Looking to grow your revenue? I’m going to show you the strategy we use to help our ecom clients do just that. This can work for large and small online stores. How fast can you implement and scale what’s working?
This is going to take a departure from the blog as I’m not writing about Google Ads. We are going to cover how you can build up your ecommerce store revenue and make your business more profitable this year. We are also going to show you how this can work on Facebook, which we find is a great partner with email. You can of course do all of this on Google and Bing too.
What’s your biggest issue when you run an ecommerce store? Revenue? Acquiring customers? Being profitable on all if not 90% of your sales? When I talk with friends in the industry or even potential clients, it seems all 3 can be an issue as every business is at a different stage of their growth. Today I want to share some ways we can solve these problems and help turn businesses around. This is about peeling back the layers and staying focused on doing the hard work. It’s not fun nor is it sexy but when you double your revenue in 18 months, you’ll know it’s worth it. Hell, even if you increase your revenue by 50% or even 30% from the past year, you will be doing better than most businesses out there.There are three areas you should be working on should you want to increase your revenue:
- Customer Acquisition
- Average Order Value (AOV)
- Repeat Customers
One final point, a lot of what I’m sharing today is based on working with non-drop ship ecommerce shops and online brands. This may or may not work for a drop ship brand but it remains to be seen. Now let’s talk about how you are going to grow with these three areas over the next 18 months.
Most businesses will have 2 or 3 channels that they get 80% of their customers from each month. That may be Google Ads, Facebook or even Instagram. However, even if you spend 80% of your time and effort on these channels, there are other opportunities you should be looking at to acquire more customers.
We see a lot of brands get stuck on the 80/20 rule, and though it holds true for digital marketing and customer acquisition, we believe strongly in incremental growth for any brand. Today’s hot brands may not be here in 2030. Branching out to Bing would be a great way to expand your reach and grow your revenue, for example.
Other channels you can look at are Pinterest, Snap Ads, Microsoft (Bing Ads), and you can even look at Reddit or Quora as well. The goal is to find other places where your customers hangout online and grow your business overtime.
Average Order Value (AOV)
Your average order value (AOV) is simply the number of orders divided by your revenue for a given period of time. When possible, we try to get clients to use the number of customers instead. It is a more meaningful number and lets you understand what you can spend to acquire a customer. If you know your AOV, what can you do to improve it? The answer being: plenty!
Your two main options are trying to upsell or cross-sell a product (or a series of products). This happens while someone is still on your site or has recently bought from you. Amazon makes 35% of their revenue from doing this…
both the “Frequently Bought Together” and “Customers Who Bought This Item Also Bought” sections promote products related to the item that a customer is currently viewing on the site.
If it’s good for Amazon, I know it’s worth testing out for clients. You already spend time and money acquiring that customer, why not try and get them to buy more of what you are selling?
Up-selling Your Customer
Up-selling typically happens on the product page of a site. You are trying to convince someone to buy a higher version of a product. I have a bonus tip at the end of this section and it’s something we are trying to get a client to implement.
Apple is what comes to mind for most people. They will try to have you upgrade your ram, hard drive or other parts of your new Mac. Sometimes it is worth it and other times you should stay away. Car brands and just about any tech brand is going to try and upsell you on accessories for your new tech purchase. My recent purcahse of the Google Pixel 2 below is the perfect example. With higher tier options, there was a distinct attempt to get me to upgrade the storage or even get the Pixel 2 XL. Neither of which I opted for.
Even though the product page is where upselling happens 95% of the time, most sites have two other options: search result page and category page.
Search Result Page: while searching for a product, if customers’ search bar auto-completes, why not show the higher end version of the product? In my case, when I go to search on Google’s store for a Pixel 2, they could show me the Pixel 2 XL as I started to type in “Pixel 2”. Maybe I didn’t know about the higher end version of the phone. By showing it however, I may consider and end up buying it.
Category Page: If I land on a site from a Bing search and wanted to purchase the Pixel 2, having the Pixel 2 XL as the top result before the Pixel 2 would be a good way to nudge me towards buying the higher-end.
Cross-selling Your Customer
Cross selling happens in the shopping cart. You try to convince someone to buy a related/complimentary product based on what they’ve already put in the shopping cart. You can do it on the product page too but it’s not as effective. One other place that is effective is the email receipt someone receives after a purchase. It typically has a high open rate and a perfect place to do a cross-sell.
If I’m buying the Pixel 2 then you could add headphones or extra charging cables for my new purchase. If you sold a high-end item including art or furniture, you could try adding a premium service offer. That premium service offering could be a design service where you go design a custom space in an office or someone’s home.
A good example could be Harry’s shaving brand. They are offering a mystery box item that goes with the product I was looking at. I do use Harry’s, so it’s an interesting offer I may go for next time I’m on the site. A mystery box is an fun angle because it adds a level of surprise and excitement to what you are buying.
To finish off Average Order Value and how you can increase that on your site, you can do free shipping when people hit a certain spend level. The spend threshold is usually set just above your AOV. You can also look at trying bundle pricing for items that people buy together. Amazon does this with their “Frequently Bought Together” section. The price for your customer is cheaper than if they bought each item individually and you have a higher AOV by having customers buy more in one transaction.
Acquiring customers is easy and that is what your typical agency will work on with you. They are always looking to increase your spend and help you find more customers. Some agencies might even go one step further and work with you on getting a higher average order value (AOV). That is not as easy but it can be done with testing.
If you have done all of the above, then your last step is having customers come back and buy from you again. Though the majority of businesses can have repeat customers, the product you sell and where you sell it will determine how often you can do this.
Target your first time buyer with an ad. What do many of your first time buyers have in common? Find out what multi-buyers are buying after their first purchase. You may find that those who buy blue jeans come back and buy belts and a t-shirt within 90 days. Maybe you sell furniture and you know those who buy something for their kitchen will come back and buy another one of your products. The goal is to turn a one-off-buyer into a repeat customer.
Targeting a person with ads alongside an email that lists other items a person should buy within 30 days becomes a good way to turn a one-off-buyer into a repeat customer. If your store has been around for a number of years, you can do this across all of your customers who have bought from you in the past. If the first email does not work, you can look at offering a discount through a series of emails. I will say that I’m not a fan of discounting as a matter of business, though. It’s what has got some old school retailers in trouble.
Now let’s talk about your big whale of a VIP customer. You know the one who spent $300 on their first purchase and came back and bought four more times in the last 2 years spending $1,500. Let’s show them some love. Send them an email or a handwritten thank you note and express your thanks for buying as much as they did.
Ask them what they like about your business, how you can improve and what they want more they’d like to see. Use this as an opportunity to understand why they bought, so you can go and out find more customers like them. I would not do any discounting, but if you had just launched a new product they might be into, perhaps follow up with an email when it launches to let them know.
By keeping these three major things in mind, you are well on your way to doubling that revenue. That is it for this week though, see you next time.