Ecommerce marketing and trusting the process

In an ideal world, customers and sales would be generated simply by creating a website and rolling out some online advertising. In reality, things are a little more complex than this: customers are generally not easily won, and sales can be elusive. Ecommerce marketing, then, requires careful planning, calculating and strategising. It also takes time. Let’s dive into the mysterious world of ecommerce marketing, digital advertising and gaining customers.

PIER-Marketing-Ecommerce-Marketing

Warming up your audience

It might feel as if acquiring customers should be a simple equation: someone comes across your website/social media page/storefront, likes what they see, and makes a purchase. In other words, it seems that exposure should equal conversion.

Again, the reality is a little different to this picture. Research tells us that the average customer needs to interact with your business five to seven times before they even think about making a purchase.* Of course, this figure is an average: some people may be faster to jump on board; others may need to interact with a brand plenty more times before they feel comfortable making a purchase. Even if you know someone who considers themselves an impulsive shopper, the truth is that they probably see a brand at least a few times before they decide to hand over their money (it’s just that we don’t necessarily remember those first few interactions). In other words, it takes time to warm up your audience.

Of course, your customers need to be able to find you in the first place. How often have you discovered a new business — and actually made a purchase — simply by stumbling across it? You can have the most amazing website or Instagram profile in the world, but it won’t have much of an impact without the right eyes on it. This is where ecommerce marketing and advertising comes in.

The average customer needs to interact with your business five to seven times before they even think about making a purchase.


Digital advertising in ecommerce marketing

The role of advertising is not necessarily to generate sales. Online advertising plays the all-important role of piquing interest, raising brand awareness and pointing potential customers in your direction. Along with Google advertising, social media ads are a major form of digital advertising.

Social media advertising is a very powerful and important tool — one of the most essential available to modern marketers in the ecommerce marketing world. It’s utilised by a majority of the population, offers economical advertising options, allows you to target specific audiences, provides feedback on performance and gives you the opportunity to tweak ads for better results.

However, social media will not quickly magic customers for you. Social media campaigns work best when part of a larger web of marketing efforts — that is, when integrated among activities like targeted email campaigns and remarketing, as an example. An effective social media campaign is well designed, well targeted (ie. targets the identified audience based on research findings) and well managed (as opposed to set-and-forget). Successful social media campaigns will eventually help you acquire customers, but it won’t happen instantly. To put things into perspective, the average click-through-rate on Facebook is currently around 0.90 per cent.*


Customer acquisition

PIER-Marketing-Funnel

This goes back to the blog we wrote a little while back on customer acquisition and our beloved friend, the marketing funnel. As a reminder, the marketing funnel illustrates the journey that potential customers go on to becoming loyal customers and advocates for your business.

The first three phases of the funnel (awareness, consideration and conversion) are the costliest. So, while acquiring customers is exciting, the initial cost is relatively high. Businesses often won’t see a return on its ecommerce marketing investment until customers reach the loyalty and advocacy phase. Bearing this in mind helps set realistic expectations.

As we’ve detailed before, there is a way to calculate the cost of acquisition. We can determine Customer Acquisition Cost (CAC) by dividing the sum total of what you’ve spent on a marketing campaign by the number of new customers it’s brought you. So, for example, if you’ve spent $1,000 on ads and they’ve attracted 100 new customers, your CAC would be $10 per customer. To get a more accurate figure, you could include other costs such as wages, salaries and overheads in the figure you divide by your customer number.

To understand return on invest (ROI) with this example, let’s say your average sale is worth $63.50 with a margin of 45%, you will profit $28 on that customer. But you have paid $100 to acquire that customer, so you’re actually in the red by $72. What’s especially important, however, is how many times customers return. While customer acquisition requires a decent investment, and often costs the business money, it’s through repeat purchases that businesses start to see a return on their ecommerce marketing investment.

Calculations

CAC: total cost / new customers = customer acquisition cost. For example, $1,000 / 100 = $10 CAC.

ROI: ($ average sale at % margin) – CAC = return on investment. For example, ($63.50 at 45% margin = $28) – $100 = – $72 ROI.


Breaking even and ecommerce marketing

As our General Manager, Alex, says, “a break even campaign is a massive success”. Why? Because breaking even means that you’ve recouped the investment you’ve poured into your ecommerce marketing campaign, plus you’ve planted seeds for the future. If you’re seeing evidence of consumers at the conversion stage of the funnel journey, then following behind them are those at the awareness or consideration phase, as well as new customers you’ll potentially acquire through these converted customers’ advocacy. In other words, if you’re breaking even, things are looking good. It’s only up from there.

“A break even campaign is a massive success.”

Often, you won’t break even in a customer relationship until that customer makes their fourth purchase — and you won’t see a profit until they make their fifth. This is why we say that advertising is a slow burn. Ecommerce marketing gets results, but it doesn’t get them overnight. In the meantime, it’s a matter of trusting the process.


If you think your business is at the stage where you’re ready for ecommerce marketing, get in touch with PIER today.

Sources

* https://www.smallbizgenius.net/by-the-numbers/branding-statistics/#gref

* https://www.brafton.com/blog/social-media/social-advertising-benchmarks/