This guide is a practical resource for developing a set of transactional emails that will move your new users through the sales funnel toward becoming happy, engaged, and paying customers.
Chances are, these are emails you’re already sending, but they’re probably not driving your bottom line. We’re here to change that.
To map out the guide, we’re using Dave McClure’s Pirate Metrics model. We use Dave’s model because it’s a great conceptual framework that’s easy to implement. At each step of the pirate model, we’ll give you clear, actionable examples that you can use to craft your own set of conversion-centered transactional emails.
Sometimes your best new marketing channel isn’t a new channel at all.
Transactional emails – emails sent automatically in response to a user’s action on your site – amplify all of your other marketing channels at once. When fewer users fall off the conveyor belt toward revenue, the time and money you spend getting them there in the first place yields much better returns.
Not only are you already sending these emails, but people are expecting them, opening them, and reading them, so why not make them work for you? Of course, if you aren’t already sending transactional emails, we can help.
Transactional emails are the mechanism by which you keep in contact with your users, just because they’re automated, doesn’t mean they should be robotic.
There are plenty of great explanations of the Pirate Model, including Dave McClure’s original presentation (which, by the way, specifically mentions automated emails) but if you’re unfamiliar, here’s a quick rundown of what we’re talking about.
The Pirate Model is so named because it consists of five stages that make up the user life-cycle: Acquisition, Activation, Retention, Referral, and Revenue – or “AARRR”.
People hear about you and land on your site. For the purposes of email planning we’re also going to include anything that gets you a user’s email address.
People actually use your product. They get to that “Aha!” moment when they experience the value proposition your company offers.
People come back. They stick with your product over time and develop an understanding of how it works and why they like it.
People invite their friends to try your product. They’re good at describing and pitching your product to others, they share your content, or maybe they’re inviting friends for an incentive – that counts too!
See? Simple as that. We love it because it gives marketers and CEOs a consistent vocabulary for planning and reviewing growth strategies. We’ll elaborate a little on each of these steps as we go, so a general understanding should be plenty for now.
You’ve just acquired a new customer – someone has visited your site and signed up. They’re interested in what you’re up to and they’ve given you their email address. What’s the next step? How do you keep that momentum going?
Enter the Welcome Email
Welcome emails are purpose driven emails written to carry the excitement of a new user toward a first positive experience with your product or service. They bridge the first steps of the onboarding process – acquisition & activation – and they happen at the crucial time of your first direct contact with a user, when they’re most likely to open, read, and click your emails.
In fact, welcome emails generate 4x more opens and 5x more clicks [warning: boring marketing pdf] than regular campaign emails, so they’re fertile places to cross-promote, upsell, or gather more information. Let’s make them count.
This chapter outlines 10 battle-tested strategies for creating conversion focused welcome emails. If your company has already mapped out specific user goals or actions to move new customers from acquisition to activation, skip this next section and move straight to the strategies.
Otherwise, this section will help you build out a step-by-step process for activating new users. Let’s dive right in.
Ask yourself, “What’s the next step for the user?”
People sign up for all sorts of different reasons; some are fully qualified to use your product – most are not. Map out the onboarding process.
- Take a screenshot of every page your user sees from the time they sign up to the time they’re using your product.
- Stick them up on a white board.
- Make a list of your activation goals – the specific actions your users need to complete in order to hit the ground running with your product. This includes what they need to know as well as what they need to do.
- Take this opportunity to cut any unnecessary steps.
This process will help you determine the goal of your welcome email (and, in chapter 2, the goals of your onboarding emails).
The goal of the welcome email is to get readers to complete the first activation goal with as little friction as possible.
Let’s take a look at an example:
Instagram’s activation goals are simple: Sign up, Add Friends, Take Photos, and Browse the Feed. After signing up for the service, it’s clear that adding friends is the most important action to activate the customer – they dedicate a whole 3 pages to it. Their welcome email would certainly suggest “adding friends” as the first step.
Everybody’s activation goals are different: yours could be as simple as getting people to read something or you could be trying to get users make a first purchase or subscribe to your service. The important thing is that your welcome emails are tailored to your goals.
To help get you rolling, here are a few welcome emails with clear & simple goals:
The intended action in Path‘s welcome email is very clear: Watch this video
The big blue CTA in Vimeo‘s welcome email makes the next step crystal clear.
Twitter visualizes the benefits of downloading their app and includes a clear CTA button
Quora has all their activation goals mapped out for the user in their welcome email
Now that you’ve determined what your users need to do, it’s time to encourage that action with a welcome email.
Every email should focus on a specific (read: one) goal. You might be tempted to stuff a bunch of calls-to-action (CTAs) in your welcome email – don’t. When Whirlpool reduced the number of CTAs in their emails from four to one, their click-through-rate (CTR) increased by 42%.[warning: another boring industry link]
Focus on just the first activation goal. For Speek, a conference calling service, it’s getting users to make that first call.
Speek doesn’t waste any time activating customers in their welcome email.
Emails are a bridge back to your site where you can finish making the sale or activating the customer. Pushing a sale can be tempting in a welcome email, but if you asking for too much commitment up front your user could get cold feet. The big green button stands out and encourages a simple action without asking for too much.
In an email promoting one of their webcasts, SendGrid tested exactly that. They created two versions of their welcome email: one said “Sign Up for Free Webcast” (Email A), the other, “Preview the Agenda” (Email B).
Email B? It asks for nothing more than to preview the agenda – just “check out what we have to offer.”
Email B got 83% more clicks!.
The lesson here? Two things:
- Limit Welcome Emails to one CTA.
- Keep the CTA commitment free and save the sale for the landing page
This works two ways:
- Encourage more activations by offering a direct incentive, or
- Surprise & delight your new readers with a funny cat picture. Seriously, never underestimate the effectiveness of a well-timed cat picture.
Add a 20% off coupon, link to a white paper, offer a 30-day free trial, whatever. Just make sure this little piece of free is still nudging them toward activation.
There are lots of ways to gather email addresses: events, purchases, lead generation campaigns, social media, among others. Somewhere along the way you’ve probably gathered a name, where they work, or much more. Use it!
Add a nice personal touch to your email by using their name in the subject or body. If you have the data, segment your subscribers using information about how and where they signed up, so you can tailor your welcome email to reinforce their decision.
Shutterfly, an image publishing service, had the right idea when they created a welcome email targeted at customers who had just purchased their birth announcement cards. Their welcome email used segmentation to recommend a product that spoke to a specific group of customers – in this case, thank-you cards from expectant couples.
Welcome Emails are NOT sign up receipts.
Treat the welcome email as an opportunity to connect with and learn from new customers – this means ditching the “do-not-reply.”
Maybe you have a product that requires a little explaining. The welcome email can point your users to a helpful tutorial or even connect them directly to someone in customer service.
Groove, a simple help desk application, does this particularly well. After signing up, new users receive a welcome email with clear, concise, and casual language that offers tips and next-steps to get them going.
Welcome Emails should look like the landing pages they came from. Brand consistency across all media builds a strong impression of your company in the user’s mind.
Look back at the exercise we completed earlier where we mapped out our activation goals using screen shots of the onboarding process. Does your welcome email fit in with the other pages? There were probably no ugly web pages in your onboarding process, so why would you send an ugly email?
HTML emails serve an important purpose and it’s not just being not-ugly. When your site and emails not only look, but respond similarly, you smooth out the user’s path to activation.
Finally, if your value proposition is difficult to express concisely, visualize it with graphics.
Images and big flashy CTAs are hard to miss.
Side note: it’s worth mentioning the age old HTML vs. plain text email debate. Some believe that plain text gets better deliverability and higher click-rates. In truth, it depends on your audience. Plain text performs better for some, but don’t assume. Test your emails against your audience to determine which performs better for your customers.
This one comes from our good friend Jillian Wohlfarth at SendGrid – Thanks, Jillian!
You only get one chance to make a first impression. Saying “thank you” shows that you appreciate a user’s interest. Remember to show that you care – these two words go a long way – and not just in emails.
Unsubscribe buttons build trust between you and your customer and, though they’re unusual for transactional emails, we recommend including them because you gain a lot more from knowing which emails are losing you customers.
Of course, you might be thinking “I’m afraid people will unsubscribe from my emails.” Yes, however the alternative is… they mark you as SPAM. At least you can track your unsubscribes and learn from them. If you’ve been marked as SPAM, the problem can quickly compound itself.
Side note: As of July 1st 2014, Canada’s Anti-Spam Legislation (CASL) says that by law you must include an ‘unsubscribe’ link in each email. That’s just one more reason to make it available to your readers, but even if you’re not sending emails to Canadians, it’s still good practice to include ‘unsubscribes’ so you can learn from your failures and write better emails.
Waiting for email sucks. Don’t make your customers wait. Here’s a picture of a cat:
Step 1: Have a plan.
Step 2: Tell them your plan.
You’re building an audience for the long haul, your welcome email should set some expectations. Whether you’re sending newsletters or a 4-part ‘How-To’ guide, you probably have a plan of attack.
How often should your new users expect to hear from you? Creating a schedule for delivery helps create anticipation and establishes a level of trust between you and your audience
This one comes courtesy of our good friend Joanna Wiebe, of copyhackers.com.
Remember the welcome email is only the beginning. Be sure to follow-up with pertinent information to fill out the user’s experience. The pace at which you send these emails is highly dependent on your business, but here are two great tips:
- Use the Fibonacci Sequence. While nobody’s claiming that this is a divine secret of the universe, timing out your drip campaigns to the tune of the Fibonacci sequence (1,1,2,3,5,8,13…) is a good starting point. You weight your communications towards the time when a new user is most excited about you and then slowly back off without abandoning them.
- Make your move by day eight. The first week, your users are becoming acclimated to you and building on the excitement they felt when they originally signed up. Try and get them to activate while you still have this momentum!
People who receive your welcome email have self-selected as being interested in what you have to offer so continue the conversation you started on your landing page and make the next step easy and obvious.
A clear and friendly welcome email will keep your customers from walking the plank during the voyage from Acquisition to Activation.
After sending the welcome email, you’ve gained some trust with your new user. They’ve been introduced to your product and they have an active interest in it. Now it’s your job to make sure they actually use what they signed up for. That’s where activation and onboarding emails come in.
What is Activation?
Activation happens when users understand and appreciate the value of your product. Like acquisition, activation doesn’t happen instantly. Just because someone has given you their email address, or even signed in to your product or service, it doesn’t mean they’ve activated. Even if users can instantly start using and benefiting from your product, they still might need some direction getting to the next step.
Activation can be difficult. Just think about all the free trials you’ve signed up for over the years. Now, think about how many of those companies you’re actually a customer of.
Chances are, it’s not the value proposition that kept you from using the product. It’s the barrier to entry – the extra time and energy it takes to poke around and get the hang of everything.
To help move new users toward activation, we use Onboarding Emails. These emails tell users what to do next, but they also provide value to the customer. They’re the “getting started” emails, the “walkthroughs”, and the “How-to’s” that are generally sent the first few weeks after signing up.
So, Where are We in the Pirate Funnel?
After all the time and energy spent finding new users and getting their attention in the acquisition phase, now it’s time to make sure they have a great first experience.
Like many early startups, your pirate funnel might look something like this:
Leading a Horse to Water
To begin activating new users you need to understand the barriers between signing up and actually using the product effectively. Whether those barriers are complex UI, unclear goals, or a slowly developing return, it’s your job to walk new users through the pain points of getting started. The most impactful way you can do this is through email.
Okay, I know what you’re thinking: Email… Onboarding…
Most Startups Aren’t Ready for Drip Campaigns
During the writing process for this chapter we talked to our friend Noah Kagan fromSumoMe, and he brought up a really great point: until you actually know what needs to go in the drip campaign, you’re wasting your time. You should think of drip campaigns as a way of automating the most painful parts of activating a new user, so the first thing you need to do is figure out what those pain points are.
How, you ask? Just email them yourself.
You might recognize this from last chapter, and you haven’t seen the last of it. Direct, personal communication is hugely beneficial, not only in building relationships with new users, but also in developing an understanding of the pain points your customer experiences so that you can fix them or address them in your onboarding campaign.
CEO: It’s your job to email the first 1000 customers
Rob Fitzpatrick wrote a great post a while back wherein he suggests that, for new startups, the CEO should personally email the first 1000 customers to make sure they’re happy and activated. Not only will they be delighted to hear from and interact with a real person, but you’ll understand who your customers are, what they’re problems are, and how you can solve those problems.
By answering the same questions over and over again, you can truly get an understanding of what your users want and what keeps them from achieving it. When you’re sick and tired of addressing the same issues again and again, then – and only then – are you ready to build those answers into a killer onboarding campaign.
Building an Onboarding Campaign
Step 1: Sketch Out an Onboarding Funnel
Last chapter, we set some basic activation goals to get you started with a clear and actionable welcome email. Now, we’re going to take that step further by building an onboarding funnel. Onboarding funnels help you identify where there’s friction in your onboarding process so you know when to step in and nudge a new user with an onboarding email.
Onboarding Funnels have 3 major steps:
- Track Key Activation Goals
- Identify Pain Points
- Find a Solution for the Problem
But, before we build the funnel you need to understand two things: User Motivations and Activation Goals.
Understanding User Motivations & Activation Goals
User Motivations are why people are using your product in the first place (your value proposition). For Facebook, it could be to connect with old and new friends. For Dropbox, it’s an easy solution to share files between people and devices.
Activation Goals are all the actions users need to take to get from where they are when they sign up to where they want to be – their motivation for signing up. This could include installing software, learning the UI, connecting with friends, or uploading a file.
Activation happens when users get through all the goals and achieve what they set out to do. The less friction we have in this process the better.
Let’s build out an onboarding funnel using Dropbox as an example.
Track Key Activation Goals
New users sign up for Dropbox because it’s an easy way to share files between devices, friends, and colleagues. But, there a few steps (activation goals) every user needs to take in order to use the service.
If we were to map out all the activation goals between signing up and actually using the service the first time, it would look like this:
Now that you have the outline of your funnel, it’s time to populate it with numbers to identify where the friction is.
If you’re tracking the how many users are making it through each activation goal, you’ll have a much easier time accessing where the problem is.
Find a Solution to the Problem
Once you’ve discovered where your users are falling off the funnel, then it’s time to fix it. This is where you’ll do most of your learning. Sometimes the cause of the issue will be clear – maybe they just needed a reminder – other times, you’ll have to dive deep into the user experience to find the root of the problem.
In Dropbox’s case, they might have seen a low conversion rate on their app installs and identified that their signups just needed a little email reminder. So, they send brief email highlighting the features of their product with a clear and actionable link to download the app.
Step 2: Writing the Onboarding Email
We’ve all received Onboarding Emails. They can be helpful, but they can also be pushy, naggy, and sometimes just plain desperate.
The worst Onboarding Emails usually have on thing in common: they’re entirely focused on the coversion. “How do we make the sale?” “What can we offer to encourage a buy?”
That’s the exact wrong way to look at it.
Onboarding emails work best when they provide value to the reader. Your onboarding emails should iterate on the customer discovery process above – learning directly from users what trouble they’re running into. Then, when it comes time to sit down and write a solution at scale, you’ll know exactly what they’re looking for.
Save the Sale for Later
Your customers aren’t ready to make a purchasing decision (yet).
According to Gleanster, between 30-50% of leads are qualified, but they’re just not ready to buy. They need nurturing and education to fully understand the value of your product or service.
Once you’ve determined what resources you have that are of most use to your users, these strategies will help you craft emails that turn that knowledge into a bridge between signup and activation. Remember, new users want to hear from you as long as you have something relevant to say.
Onboarding Email Strategies
1. Include a single, clear CTA
You should recognize this tip from our chapter on Welcome Emails. We repeat the strategy here because the success of an email depends on a simple, clear Call-to-Action (CTA). Readers are more likely to click-through when it’s clear what the next step is supposed to be.
Buffer, the social media scheduling service, starts their onboarding campaign with a clear CTA that moves it’s users one step closer to activation by asking users to install their click-to-post browser extension.
2. Curate or Create Relevant Content
Onboarding Emails should focus on educating users, not pitching them. Whether you’ve created a video, written a blogpost, or linked to some relevant content on your blog, share that with new users in an email if you know it will help them use your product or service. And, remember, pick content that plays into the user’s motivation for signing up.
Buffer sends a great follow-up email that’s hard to ignore if you’re someone that’s just signed up for a product that makes you better at social media.
Make sure it’s as easy as possible for your signups to get to your product or service. If you can link them directly into the app, sign them in, and get them rolling, do it. Remove as much friction as possible in onboarding emails.
4. Time Your Emails Accordingly
There are two mildly conflicting things to keep in mind when timing your onboarding emails:
- Strike while the iron is hot
- It’s a Marathon, not a sprint
Strike While the Iron is Hot
Front-load your onboarding experience. This line of thinking says that users are most interested in your product when they sign up and, as time goes on, they become less and less excited.
If signups are slow to move through your onboarding process on day-zero, email them with resources or offer them assistance setting up their account. If you’re an early startup, you can afford doing things that aren’t scalable in order to get those early evangelists for your product.
It’s a marathon, not sprint
Activation doesn’t happen instantly.
Receiving a barrage of onboarding emails from a company can get annoying quick. Consider looking at your onboarding funnel every week or two and email the segments of users that haven’t accomplished specific activation goals.
Which method you choose to follow will depend entirely on your user base. Try both. You’ll learn quickly what works and what doesn’t. Just don’t leave your new users in the dark. They have self-selected as being interested in you, so they want to hear from you as long as you have something relevant to say.
Step 3: Automate Your Learning with a Drip Campaign
Once you’ve manually guided your early adopters to activation, Drip Campaigns allow you to take all the learning and best practices you’ve discovered and automate the process. They allow you to setup a system that’s proven to work, so that new signups automatically receive what they need when they need it.
A typical drip campaign looks like this:
All great drip campaigns come from a marketer or CEO that really understands the plight of the new user. Without an understanding of each customer segment, a drip campaign is – at best – a shot in the dark.
Activation is a crucial step of the Pirate Model. It’s where you follow through on the promises you made during acquisition and you validate your product against real customers. Activation doesn’t happen instantly, but if people have taken the time to sign up for your product, it’s your job to make sure they have a great first experience.
If you take anything away from this chapter, it should be that you need to listen to you users if you’re going to succeed. Talking to users will help you understand who your customers are, what their problems are, and how you can help solve those problems. If you understand that, onboarding takes care of itself.
Retention is the metric that has the closest link to revenue and growth in the Pirate Model. Retention, (aka loyalty) is the number of customers that come back and use your product over and over again.
In this chapter, we’ll look at the elements that influence customers to stay and use your product over the long haul. We’ll give you tools for developing your own retention campaign and we’ll look at example retention strategies that will help increase the lifetime value of your customers and set them up to become your best marketing channel.
These retention strategies are transactional, meaning that they’re targeted one-to-one messages that are triggered by individual actions. Transactional emails are especially effective in retention because they target specific pain points in your sales funnel.
We’ll go over specific strategies later in this chapter, but first let’s understand exactly what we’re talking about and how to measure it.
A Bird in Hand is Worth Two in the Bush
It’s always easier to keep existing customers than it is find new ones.
Users that have reached the retention stage of the pirate model have become extremely valuable to your company and you should take care of them. These customers have used your product, they understand your value proposition, and they’re at most just one step away from paying you. They’re so close in fact that Harvard Business School found that even just a 5% increase in retention translates into a 25-95% increase in profit.
How to Define a Retained User
A retained user is more than a customer that uses your product over a long period of time. A customer that continues to pay for your service, but never signs in to your product is not your ideal user, so it’s important define the qualities of a “good” customer.
Similar to activated users, retained users are customers that use your product for the specific feature (or features) you offer that differentiates you from your competitors. By defining a retained user using specific metrics like subscription, feature usage, engagement, or activity, you can make sure that your customers are a good fit for your company and constitute an actual demand for what you do.
Finding your Core Retention Behavior
Once you’ve defined what a retained user looks like, now you need to determine your core retention behavior. Similar to the “Aha” moment, this is the point where your customers understand your product and will continue to use it long term.
For Facebook, they’ve defined core retention behavior as the point when a user has added at least 15 friends to their account. In Alex Schultz’s Startup Class lecture he discloses that, for Facebook, someone that has 15 friends is likely to remain active on the service for a long time, so their retention strategies are all focused around promoting the behavior of adding friends.
To find your own core retention behavior, look for specific actions that are common to your ideal users, then promote that behavior in your retention strategies.
How to Measure Retention
Before you dive into creating a retention strategy you need a baseline to measure your successes.
Retention is the percentage of customers that continue to use your product over a period of time, so to calculate your retention rate here’s a simple formula:
Retention Rate = ((CE – CN) / CS) x 100
CE = Number of customers at the end of a period
CN = Number of new customers acquired during a period
CS = Number of customers at the start of a period
Obviously, the goal is to have a high retention rate (because losing customers sucks), but the real value of calculating this comes from mapping its progress over time.
Another way to measure retention is to look at churn.
What is Churn?
Your churn rate is the number of users that cut ties with your company during a period of time. Like retention, churn is calculated by dividing the number of customers lost by the number of customers at the start of the month (or period of your choice).
3 Customers Lost / 100 Customers at the start of the month = 3% Churn Rate
How you decide to measure your company’s retention isn’t as important as maintaining consistency in your measurement methods.
Three Ways to Increase Customer Retention
Priming customers for retention starts long before they reach the retention stage of the Pirate Model. In fact, it starts at the top of funnel. Customers don’t owe loyalty to your product, so building a relationship that retains customers takes time.
Here are 3 ways to set yourself up for success:
- Find the right users to start with. Believe it or not, retention starts with acquisition. If you’re attracting the right customers for your product, they’ll naturally get the most out of it. If your retention rate is low, you might be attracting the wrong users. Determine your ideal customers and use them as a measuring stick to assess the quality of your acquisitions.
- Have a killer onboarding process. Making sure your new users actually use your product is key to retaining them later in the funnel. Are your users activating? Have they found and used your product’s key features? If not, retention emails are going to have a hard time convincing them to stay with your product. Retention strategies add value on top of your product – icing on the cake – if users have missed the value of the product alltogether then just the icing isn’t going to cut it.
- Don’t let your customers forget about you. Great retention strategies continue to solve problems for their customers long after they’ve started using the product. Constant and continuous education in the form of videos, webinars, slideshows, eBooks, blog posts, etc. will keep your users engaged and will make sure that your company stays at the top of their mind. But remember, give your customers practical and actionable content that they can actually draw value from. Customers that see value in your content will thank you with their loyalty.
Seven Proven Email Retention Strategies
With so many products on the market, keeping customers engaged with your company is harder than ever. So, if you find that your customers are churning after activation, we’ve compiled 7 transactional emails strategies you can implement to loop them back into your product.
1. Notification Emails
The most effective emails you can send are Notifications – Alex Schultz
Notifications are a great retention tool, especially for high-use products. They stand out in a user’s inbox because the content in a notification email is tied directly to what’s happening on their account. Second to welcome emails, notifications get the highest open-rate compared to all other email categories.
Similar to push notifications, email notifications are real-time update emails that can