At first glance, data can be deceiving. High-level overviews often hide underlying issues that secretly stymie growth. Among Fortune 500 companies, Teradata’s Andy Johnson reports that only 15 percent use big data analytics to learn more than the "known-knowns." That leaves the remaining 85 percent at a disadvantage because those companies happily settle for surface-level data which rarely reveal actionable insights. To consistently grow and develop a competitive advantage, companies must take a data-driven approach to business strategy and marketing.
Below, we explain how e-commerce brands can be deliberate when analyzing their data to outperform their peers.
Accelerating page load time and, thus, sales
In quantifying the importance of site speed, experts popularly refer to a 2006 presentation from Greg Linden, the man behind Amazon’s product recommendation engine, in which he stated, “Speed matters. Every 100 milliseconds delay costs one percent of sales.” In 2014, the e-commerce behemoth sold $88.99 billion worth of product. Assuming the consequences of site latency remained the same, that would mean for every 0.1 seconds of lag, Amazon would lose $889.9 million. For most e-commerce businesses though, other data suggests 40 percent of shoppers abandon a website when it takes more than three seconds to load.
When stores focus exclusively on increasing visits and conversions, they forgo opportunities to extract value from their existing audience through minor on-site optimizations. Indeed, the smallest of changes can make a significant impact on visitor engagement and sales. For example, the removal of an image, smart use of caching, and minifying code can easily cut page load time in half.
To measure how fast—or slow—your pages load, you may run Pingdom reports or use Google’s PageSpeed Insights tool. Each gives your page a score from zero to 100 along with recommendations for how you can enhance your site’s performance. Other tools provide granular data about how many seconds different features on the page take to load, allowing webmasters to clearly identify areas for improvement.
Creating customized win-back opportunities to re-engage old customers
Organically, customer-brand relationships can taper off. After some time, frequent customers may inexplicably stop patronizing your business altogether. Ometria’s Hannah Stacey believes a few causes of this phenomenon are:
- “Their circumstances/interests have changed (e.g. they’ve left the country, you’re a golfing equipment retailer and they’re not into golf any more, they used to buy presents for their girlfriend from you but they’ve since broken up :( ).”
- “Your emails might be falling into their junk mail folder so they never see or act upon them (putting an ‘add us to your address book’ CTA in your emails can be a good remedy to this).”
- “Your product offering has changed, and they’re just not that into you anymore.”
Whatever the reason though, marketers are on the hook to re-engage old customers to get them back in the groove of frequenting your store and purchasing again. But rather than batch all of those customers into a bulk email list, Stacey recommends segmenting them using three criteria:
- Time lapse since last order
- Volume of orders over their lifetime or in the past year
- Average order value
With data on their side, marketers can deliver high-touch messages to customers who have more recently spent a lot of money with their brand.
Curbing shopping cart abandonment and recovering lost revenue
The Baymard Institute calculates the average shopping cart abandonment rate to be 68.53 percent. What that means is, among e-commerce shops, less than 70 percent of customers who go as far as adding an item to their shopping cart leave without completing their purchase. In a research paper, marketing lecturer Tino Fenech of Griffith University explains the main antecedents of digital shopping cart abandonment are:
- Demographics: Younger, less educated, low-income males are most likely to abandon their shopping carts compared to others.
- Perceived risk: Shoppers are skeptical about sharing their payment information and personal data with certain web stores.
- Shopping motives: Customers may seek different things from the shopping experience other than the acquisition of goods.
- Service delivery: Buyers become reluctant to purchase when basic shipping options are costly or inconvenient, pages load slow, customer service features are ineffective, and product information is sparse.
Although marketers can pump traffic into the top of their conversion funnel, they collectively lose $4 trillion each year when they fail to convert customers who have already added items to their shopping carts. Using email and retargeting, marketers can follow-up with shoppers who have abandoned their carts to recover lost revenue.
Highlighting best-selling products and relevant recommendations to increase average order values
According to RJMetrics, high-growth e-commerce companies have a customer lifetime value (LTV) that is 79 percent higher than their peers. But driving repeat purchases is harder than most people think. To do that, many e-commerce marketers upsell existing customers on items they supposedly will love. And often, brands default to promoting new arrivals or top-selling products. While that may motivate some buyers to add the extra items to their cart, it is a lazy strategy. High-impact marketers check their records to identify what certain customers have purchased in the past and which products are most frequently bought together to upsell shoppers on related goods and items they, specifically, are most likely to purchase.
For example, a marketer may find that customers who bought a $40 basketball are 83 percent likely to purchase a $20 pump within 30 days of completing their last order to keep their ball fully inflated. Using a data-driven upsell, that marketer can increase customer LTV by 50 percent.
Also, brands would be wise to gain an understanding of which products simply don’t sell well. Rather than stubbornly promote available inventory until it is liquidated, some clever companies abandon their low-demand goods altogether to focus customers’ attention on items shoppers actually want.
Optimizing advertising spend to maximize ROI from limited marketing budgets
When budget isn’t a concern, marketers can spend $10,000 on newspaper ads to earn as little as $10,001 back. Generally, if a campaign is profitable it will live to see another day. But when email marketing generates a 40-to-1 ROI and influencer marketing earns companies $6.85 for every dollar spent, marketers would be remiss if they didn’t invest a majority of their marketing budget on one or both of these programs.
That said, most marketers aren’t lucky enough to have an uncapped marketing budget. Instead, their resources are limited. But to decide how they should spend their money and time, e-commerce marketers need to analyze the ROI of each of their marketing channels.
When I first began my career as a marketer, I was convinced that running social media campaigns, public relations (PR) initiatives and advertisements on AdWords would guarantee my company’s overall success. But, quickly, I realized I had stretched myself too thin in attempting to learn how to master each of those marketing strategies. Also, I noticed that our marketing budget for each channel didn’t go very far. While social media, for us, was profitable, AdWords was not. And PR outperformed social media by four times. Suddenly, it all clicked. To maximize the ROI of our marketing budget, it only made sense to exclusively focus our marketing efforts on PR. We abandoned our lower-performing, yet profitable, marketing campaigns on social media and made the conscious decision to fully invest in PR because it demonstrated better ROI and a higher potential for scale.
Shutting down profit-losing coupons and crafting high-margin promotions
At some point in his or her lifetime, every e-commerce marketer experiences the temptation of offering customers a 60 percent coupon.
Can we multiply sales with this simple strategy? Will this one-off promotion help us beat our revenue goal this quarter? How much market share can we steal from competitors this way?
But for many, the experiment in deep discounting can lead to loads of regret. Often, the problem isn’t in acquiring new customers. It’s in fulfilling so many orders on razor thin margins. And the worst part of it is: some customers get addicted to the deal and they never return to pay full-price—if they return at all.
Currently, Bed Bath & Beyond’s biggest woe is in its costly couponing strategy. According to the Washington Post, the retail giant reported a 1.7 percent increase in revenue over the past quarter but a 10 percent drop in profits all due to coupon abuse. What analysts suspect is shoppers who consistently return to Bed Bath & Beyond stores do so with coupon in-hand and are reluctant to ever pay full-price. These days, most brands limit coupons to first-time customers only which conditions consumers to feel comfortable with purchasing goods later at retail price.
Now, in realizing that its discounting strategy has backfired, Bed Bath & Beyond would be wise to stop distributing its profit-losing coupons and identify other ways to bring customers back without cutting so deep into margins. For example, the company can promote deals that offer a free small gift with purchase. This encourages shoppers to spend more, thus increasing average order values, and gives the brand opportunities to offload excess inventory or share new product samples. Had Bed Bath & Beyond dissected how customers redeemed coupons earlier, the home goods brand would have limited the negative impact couponing has had on its profits.
This article was written by Danny Wong from Business2Community and was legally licensed through the NewsCred publisher network.