ProfitXL To Profipoly: Solving the Four Funnel Frictions – Part 5
Written by
Rajesh Jain
Rajesh Jain
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ProfitXL To Profipoly: Solving the Four Funnel Frictions – Part 5

Published : December 20, 2023

In the fourth part of this series, I talked about how Reactivation Progency and the strategy of Near-Zero Acquisition Cost can help address Dormancy and Churn and Adtech AdWaste, respectively. In this concluding part, I will discuss the importance of addressing these four funnel frictions and present an alternative perspective on their solutions.

The importance of addressing the four funnel frictions

So far in this series, I have discussed the four funnel friction fractions and presented solutions for each.

  • 1/00: Mitigating Attention Recession through Inbox Commerce by using Email Shops.
  • 1/33: Countering Red Journeys with Green Journeys powered by iDarpan to predict the next best action.
  • 1/3: Partnering with a Reactivation Progency to overcome Dormancy and Churn.
  • 1/2: Adopting a Near-Zero Acquisition Cost strategy to address Adtech AdWaste.

Addressing these frictions must take precedence for eCommerce CEOs and CMOs, as it can help brands enhance profitability, putting them on course to achieve exponential, forever profitable growth. eCommerce brands must strive to resolve all four friction points to create a fortified business and a profits monopoly (Profipoly). Such an approach distinguishes ordinary businesses from extraordinary, enduring, and great businesses.

eCommerce brands can start by implementing Inbox Commerce and Reactivation Progency, as both can seamlessly integrate into existing marketing activities without extensive tech integration. Crucially, brands must identify a Martech 2.0 partner willing to adopt a performance-based pricing model for both initiatives.

Next, eCommerce brands can address AdWaste by implementing a reactivation program. Encouraging referrals from ‘Best’ customers through AMP email footers can help further this endeavor. Lastly, using the Best Customer Genome data to influence the acquisition of ‘Next’ customers can provide a comprehensive solution to this challenge.

An alternate perspective

Here is an alternate perspective on the four solutions to the four funnel frictions.

  • Inbox Commerce targets all customers (especially Best customers) to optimize lifetime value.
  • Green Journeys for Rest and Test customers aim to predict the next best action.
  • Reactivation Progency re-engages Left customers and prevents Test customers from becoming dormant.
  • Near-Zero Acquisition Cost focuses on Next customers.
Friction
Good Fraction
Solution
Customers
Attention Recession
Low opens and CTRs due to information overload and non-personalized messages
1/00
Inbox Commerce
Email 2.0; Email Shops (AMP); Engaging Footers (Atomic Rewards); Hotlines; WhatsApp Shops
Next
Red Journeys
Poor customer experiences leading to drop-offs and disengagement on brand properties (website, app)
1/33
Green Journeys for Next Best Action
iDarpan powered by Digital Twins, Large Customer Model, and Generative AI; SHUVAM; VRM, Best Customer Genome; CLV; Unistack; Unichannel; Search, Browse, Recs; Omnichannel Personalization; Earned Growth
All

Special focus on Rest and Test
Dormancy and Churn
Existing customers are lost or become inactive. They are then retargeted for expensive reacquisition.
1/3
Reactivation Progency
Email (AMP); Data Enrichment; Microns with targeted content; Atomic Rewards Partner, combining product and agency; Adtech-style performance pricing.
Left and Test
Adtech AdWaste
Inefficient marketing spends on customer acquisition.
1/2
Near-Zero Acquisition Cost
Reacquisition → Reactivation; Referrals from Best Customers; BCG-influenced acquisition.
Next

A 10% increase in revenue and a 30% reduction in marketing spends by halving AdWaste can transform the company’s P&L, potentially doubling profits.

Before
After
Revenue
100
110
Gross Margin
40
44
General & Admin Expenses
25
25
Marketing Expenses
10
7
Adtech
8
4
Martech
2
3
Profit
5
12

The successful implementation and execution of these four funnel interventions opens the path towards building a ‘Profipoly.’

The importance of customer data

I will conclude this series by highlighting that these strategies are designed for eCommerce businesses that maintain a direct relationship with their customers. But what about businesses that operate offline through stores and marketplaces where acquiring customer details is a significant challenge? Then, there are unidentified website browsers. These situations present a potential fifth friction point within the sales funnel.

These businesses must collect some details from customers, such as an email ID, and establish a direct digital communication channel. Here is an excerpt from one of my other articles wherein I discussed the importance of customers and customer data in ‘building high-growth profitable D2C businesses.’

“The strength of marketplaces comes from their ability to access their customers and the data they accumulate. The lack of buyer data pushes D2C brands to remain dependent on marketplaces. In some situations, it may be possible for D2C brands to get end-customer information through incentives such as an extended guarantee or discounts on future purchases if buyers give their email address and mobile number.”

Ultimately, businesses that maintain close customer relationships emerge as big winners. Businesses dealing with unidentified customers must implement a Know Your Customer (KYC) program – ‘Anon-to-Known’ – and foster direct connections with them.

If you haven’t read the previous parts of this series, you can start by reading Part 1 here.

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