All about customer lifetime value. Juliana continues to amaze me with her undeniable ability to deeply understand customers.
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In this episode we discuss:
[0:00:00] George Reid: Welcome to us Always Day One. My name is George Reid, a former Amazonian turned Amazon consultant. Each week on the podcast, you're going to hear industry experts, brand owners and Amazon employees share their answers to the basic yet fundamental questions. You should be asking yourself, Bang your Amazon business. Now, let's jump in. Hello, ladies and gentlemen, welcome to another episode of It's always Day One. Today I'm really excited to have Juliana on Juliana. John, give us a brief background into yourself, and then we can get craft with some questions.
[0:00:34] Juliana Jackson: Hi. Hi, George. Thank you for having me. I'm Juliana Jackson, and I'm the chief evangelist for Omni Comfort. Um, and I've been working in e commerce and, uh, sex industry for the last 10 years. And at the moment, I'm preaching the value of customer lifetime value and preaching the teachings and frameworks around how you can optimize customer lifetime value. I don't work with Amazon. I work with direct to consumer brands, and, uh, yeah. I mean, I'm one of the architects of the customer value optimization category. So you could say I'm also a category designer.
[0:01:12] George Reid: Beautiful. I like I like the topic that you specialize in. And it's certainly one of one of the areas I'm digging a lot more into at the moment. So you want to kick us off with the simple question of what actions can brand take at the moment to increase that customer lifetime value.
[0:01:31] Juliana Jackson: Cool. So, I mean, the first and most important thing to do when it comes to customer lifetime value is to calculate customer value. Because if you don't know exactly how how valuable is your is your customer list, how valuable are your customers in general, you can, you know, reproduce that and repeat that type of you know, I guess, uh, you know, uh huh, behavior that they have right to long term type of behavior. So what I what I usually tell people is that the most important thing is to segment your customers based on their buying behavior, because customer lifetime value suppose a behavior a different, you know, buying behavior. Suppose having the same, um, you know, uh, purchasing behavior from the same source. So just to give you an example when you acquire a cohort of new customers, it's not enough to just acquired them and break even on the accusation cost. It's to have. Actually, customer. Lifetime value is to have the same source of the same customers purchasing repeatedly from you. So unless you understand, you know what is the value of each customer that you bring, you won't be able to work with them, you know differently to grow that the lifetime value and the best way I suggest people to go about this is to do RFM segmentation, which means recently frequency and monetary value segmentation. And it's a methodology that appeared in the fifties, and a lot of people say, Oh my God so all that appeared in the fifties and so on, But I'm saying it's bullshit because it works and, uh, I reference segmentation looks at your customers based on the recency, they have the frequency they buy in the monetary value. So once you do that, you will see you will have, like different segments from your customer database that share a particular buying patterns. But the secret is that inside those segments they are not. The customers are not created equally. So what I mean is that if you're living in an apartment building, you can say that everyone in that building has one thing income, and they live in the same place. But that doesn't mean all the people are like So here is where you have to come with the granular RFM analysis, which is a different thing, which is something that a science customers a score from 1 to 51 being the lowest five being the highest. That takes into consideration your average days between transaction. Right, So you're buying cycles. It takes into consideration the monetary value. And, of course, how many of the workers were customers. How many times people were there for me. So once you do this sort of fem analysis, you'll figure out that in each segment of customers you have customers that are worth keeping and customers that are not worth keeping. And when I say that, I mean, even if you have customers that purchase five times from you. But they purchased only for $5 or they purchased only on discounts or they purchased. You know, we are couponing and discounting. They don't have the same value as people that purchase, let's say two or three times, but they spend full time full price on you So they spent, you know, when, uh, acquired for a million full price. So it's very important that when you do any type of optimization via email via retargeting via whatever you do is to look exactly at the customers that have value instead of just pocketing everyone in the same place because it's not gonna work. I hope. I hope I made sense this very morning for everyone who's listening right now. It's morning here. It is unfair. Yeah, I'm
[0:05:00] George Reid: here having a bear. It's evening for me. You're there in Romania and it's his first thing in the morning. So is admittedly unfair for both of us to be on, to be honest. But I really like your your mindset. That and I heard that rfm, um, way of kind of speaking before to be to be frank. But I do like the idea behind the buying cycles, the monetary value, the frequency who is worth keeping, who's not worth keeping. Then you you touched upon their around the optimization techniques. Are there any optimization techniques? Once you've done this analysis and we can come back to how we do the analysis, But once you've done it, what optimization techniques that people start to think about.
[0:05:42] Juliana Jackson: Cool. So you're actually right now stepping into my landmine of customer value optimization, which is something you know that we are we are doing. And we have a methodology that basically it's like a whole strategy that any brand can start. So once you have the segment of customers, the first important being a marketer can do or any Commerce manager can do is to stop guessing. Okay, because a lot of times as a marketer, we look at data to justify decisions that we're making with with it. So we want that data to look exactly as we want to do. You know something, so we justify what we do. So when you have the segments of customers, it's naturally for us humans and marketers to start seeing things where they're not just because we want to believe something. So my first advice is don't believe the data, the quad, the quantitative data immediately. If you have the segments of customers, the most important thing you can do is do qualitative research. I cannot stress this enough. It's not enough to have numbers and data data doesn't tell you the whole story. The only way you can get, uh, you know, context around your customers' behavior is if you talk to them. So you need that qualitative data. Only by combining the tool, you are gonna be able to do further optimization. So just to give you, like a practical example and this is my favorite one new customers. Everyone wants new customers. Everyone is running to get new customers. But what do you do with them? Right. So the main thing people do in this industry which pieces the shit out of me is that you acquire that new custom. Where and you think Oh, my God, I did it. And then you just bomb them with emails. And you, you send them product focused emails, you send them discounts. You just You just are so desperate to get that money back that you spent on that customer that you don't think for one second like why is this customer here? Why did they buy from me? What? They happy with what they bought for me? So you have two types of customers. So this is the first time I'm actually talking about this, you know, Podcast, This is a part of, you know something I'm doing on the side. So let's go to our FM in this new customer thing. I'm going to make it powerful, I promise. So in RFM segmentation, you have a score, right? Let's let's talk about 511 511 means five recency. One frequency because it's one order and one monetary value, which means a low order value. Right, the low adobe. And then you have customers that have 515 which means five for reasons you one for frequency, one weather and five for a or B. So you have customers that purchase one time with a small order value, and you have customers that purchase one time with the high words are bad.
[0:08:31] George Reid: So
[0:08:32] Juliana Jackson: your I guess our instincts at market there would be fucked, the one with the smaller their values focus on the one that spend the big bucks right, because if you think you know, I'm kind of segment enclaves or whatever I'm using based on the I O. B. But that's just guessing because you have no knowledge or you can. You cannot be sure that if someone came today and purchased by you know, from you for 20 bucks won't come in the buying cycle to spend 100. And you have no, you know, certainty that the one that spent 500 bucks will ever come back again. So before you, uh, you know, go and attack this new customers is very important to track the net promoter, score pre and post delivery. And I'm not saying just doing it and asking them all on a scale of 1 to 5, just how would you recommend that's not going to work? You have to understand the Why very well. So when you get these new customers the ones that didn't spend too much money, it's clear that they are not there yet with you. And let's be honest when you're buying for the first time from a brand, unless it's Amazon, right? You are very You are very careful with how much you spend because you don't know those people. So before you open up your wallet white, they need to be cautious. So what I suggest people to do is to enforce their customers, support teams to engage in conversations with the new customers and understand what were some potential frictions or some potential, you know, threats that people felt along the way that they didn't. You know, that didn't make them spend that much money. Because understanding these things, you can fix the customer journey, and you can fix the way you approach your customers in the future. And the ones that did spend a big bottle in your store, understand? Why do they do that? You know what was it Something that made them feel safe and be like Okay, fuck it. I'm buying this. It can be word of mouth. It can be a recommendation from their friends. They must have seen something. Because what I also tell you know, e commerce manager Don't look at the buying the buying process or the you know, the sales process, just from, you know, people are people are not for using the Internet to look for your product. They're not. They just randomly get to them. They're looking to fix the job, right? So your job as the market there is to understand, what is the job that people hire your product for and your brand for, and that's that's that's the most important thing. So when you get new customers before assigning them to flows in Cleveland. Before you send the boring gas welcome series, make sure you understand. Why are they on your website? Why did they purchase from you and then understand if they were satisfied with the experience they had with you and the product that they bought from you but also a very important thing here. Focus on allowing people to experiment and experience your product. Don't send the product that I just got today. You know the product and tomorrow has them. Wasn't good. Allow people to experience that product, or sometimes you send messages before even you get the product. And I had those a lot. So make sure it's a very good communication between your customer support, your marketing and your fulfillment, so so that the messages come on time. And once you collect this information about the customers, you will know how to move further. So if you have happy customers with a score, you know big square of satisfaction. Don't send them directly, you know, buying prices give them value allow, you know, build a relationship you won't be able to like if you try to sell that fast it might happen or it might not happen, but it's not gonna help you like you need to make sure that you are allowing them. I always say this like you have to uncover the demand, right? You don't have to uncover how you can sell sell better. You have to uncover the demand. So make sure that you are focused on the outcomes that people buy from you instead of the output. Because most of the optimization that's done post purchase is very much focused on products and discounting and gaming. And, you know, there. See, this is what pisses me off about the commerce, like the only thing that the best thing that they could have taken from Amazon example is the convenience. Because people are buying from Amazon because of convenience because they feel safe. So brands, instead of reproducing that convenience, they are reproducing the whole sales process. But they don't understand that Amazon is a marketplace. Their story is not a marketplace so Amazon can afford. You know what they're doing right now, But when you're a brand or any commerce story or not, a marketplace is just you. You want your customers.
[0:13:10] George Reid: I think I love that five minute spiel. I think there was so much value to go
[0:13:16] Juliana Jackson: back. I'm sorry.
[0:13:17] George Reid: No, no, no.
[0:13:18] Juliana Jackson: I
[0:13:22] George Reid: absolutely I'm more than happy for you to speak for the whole duration of me to sit back and consume and learn. It's the benefit of having a podcast I can host. But in reality, I'm just getting this free information and material straight from the horse's now. So it's great. I mean, my one. I absolutely love the idea of digging into the qualitative data because Constant obviously, um, is always what shit. That's the one you always see kind of hearing numbers, figures, analytics, that sort of jazz. But digging into the qualitative is a bit more nitty gritty. It's a bit dirtier. What are the challenges that then comes from this? So reaching out to those customers who do buy big on the first order? It's odd. It's an anomaly. You want to understand why, again, those customers who buy small do you want to understand those friction points? I really enjoyed that peace. What was that? Was there a trust issue? Was it because we didn't have the strike badge or the PayPal logo on the on the checkout form was because we had to go to a separate tab on the checkout form instead of a pop up or whatever with these tiny things which fills you with element of doubt and getting that qualitative data in 100%. Do I see the benefit of that? And the caveat them being with Amazon, you remove all of that issue because there is this overwhelming trust, like there's a nice kind of big arm around you with every time you make a purchase rubbing your head, saying it's gonna be okay if it goes tits up now, in order to implement a a mechanism, a process, standard operating procedure, let's say for this qualitative piece, there's always gonna be an element of how does it scale? And this is this is a common question from many senior people at Amazon of how do we How do we scale it? At what point does it break? So how do we think about this scalability with qualitative data? Even if we do, just look at our website house that's scalable.
[0:15:28] Juliana Jackson: What So I don't want to talk about my software today, and I want but I'm just gonna give you, like, the framework of it without mentioning because I don't like to speak about, you know, So put it like this. You have You need your Google analytics. Of course you need Hajjar, right? You need a software that collects customer data that also is connected to an MP s. Um, you know, software and the promoter score software, and you also need a customer support software. So this is like the whole ecosystem I land on your website. Google Analytics. Tra attracts me. They know where I come from, right? And then if you have Hajar, you can see my activity on the website. If you do use a recording. So this is, like already zero party data collected, right? You see what I'm doing? What I'm going. Whatever. Whatever you add, some surveys I really encourage encourage people to, um, start the whole buying process even before the person buys and ask questions like, Why are you here today? What are you looking for? That's very precious data. Zero party data, which is the best. You know, thing you can do if you want to think about pre purchase. So I end up on the product page I buy. Great. What I would do is this on the thank you page when you pay and whatever, I would send a nice survey, right? Or, uh, what I wouldn't send it. And this is, uh this is something I'm encouraging a lot. I wouldn't send it from a marketing perspective. I would send it from a customer support perspective because customer support people are the most under used folks in e commerce right now. So if you get a new customer, if you get Giuliana accustomed to Jim from customer support from the first time in gym is being super helpful to me. You already start building habits, right, and you attach You are sort of creating the retail experience on your website by having a helping hand. So you have customer support already in your team instead of them leaving them just to reply to tickets and think about them as a cost center. You should think about them as a revenue center because they are. So once the purchases done, send a survey on the thank you page and as them did you find what you're looking for? Are you excited about this product. Did you find the website experience easy and most people will respond right? Because when you buy something, you are in that euphoria, right? And you will respond, especially if it was good and especially if it was bad. The people that don't respond are usually the neutral ones that don't really are like whatever. I don't care, and that's normal. Like you. You don't have to expect that everyone is going to respond to this, but do it from a customer support perspective. Cool. Now what's the first thing? This is question for you. What is the first thing that the customer does after they purchase something? Where are they going for the first time?
[0:18:35] George Reid: Immediately, I imagine they're going back to the email to perhaps check for an order summary. A receipt of sorts, the open rates obviously going to be much higher.
[0:18:45] Juliana Jackson: Exactly. And for the record, for the people that listening. Right now I'm just like making my hands like
[0:18:53] George Reid: a star.
[0:18:56] Juliana Jackson: Exactly. So you go to the email. So where do brands fuck up? You send that boring, boring welcome series and the biggest take people do on the Welcome series is sending products. Like I didn't even have time to To To To test your product. And you're sending me other products in your welcome series. I don't give a fuck about your best sellers. I just want to know this is what the customer things I want to know if I put my car data right, if I put my address right, and if I'm going to receive this order. So instead of saving a basic no reply, confirmation of order have the same person or someone from customer support like, Hey, you made it like you can autumn eyes this message to sound like, you know, human. You've made it. This is your order. You're gonna get it in a few days. Well, Allah, if you need anything, I'm here for you. I'm looking forward for you to receive this product, like, be a fucking human being, right? And there's gonna be open. And you are already getting people used to a person. So then once you send this nice welcome series, you can also, uh, you know, like, build some sort of trust. Okay? You You made it right. The word there is good. You put your phone down you go and Lincoln or on Instagram or whatever. Then, 23 days later, your product comes when the product comes. Instead of sending people an email directly to tell them like Oh, my God, thanks for your words are rated. No. Would send an automation from the same customer support and say,
[0:20:28] George Reid: Julian,
[0:20:29] Juliana Jackson: I'm happy you got your words today. I'm gonna let you for a few days to experience it and see how it goes for you. We really hope you like it. And I'm gonna get back to you in a few days to check if everything was good for you if you need anything. In the meantime, I'm here. Just reply to this message. What does this do? Your continuing building a relationship. You're making someone comfortable with you. So you you already announced people right that you're going to allow them to experiment. You are already announced that you're going to come back to ask for feedback. So then depending on what you're buying, let's say you bought a weighted blanket, so I I just I just got a weighted blanket.
[0:21:07] George Reid: It takes
[0:21:08] Juliana Jackson: 7 to 8 days for me to get used to that blanket I cannot give you a feedback because the first feedback that I'm gonna give you it's shit. It's heavy. I can sleep on suffocating. You know, I'm claustrophobic. But why do you have plans to experience the product, right? You have to think like all these things you have to think so you have time. Then the same person asked you. Okay, Giuliana, how was the product? Can you let me know about you know your experience and you give them questions? Was it comfortable? What you watch wanted then people can rate and based on the response from that post delivery MPs because this is supposed delivery MPs, right? You If the message was positive, you can trigger a flow and say, Oh, my God, we're happy. Uh, and if it's bad, you send them to customer support, you alert the team and customer support. This is bad. We need to fix this and you hop on the phone. Yes. If you're a small brand that doesn't have you, are the customer support fucking cold? People directly forget about paying money for so many tools and for so many automation, if you have, if you just started up and you have 100 customers or 200 or 300. Forget about all this. Finished stuff. Call them. Did you get your order? Is it good? Is it good? Cool and that's it. And this is how you collect And you obviously, you know, collect this data and write it down. So the sophistication grows as much as the brand growth. But what I'm trying to say is that it's not enough to measure experience, only pre delivery or only post delivery. You have to have a delta. And the way I advise people to do it and a few of them listen to me. A few of them don't because it defies whatever you know. They're already thinking the ones that do it from customer support. They are already building habits. So the only again this is why, uh, this is why you know, I end up. I always end up talking about Amazon Amazon functions or customer lifetime value. Amazon functions on, uh, on habits Amazon fortunate on RFM as well. And this is how you grow a brand like learn something from, you know from this and build that habit forming and do it with the person because everyone wants to compete with Amazon. They can't. You can't. But at least try to reproduce that retail experience by using your customer. Support them as a fucking revenue center. Not they're not a car center. They are the ones that know what customers want that. No, the biggest issues that No, the biggest frictions that know the biggest problems that you have. It's not your marketing team. And I really feel sorry, and I'm gonna be done with that because I saw your breath. I really feel that marketing people should humble down like, a few notches and try to speak more with the customer, support him or the sales team or the fulfillment team and understand what are actually the problems of the customers and stop, you know, throwing marketing of their asses all the time. From that.
[0:24:05] George Reid: No, another another. You don't need to comment. I was just about to give it to make a comment. I thought at the moment, but I didn't You were still finishing, and that's fine because I have enjoyed it. Um,
[0:24:17] Juliana Jackson: I
[0:24:18] George Reid: like that a lot of kind of winding either way. Right away. Back to the start. Yeah, and some of them core pieces about that first, first email you sent particularly. Now I've experienced it myself for you do apple pay. Um, and it picks up some random fucking address. You got saved in your phone from seven years ago, and it sends it to that address we've recently just sent toilet roll. Who gives a crap to our old landlord for, like, two years ago? And you just received these, like a big, massive box of toilet roll. And we had a bad ending to our tendency as well. It's even
[0:24:52] Juliana Jackson: worse. You
[0:24:53] George Reid: just got, like, all right, Joe and George just sent a whole box of toilet roll out of out of the blue. So something simple things like that have, like, you've completed your job, sending it to the right address
[0:25:05] Juliana Jackson: and all that sort
[0:25:06] George Reid: of information is helpful stuff. Just to go. Yes, I've ticked boxes. Well done, me and then that that reproducing a retail experience I really, really like because when you're in store, you can watch a little bit more closely as a shopkeeper, how they interact. You can see how they navigate. You can see what questions that are cropping up regularly of. Do you have anything that goes with this dress, for instance? And you're like, Okay, well, that keeps coming up. Maybe they should be closer together or Oh, you don't accept cash or you don't accept hard, which has been a common issue. And in many parts of Europe, like I found with a huge issue of like, they don't accept any any kind of foreign card whatsoever. So you're like, Okay, well, this is a bad experience. So you're you're kind of dragging some of them learning through that you can pick up in person, even if you are at that point where you're looking to increase it by 10 fold. And that is obviously everyone's ultimate goal. Where you go, right? I want my business to be X y Z in X number of years. I know I need a system in place. What are the challenges? Obviously, when you look at the quality of side is how can we achieve that? But in the earlier days, there's nothing wrong with them being quality stiff doing something manual and an order episode. Charles in Stone talked about this as well. You would quite like the episode, Juliana, where he goes when you do it for as long as you can to collect as much as you can. And if you can then get different systems in place. Fantastic. Um, but if not, then then it's difficult to obviously scared. I've rambled a little bit there, but hopefully that makes sense.
[0:26:54] Juliana Jackson: No, you're right. You're right. And you you always should should ask yourself as a brand owner or commerce manager if you're managing a team like how should I scale? And I think you should just take it gradually, like you just start the business. You it's Listen, it's a very big problem in e commerce. No matter how big you are, you're always gonna be, uh, you know, faced with the status quo. And that's my biggest problem right now. It's a very, very, uh, closeted, and I don't know the closet, but like and I want I don't want to. I want really trying to find a good word for this. It's a very restrictive. That's the word. It's a very restrictive mindset when it comes to growth in e commerce, and when you are a founder, you are faced with the status quo because you are. So, uh, you are agreeing with yourself, like the Four agreements type of book. You are agreeing with yourself on this. I got to grow this business by any chance, by any means by anyway. So you are so absorbed in that mindset that you are, you basically block everyone around you. That's actually better at you, you know, and doing the job that they have, right? And you're just stopping people. You're hiring people in your team, but you don't allow them to do your job because you think because you're the founder, you know better. But you don't, and that's that's the biggest problem. That's the biggest problem. Like you hire experts and you're trying to grow with people. You hire growth market that you hire customer support, you hire people and you want them to have experience. But when they are there, you don't allow them to do what they want. So I think the biggest challenge right now, and I spoke about this a couple of times and actually had a manifesto on a on a big event, and I had a key note that was not a keynote. It was a manifesto. We don't have a tool problem in the market. We don't have a data problem. First party data was always there, right? It's just someone put a name on it. Tools, Even if you don't have the sophistication of a customer data platform because there are all hot right now. You have crm s. You had, I don't know, whatever you had in excel, right? You can do growth in an Excel two. So the tool is a commodity. The data is a commodity. The problem is the mindset and the know how is just that we have been, um, in the direct to consumer space. We have been, um, for the last 20 years, living 20 years, we have been living in an accusation focused mindset because the only take away that e commerce brand owners have taken from Amazon is the sales part, which is wrong, which is very wrong. Because again, you are not the Amazon. And I wish I wish the only thing I wish is that people understand that the reason Costco, Amazon, walmart, assholes all this giants in, you know, in the you know e commerce sector are winning is because they're focusing on customers and making their life easier and understand that you have to make someone told me this on LinkedIn. I hope I'm not gonna fuck it up. But he says something like, make sure you have the storefront, okay? So people can come in but behind the store, you know, behind the store behind the front. And make sure you have your mother's apple pie to give people.
[0:30:04] George Reid: So
[0:30:06] Juliana Jackson: I really like that a lot. Because if you no matter how many tools you use, no matter how many automation is, no matter whatever you do, all this stupid Gamification stuff that people are doing right now speeding the wheels and stupid pop ups and discounting and
[0:30:21] George Reid: whatever, you
[0:30:23] Juliana Jackson: cannot gain retention man, you cannot gain customer lifetime value. If you have a very bad customer experience, post purchase, you're done. And, like look at the market. Everyone is selling the same shit is very hard to find someone that actually has a niche, right, a good niche and has really, you know, loyal customers that stay in that niche. Because again, this comes back to the conversation around the roos and about, you know, cause for marketing an accusation. People are focusing on accusation costs and, you know, ads and whatever when their biggest problem is reached. Brands are really gang banging the same audience, right? And if you if you don't like that, I can say that again like
[0:31:09] George Reid: no gangbanging works.
[0:31:11] Juliana Jackson: Okay, so the same. It's just the same audience, man. And you're what's the What's your value proposition? You see so many ads that make you be like, Okay, so what? You know what? So whatever you know, But you are like going for the same people. And what, like That's not how you grow a business because most people see growth, you know, like this traffic conversion rate a o. V, and that's it. But that's not growth. That's nothing. That's not how you run a business. A business again is being rent with your models, mothers, apple pie, and that's how you treat your customers. And yeah, I'm sorry I went on a rent, but I'm having so many conversations around this topic every day that I just became super vocal about it right now.
[0:31:57] George Reid: So if we if we think about the mother's apple pie for a moment there and you touched upon higher than white people and allowing them to do what they need to do. Um, so let's see who's going to make this apple pie. From your point of view, if you're setting up a brand now, you're running a one man show, one woman show. Um, and you've just said that this brand you're looking for that first hire? What skill are you looking for in your first high right now?
[0:32:24] Juliana Jackson: That's a great question. I'm looking. I'm gonna look for someone that's the total opposite of me Because I am. I am an innovator. I'm loud. I am super impulsive. I just If I If I come with
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