Saving private Jaime - RFM model & email marketing

Email marketing fundamentals

I’ll be honest with you, I hate Discord boomers. NFTs, paid communities and now they all started to flock to it.

But let’s save our buddy Jaime.

I put email marketers in 2 buckets.

Ones that come up with their own stuff, and ‘template’ marketers.

A template email marketer is someone who just copies his stuff from project to project. Never innovates, lacks creativity, is there to just fill in the blanks and get paid.

How to spot one?

“I’ll build you a welcome sequence, abandoned checkout, the post-purchase sequence”…

Basically repeating whatever their guru told them.

And how to spot OG email dominator:

Shoutout to Wilding.

“B-but how does one come up with 23 flows?”

Good question.

Let me introduce you to the model that’s often mentioned in direct response space.

The RFM Model

The main difference between profitable and unprofitable brands is lifecycle marketing.

All your customers have a lifecycle. This is their complete lifetime of experience with your brand and your products. 

For some customers, the lifecycle is short. Someone finds your site, buys one product, then she never comes back to your site again.

For others, the lifecycle is long. Someone subscribes to your newsletter, makes initial purchase off that list, then buys fairly frequently for about six months, hangs out on your blog all the time, then gone until the holidays at which point comes back and buys more.

With email, we map out each stage your customers go through during their sales cycle and nurture them with personalized email messages on autopilot.

That’s why it’s called triggered lifecycle marketing. It’s triggered based of user behavior.

The more you dial in the messaging and offers to the stage of the customer lifecycle, the more effective you will be in incentivizing customer behavior and the more revenue you will generate from your customers.

To map out email flow correctly and to put customers correctly in their “buckets”, we use something called the RFM model which stands for recency, frequency, and monetary value.

In theory, it looks something like this (frequency on the Y axis, recency on X-axis, monetary value being the size of the circle):

If you hated math in school and don’t understand anything, take a moment and stare at the graph for a second.

Now let me explain it to you.

The famous Jay Abraham said there are only 3 ways to grow your business.

1. Increase the number of customers (customer acquisition)

2. Increase the average size of the sale per client (Average order value)

3. Increase the frequency of purchases (average number of orders)

The formula is simple:

Customers X Frequency (AVG nr. of orders) X AOV = Total Revenue

Since email is retention-oriented, the part of the equation that interests us is recency and frequency.

Recency (X-axis)

Recency being days since the last purchase.

Someone with R0 purchased today, R1 yesterday, and R365 1 year ago.

So someone who is relatively new, R0, has High Potential, and someone who has been around for a while, R1000, is much lower Potential.

Frequency (Y-axis)

Frequency is total purchases.

Someone with F1 is a 1-time purchaser, Low-value customer. Someone with F7 is VIP, high-value customer.

So, without the bubbles, the Frequency and Recency graph would look something like this.

We basically get 4 buckets in which we can put customers.

• Low Value + High Potential

• High Value + High Potential

• High Value + Low Potential

• Low Value + Low Potential

The billion-dollar question is - where do we want all of our customers to be and how do we push them into the bucket?

The answer to the first question is - High Value + High Potential. Thus big bubbles.

The answer to the second question I don’t know yet.

Coming up with unique flows

Let’s get things straight.

Most of the stores don’t need 20+ flows because it would be a total waste of time to create them all and pay for it only to generate an extra $74 per month.

But if you’d like to, here’s my advice -

Learn about the product and business model first.

Are you running a subscription business?

If yes, integrate with ReCharge, get new trigger events, and create more flows. Post-purchase for subscriptions, subscription cancellation, expired credit card… whatever comes up to your mind with the new events.

Do customers need just 1 of each or multiple?

Come up with upsells, downsells, cross-sells, replenishments. Whatever just to increase their LTV.

Put them in buckets

pUt YoUrSeLf iN cUsToMeR’s ShOeS.

Are they VIP?

Are they loyal but are not in VIP yet?

Are they sensitive to price changes?

Are they asleep?

Are they opening your emails but never buying aka window shoppers?

Have they canceled their subscription but still open and click your emails?

Are they just testing your product?

The list goes on and I cannot allow this email to get clipped.

Last thing I wanna tell you… advanced segmentation and retention models make sense only to a certain degree. Don’t stress about it too much.

The real focus should be on the email itself. You can have gazillion flows, conditional splits, and triggers, but if your emails are absolute trash it won’t make much sense then.

Focus on crafting your copy. Be unique, have a voice and I’m sure you’ll do great.

Till next time,

Beacta