Patrick McKenzie – Hacking Lifecycle Emails

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Patrick McKenzie – Hacking Lifecycle Emails

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You can increase sales by 10% with email… if it is the right email. This gives my inner engineer existential crises all the time, let me tell you.
The savviest software firms rely less on mailing blasts and more on sending the right email to the right person at the right time, asking for one little nudge to their behavior.
This technique is called “lifecycle emails” and it is scandalously effective. It lets you:
Decrease churn by identifying and getting in touch with dissatisfied customers before they cancel.
Increase conversion rates by guiding your customers through the free trial more effectively.
Increase trials of your software by converting more website visitors into trialers, through getting permission to contact them and then educating them until they’re ready to try (and buy).
Increase revenue by driving up the average lifetime value of your existing customer base… in ways they will thank you for.
Increase customer happiness by educating them on how to use your software to make their lives better, answering common questions before they’re even asked, and knocking their socks off with your perceived responsiveness to their needs… while saving you time talking one-on-one.

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Sending The Right Email, To The Right Person, At The Right Time
You would think that, since software companies are in the data business, our marketing would be pretty data-oriented, right? If so, you’ve never worked at a software company. The sign in screen for a typical software company uses more custom code than the entire Marketing Department. Marketing generally is one-size-fits-none, with everyone visiting the website or reading the newsletter or interacting with the demo getting the exact same experience.
This is unfortunate, because we know our customers are unique, including in ways we can actually measure. For example, we know that first-time users of our software have very different needs than customers who have been happily using it for years. Unfortunately, the website and our marketing channels treat them exactly the same.
Lifecycle emails use information we have about customers to make informed guesses about what they’re experiencing right now. Then we send them messages tailored to where they are.
Having problems with the free trial? -> Send your customer a guide to getting over the hump.
Didn’t install the tracking code? -> Send your customer instructions.
Didn’t log in yet? -> Remind your customer why they should get started today.
The typical software company has less than a 2% conversion rate on their free trials, which means that altering the behavior of any two trialers out of a thousand would increase sales by 10%. Not only do lifecycle emails routinely achieve that, customers will frequently be ecstatic to receive our emails, because it will appear that the system has accurately predicted their needs and provided them with something exactly responsive to those needs.
How WPEngine Increased Sales With Lifecycle Emails
Let’s pretend you sell blog hosting, and you charge fifty times what your competitors do. You might envision that being a hard sale to make. WPEngine manages to make that sale very frequently indeed — they have revenue in the millions — partly because they have a product which is legitimately awesome (I use it for my own blog) and partly because they’re savvy about selling it. They were, for example, savvy enough to hire me to work on one sales channel — a drip marketing campaign. Drip marketing means sending a timed sequence of emails to educate, persuade, and only then sell.
WPEngine has a particular landing page which offers a speed test for your website. To take advantage of it, you need to provide an email address and your site’s URL. It works exactly as advertised: it will load your site using a reliable third-party testing service, tell you how long it took, and give you recommendations for making it faster. The landing page also includes an offer for a one-month course on optimizing one’s site’s speed, scalability, and security. Because this is directly aligned with the customer need that brings people to this page in the first place, prospects ask WPEngine for this course quite frequently.

One day after the prospect signs up, WPEngine mails them some more tips on making their site faster. They should turn on gzip — here’s how. They should distribute static content over a CDN — here’s how. They should combine and minify Javascript and CSS files — here’s how. These are all table-stakes for WordPress experts with engineering degrees who live-and-breathe pageload speed optimization, but they’re new and useful for site owners.
A few days later, WPEngine follows up on that with more valuable advice, this time about scalability. They tell you how to architect a WordPress site such that it won’t blow up if you get on Hacker News… or Oprah. (Explanatory note for geeks: she runs a TV show. It’s sort of a big deal. Her monthly active uniques are higher than Twitter’s.)
A few days after that, WPEngine again comes back, this time with advice on security, avoiding recent WordPress vulnerabilities, locking down problematic plugins, and the like.
Over the course of the month, the prospect’s relationship with WPEngine changes. WPEngine is no longer just a page they landed on — they are a trusted source of very valuable expert advice about everything WordPress. The prospect might have had time to implement some of that advice, and they’ve seen their life get better.
Only after having educated their customer and established trust does WPEngine start selling… and sell they do! After all, their customers are mostly businesses, and businesses only have limited tolerance for playing around with httpd.conf settings… but they’re frequently willing to write a check to have someone take care of that for them. And WPEngine has just spent weeks in their inbox convincing them that they are exactly that someone. The drip marketing campaign provably brings WPEngine huge amounts of revenue.

Why You Aren’t Using Lifecycle Emails (Even Though You Want To) And Why You Won’t Start Today, Either
Having implemented lifecycle emails, and similar marketing-via-engineering strategies, for myself and over a dozen consulting clients, I can tell you that a) 99% of you aren’t doing this and b) that won’t change any time soon. Even the savviest folks I work with have issues which stop them from getting these projects out the door. Here’s a few of them:
“We want to start sending lifecycle emails, but we don’t know how to get started.”
“We don’t have an email list and don’t know how to start building one.”
“We don’t know how to write emails that actually work.”

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“We’re the Marketing team, but we’d need Engineering to figure who gets what email when, and they’re too busy building product.”
“We’re the Engineering team, but we’d need Marketing to write these emails, and they’re too busy doing… what do marketers actually do, anyhow?!”
“We don’t know how to measure the ROI on our email campaigns.”
One option for getting past these problems is to just muddle through them. That works for some people. If it works for you, great! Close out of this page right now and get back to work on implementation. If you need help, it is available on the Internet… if you know where to look. (A word of caution: Googling for anything related to marketing or email gets you very close to the Make Money Online slime pit.)
Can you hire a consultant to do this? Yes*. Why the asterix? Well, first you have to find a consultant who actually knows what they are doing. Then you have to convince them to work with you. The people you most want to hire are a) in absolutely crushing demand right now, b) book up months in advance, and c) can charge whatever they want.
What would you expect the combination of crushing demand and constrained supply to do to prices? Yeah, exactly. I once quoted a consulting client $20,000 for a project and they asked me — dead serious — whether that was my daily rate or my weekly rate. That is how crazy the market is right now.
(Believe it or not, there are many folks who charge quite a bit more than I do. It’s very rational for businesses to pay whatever the sticker price is, because some well-executed lifecycle email campaigns can generate $200 in sales per email sent.)
I Am Totally Not BSing You About That $200-An-Email Number
Subject line: Get One Free Month of (Insert Service Name Here) By Switching To Annual Billing
Contents: Three lines of copy which virtually writes itself. “Thank you for being a loyal customer of ours. As a reward for your loyalty, we’d like to extend you a special offer: instead of paying $200 a month for the next 12 months (a total of $2,400) for the service, we’ll let you buy a year of service in advance for $2,200 (a $200 savings — essentially, your next month is free). [Click here] to switch today.”
Business rationale:
Getting their money now helps with the cash flow situation, particularly for businesses with high cost of customer acquisition.
Switching customers to annual billing radically decreases churn, one of the key risks to SaaS businesses long-term.
Customers love being singled out for special treatment.
Follow the math: You might naively assume that 1% to 2% of customers would switch to annual billing. You’d get 1% with ordinary execution (“Let’s put annual billing as an offer on our pricing page”). What if you did savvy execution (“Let’s pitch annual billing as an exclusive benefit to only our most loyal customers, who we already know are the ones getting the most value from the software, such that a 11x increase in upfront costs doesn’t matter to them.”) 10% conversion. Bam.
Formula: revenue per month equals months purchased times price per month times conversions per email sent
Formula: revenue per month equals 11 times approximately $180 times 10 conversions per 100 emails sent equals approximately $2,000
$200 in revenue per email sent. From one campaign. Which took thirty minutes to implement.
Drip marketing and loyalty rewards are two ideas of what you can do with lifecycle emails. If you want more actionable ideas to make your business money over the next two weeks, you can take a course that I’ve created. You’ll have positive ROI for it after, let’s see, less than five emails sent if your emails are as successful as that math suggests.

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