eCommerce is an “always on” line of work. Most physical stores close, but your website is always open. So an eCommerce professional’s time is limited. Operations, fire fighting and growth initiatives are all fighting for your attention.
Given the pressures inherent to this industry, it’s ironic that some of the most popular narratives are…a complete waste of time.
If you want to drive profitable growth, you need to make the most of your time. And in the beginning, that means working with consumers’ default behaviors, not against them. But some of the industry’s most popular “best practices” either ask you to change human behavior or require you to build out and manage an entirely new line of business.
To maintain your edge, you need to stay focused. Read up on the five biggest (and most popular) time wasters in eCom so you can protect your precious time.
Let’s face it: sales and promotions are effective tools for lowering the cost of customer acquisition. When you run a sale, you release pent-up demand from people who considered your products but couldn’t afford them at the time. You also bring in shoppers who simply love a sale.
This causes the conversion rate of your campaigns to increase, improving the efficiency of your ads.
Wouldn’t it be great if you could convince those customers to come back and shop at full price? You would be reducing CAC and increasing LTV with one simple trick! Someone fire up Twitter because I’ve found a new hot media arbitrage opportunity…right?
Wrong. Unfortunately you can’t have your cake and eat it too. It’s nearly impossible to convince customers you acquired during a sale to buy from you at full price. Each individual consumer has a price they feel is reasonable to pay for a given product, and a customer’s first order is a good indicator of that price.
If you bring this up to most marketers, you’ll receive immediate pushback. And to that pushback I would ask: “would you pay $25 for a single 12oz cup of coffee?”
Most people, in most circumstances, would answer that question with an emphatic “Hell no!”.
Outside of special situations, you’re generally not willing to shell out 5-10x more than you usually pay for a given product or service. So if a customer paid $10 for one of your widgets today, why would they pay $20 a month from now?
If you analyze the purchase behavior of your repeat customers you’ll see the same thing: a person typically purchases from a single promotional range.
Customers who enter the business at a 20-30% discount will generally purchase again at 20-30% off…or slide into an even deeper promotional band.
You can run a lot of tests encouraging markdown customers to buy at full price, but they will almost always fail. Working through ways to lower the cost of acquisition for full price customers is a better use of your time.
The Supremes taught us that you can’t hurry love. This timeless wisdom applies to customers’ love of your brand just as much as it applies to your latest Tinder match. A single purchase doesn’t mean that a customer is automatically head over heels for you.
In fact, most new customers never make it to their second purchase.
As marketers, we often let the upside potential of a given path blind us to how consumers will experience our decisions. Subscriptions drive predictable recurring revenue–the holy grail of financial planning. But they also require the customer to like like your product.
You wouldn’t ask someone to move in with you halfway through your first date. So why would you ask first time customers to purchase a recurring subscription to your product?
The same logic applies to other high-touch activations you encourage your customers to participate in. SMS marketing is much more disruptive and intimate than email.
Loyalty programs that require you to take ten different micro-actions to earn points are confusing and time-consuming. And social media sweepstakes that require UGC also require a huge effort from your fans.
If you’re a new brand, the majority of your active customer base, email subscribers and website visitors are either prospects or customers with a single purchase. That is the reason complex marketing activations often flop–the majority of your audience isn’t bought in enough to care.
If you want a high participation rate for your marketing efforts, focus on prospects or new customers, speak to their concerns, and give more than you take.
This is probably the most controversial item on the list. Loyalty programs run by Starbucks, Amex and Sephora receive a ton of airtime in the media. And it’s hard to argue that increasing customer lifetime value is good, or that your best customers should be rewarded.
When most brands express interest in launching a loyalty program, the internal dialogue never moves past surface-level discourse. But before you launch a loyalty program, you need to decide exactly how you’re going to define a loyal customer. Most brands fail to come up with a measurable definition.
If your goal is to “make customers more loyal”, there are a few ways to accomplish that. You could win incremental purchases from customers who would have otherwise lapsed. You could increase purchase frequency (ex. turn an annual shopper into a bi-annual shopper). Or you could drive incremental spend from your most engaged customers by increasing basket size.
The key word here is “incremental”. You need to drive behavior that wouldn’t have happened in absence of the loyalty program. The only way to determine if your loyalty efforts are incremental is to run a holdout test in which some customers are excluded from the program. And you can’t do that with a splashy public launch.
Unfortunately, that’s the playbook advocated by most loyalty program software providers: launch one set of incentives for your entire customer base and make that launch loud and public. Yes, customers engage, but for all you know, they would have engaged the same way without the five figure software investment.
If you want to engage your customer base in a way that truly impacts the bottom line, you need specific audiences, targeted objectives, and a setup that enables you to measure incremental impact. The standard loyalty playbook delivers none of these things.
Another controversial statement: most businesses should not be selling their product at discounts of 60-80% off.
Some businesses engineer their product and cost structure to sell at deep discounts while achieving margins of 60% or more. That is because the “steal” you’re getting for 80% off never sold for the sticker price. It was “designed to mark down”.
Time Waster #4 is not about those businesses. It’s about brands who intend to sell their stock for full price but wind up running massive sales. Sometimes clearance sales are the product of poor inventory planning or issues with product quality–the business needs to move a lot of units in a short amount of time. But sometimes brands run deep sales to “be competitive”, especially during peak selling periods like the Holiday season.
In any case, the “Up to 80% Off!” sale should not be a recurring move in a healthy business. These sales quickly become a “parallel business” that contributes nothing to the growth of the core brand. There are a few reasons why:
If you find yourself with too much inventory, run one clearance sale and be done with it. Don’t attempt to comp the spike in topline revenue in the following year.
eCommerce transformed retail from an industry driven by merchants’ gut instincts to an industry driven by data. And there has been tension between gut-driven and data-driven marketers ever since.
One outcome of this debate: the elevation of testing as the answer to every question and uncertainty. If you have a question about your customers, simply test your way to the answer. If campaign or website performance is lagging, test your way back to acceptable conversion rates.
But what started out as a tool has gradually transformed into a crutch. Some questions don’t have a right answer or a wrong answer–simply a likely set of outcomes that may take you closer to or further away from your intended destination. But without a destination in mind, you can’t make meaningful decisions. You wind up running around in circles.
All too often our workflow becomes:
I must make sales go up -> I will test a bunch of ideas until one of them makes sales go up.
I have a well-reasoned plan for driving growth -> I have a test plan that will let me qualify my assumptions about my plan.
If you don’t know enough about your business to make a few gut calls, you probably shouldn’t be running tests. And even if you do have a well-informed test plan, there are certain things that simply aren’t worth testing because the upside potential is too small relative to the effort.
To make sure that testing is worth your time, take a moment to tune out the wins that others may be sharing and focus on your own customers and business goals.
And if you want to save time managing your e-commerce store today, try Triple Whale.
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