.”
The concept of Progency serves as a pivotal solution in the modern marketing landscape. This approach transcends traditional methods, offering a transformative pathway for brands and marketers to capture and capitalise on missed opportunities. By partnering with a Progency, brands can effectively re-engage with dormant customer segments, refine their marketing strategies to reduce wasteful expenditure, and gather crucial data directly from consumers, leading to more personalised and impactful marketing efforts. The synergy between a sophisticated Profipoly Stack and a strategic Progency partnership heralds a new era in digital marketing, one where businesses can dramatically enhance their efficiency and profitability without burdening their teams and cost structure.
For martech vendors, instead of competing in a red ocean of stacks, there is an opportunity to partner with their customers (brands) to deliver outcomes and convert limited tech budgets into unlimited upside opportunities in the way the adtech industry has done. The opportunity is the $250 billion AdWaste which can be shared between brands and next-gen martech vendors. A multi-trillion dollar value creation awaits the world of eCommerce and martech.
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Here is a 5-point summary of the essay from Claude.
- Brands frequently miss opportunities to reduce friction for shoppers (e.g. through better personalisation and recommendations), eliminate marketing waste (e.g. by focusing more on reactivating dormant customers), and collect zero-party data; this results in lost profits.
- An innovative solution is for brands to partner with a “progency” – a product-led agency – that can focus specifically on solving these “three zeros problems”.
- A progency can power relevant product searches and recommendations, send highly targeted emails to re-engage lapsed customers, and offer content/rewards to gain zero-party data and build relationships with new prospects.
- This enables the marketing team to focus on their core priorities while the progency augments their capabilities in specific high-impact areas beyond their bandwidth.
- Combined with next-generation marketing technology stacks, progency partnerships represent a powerful way for brands to maximise customer lifetime value, gain a sustainable competitive advantage, and create a “profits monopoly”.