A fairly awesome guide to finding your 80/20 customers

Marketers have become rather obsessed with goals and conversions. (And with good reason!) We take them as the benchmark of success, building whole strategies about those precious metrics.

But, they usually show a limited view into what is actually bringing in the big bucks.

We often measure trial signups or a one-off purchase. It’s a great start but leaves the vast majority of revenue as simply appearing out of nowhere.

Data-focused marketing has one huge blindspot

A big issue that marketers face is the disconnect between measuring attraction and retention.

Reporting from ad platforms or google analytics can show you whether a visitor achieved the goals you’ve set up, but these must be kept limited. Goals typically have to:

Happen online, such as detect if an enquiry happened, not whether the call lead to a sale
Occur within a couple of visits, ideally happening on the same device within a few weeks
Be a one-off action, such as looking at if they signed up but not how long they kept the subscription

We have become used to these short term indicators that our traffic is probably correct.

Which is fine if a company is aiming for a single interaction such as a one-off purchase. But if you’re aiming to attract repeat buyers or longterm subscribers then it’s just not up to task. It can tell you how many trial signups each campaign attracted, but after that all the sources get mixed into a single clump.

Most SMEs report that over half of their annual revenue comes from repeat customers
BIAKelsey

It becomes difficult to see where your biggest spenders came from, which means we can’t see where most of our revenue is coming from

Session based analytics can’t handle multi-purchase attribution

Marketing analytics is typically focused on what happens while someone is visiting a website.

This is fine until the cookie expires, the buyer switches devices or a transaction happens off the website. For example, website analytics won’t attribute later purchases to the original source and won’t receive information from the payment process about subscription payments. So, only first-purchase attribution is possible.

Which is frustrating, because LTV is the best indicator of value in your business.

It’s like counting how many people come into a restaurant and ask for a table, but ignoring how much they actually spent, let alone whether they ever came back again.

A 5% Increase in Customer Retention can mean a 30% increase in company profitability
Bain & Company

So website analytics is good for examining your top of funnel to get that first goal or purchase. But it fails with long funnels or long retention periods, where a customer needs tracking over months or years to attribute multiple purchases back to a single source.

It’s a shame since attracting visitors who are even slightly more likely to become repeat buyers can have a big impact on profitability.

Valuable answers are hiding in your subscriber database

Marketing automation platforms are typically designed around email addresses.

These are robust for longterm tracking (unlike browser cookies). You can identify purchases as coming from the same individual even if they were years apart, so long as they use the same email address.

Many email platforms such as Mailchimp Drip and Klaviyo will connect directly to your payment processor. That means the revenue can still be associated with the subscriber data, even if it was automated or within an app.

The real magic happens when you enrich that customer data.

You can probably store more data in your email platform than you are currently doing. The UTM of each subscriber’s initial source can usually be recorded, along with tagging them about how they have interacted with different touchpoints and the items they’ve purchased.

It takes a bit of doing, but can build a powerful customer database for your business.

Note: download our Ultimate Tagging Guide if you’re unsure how to tidy yours

6 ways you could use this 80/20 data

Having a database of your top spenders is useful just by itself. You can use it for lookalike campaigns or targeted remarketing. But, there’s a whole bunch of opportunities for using it to boost your revenue:

1) Compare the LTV of customers from each source

With enriched subscriber data you can finally see where your big spenders came from. You can break it down as far as you’d like, comparing general online vs offline or looking at individual ad campaigns.

2) Which emails are being read by the big spenders?

Open and click rates are useful, but it’s hard to measure the impact on revenue unless it’s aiming at a sale. Your database can tell you whether your most important customers are reading your emails or if it’s they only interest the freebie hunters.

3) Do certain products attract repeat buyers?

Just because a product gets the best immediate ROAS, doesn’t make it the most long term profitable. If you record each customer’s first purchase then you can see how the lifetime spend differs depending on what they bought first.

4) What is the most popular second purchase?

So you got a first purchase, great. Now what? Build up your tags to find out what are the most popular second buys and whether there’s a particular effective 1-2 punch to use in your remarketing or post-purchase emails

5) Did that popular blog post attract eventual buyers?

Content marketers rarely get the credit they deserve. Unless visitors make an immediate purchase, the revenue generated will often be attributed to other sources. This adds an extra reason to collect their email, as that way you can attribute the revenue correctly even if the transaction happens months after.

6) Which onboarding method is best at reducing your churn?

You can easily see which email sequence has the most interactions, but it’s hard to tell which one got folk to stick around. It gets even harder if you want to compare touchpoints like emails vs an onboarding video call, but with the right tags you can easily see how the LTV differs between tactics.

The probability of selling to an existing customer is 60-70%, while the probability of selling to a new prospect is just 5-20% – Market Metrics

Two methods to crunch the LTV data

Building up this information around your subscribers is great, but only if you can analyze it the way you want. So, you have two options:

Option 1: Pivot tables

You can assess the data in excel, although it takes some familiarity with pivot tables. Expect it to take an hour or two per metric, often involving some data exporting and combining.

As an example, let’s say you wanted to find an average time to first purchase, the workflow would be:

Export your Leads & their creation dates (Or their tags and the tag application dates)
Export your Purchases, along with the contact Id and the date the purchase was made
Use a filter (or pivot table) to make sure that you’re looking at the first purchase that each contact made
Then, use a VLookup to attach the Lead to their purchase, and compare the date the Lead was created to their first purchase date
Finally, create a second pivot table that groups leads by the number or days it took them to purchase, and then count each of them

For more details, download our guide to calculating real lead value.

Option 2: SegMetrics

To manipulate the data in a few clicks, try out SegMetrics.

It connects to your email marketing platform, advertising tools and payment providers. That way it can automatically gather the data for each person going through your funnel.

You can then slice and dice the data any way you wish.

You’ll be able to look at the behavior of webinar attendees, the revenue associated with each upsell or the LTV of each source. These can then be saved to revisit as often as you’d like, without any need to redo your work.

“The majority of a band’s revenue comes from 10-20% of their fanbase” – Lucchese, Echo Nest CEO

TL;DR, SegMetrics lets you see how you attracted and retained your best customers

Stop relying on your website analytics to guide your funnel decisions. It is great for optimising your top of funnel, but it won’t help you improve the LTV.

Instead, enrich the data in your email platform. Record the UTM data and tidy up your tags.

You can then use SegMetric’s multi-purchase attribution to reveal the answers. You can see where your best customers came from to allocate budget accordingly, or see which mid-funnel activities actually improved retention.

Grab a 14-day trial to see for yourself.