How Email Marketing Can Maximize Recurring Revenue

The secret? Be strategic, not tactical.

Written by Joe Procopio
Published on Apr. 19, 2023
How Email Marketing Can Maximize Recurring Revenue
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Part 2 in two-part series on marketing for startups. 

In Part 1 of this series on marketing and sales funnels, I opened the discussion by asking why most startup marketing fails. There are a lot of answers to that question, of course, probably a separate answer for each startup. The diversity inherent in startups is also the root of the problem.

3 Strategic Email Marketing Moves

1. Educate interested prospects, free-tier and existing customers on your product’s inherent value.

2. Create a coordinated email campaign that speaks to interested prospects, free-tier and existing customers. 

3. Establish a regular email cadence and send fresh content that educates customers and/or provides thought leadership in their fields.

Many startup leaders lean too heavily on a tactical marketing approach. They run ads, send emails, shoot videos and write blogs without a coherent strategy for how to handle prospects that don’t buy right away.

Startup marketing is a marathon and startup sales is a slog. Both require a strategically built customer funnel to educate, encourage and engage the customer on several different levels. 

Now that we’ve covered the theory, the first touch and the landing page, let’s talk about what to do with the prospect when they show up at your website and give you their email address.

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Conversion, Trial and Education 

Obtaining a prospect’s email address and opt-in is your first conversion. It marks the transaction of the prospect giving you something, their email address and attention, in return for something else, which we’ll discuss in a minute.

You can also convert the customer to a purchase directly from your landing page. The odds here are a little bit better because the customer has already signaled intent. The prospect has already clicked on your ad or email link or blog link or whatever they did that got them to your landing page. 

Those odds still aren’t great. A lot of prospects will still fall out of the funnel once they reach the landing page. That is, unless you can push them down to the next level. 

That next level used to be a phone call from a human sales rep. The success rate for that is low, and the cost to have humans do all that unsatisfying work is high. Sales calls are also neither automatable nor scalable.

A free trial or free tier is a great way to capture a prospect, but it still requires a commitment from the customer, it’s costly for the company, and sometimes it’s more difficult to convert a free customer to a paid tier than it is to convert a non-customer to a paid tier. After all, you might be giving them what they think they need at no cost.

Regardless of your choice of next step, you’ll need to educate your interested prospects, your free-tier customers and even your existing customers on the value inherent in your product, value that is going to make them more successful with your product and thus, more successful in general. 

This is where the email list becomes critical. 

 

Engagement At All Levels

You don’t necessarily need a product newsletter, but you should create a coordinated email campaign that acts like one. It needs to speak to at least three separate audiences: Prospects who have not purchased, customers on a free or trial tier and existing paying customers.

Each of those groups can break down even further. For example, your free/trial group could break down into existing trial users and lapsed trial users. Your prospects who have not purchased can break down into those who opted in later than 90 days ago or more recent opt-ins. These are all email segments, and any bulk emailer can segment these groups, even automatically. 

Content should revolve around education, whether that’s education on the product itself or thought leadership in your customers’ field. Or both.

More important than how you group them is what you send them. Your prospects who have not purchased should be sent new information to foster better understanding of your value proposition. Your free tier customers should be reminded of what awaits them at the paid tier. Your existing customers should be encouraged to engage more, stay longer, spend more, and generally increase lifetime value (LTV).

Within each group, you can’t just send the same message over and over again, or you’ll see many more opt-outs than sales. In my mind, the content should all revolve around education, whether that’s education on the product itself or thought leadership in your customers’ field. Or both.

Regardless, success with an email list takes a plan, some time and some effort to produce a rhythmic (weekly/monthly) pulse that offers each group something of value and also reminds them why they were interested in your product in the first place. 

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Upsell to Maximize LTV

Another great thing about an engaged email population is that you can almost treat them like a separate market, and upsell to them across several axes. In other words, they may come to you for one product or service, but through your engagement program they may find an entirely different product or service for which they also have a need. 

And if you plan, you can anticipate those needs and address them in your emails.

You might offer additional or new products, managed services for existing products (do-it-for-me versus do-it-yourself), upgrades, hardware and even referrals to partners and third parties who do business that you don’t. 

The goal here is to maximize LTV across your customer base. That, combined with a prospect population in your email list that has a much lower customer acquisition cost (CAC) than the general population, means the gap between LTV and CAC is ever-increasing. 

And that’s how smart marketing funnels can boost both your top and bottom line.

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