While some might say that digital has opened the doors to online players and has blurred the existence of local retail stores, new research says that the relationship between digital marketing & in-store shopping is far more interconnected than that. Foot traffic & word-of-mouth which were the assets of offline retailers before digital & mobile entered the lives of people, are not anymore the only assets which can be relied on.
Local retailers, in general, believe that online marketing works only for e-commerce websites. But, digital doesn’t just drive e-commerce, it actually gets consumers into local stores.
Connecting offline retailers to the mobile users
We are living in “always-on search world”, where people are always able to search. When they want to buy things or when they do have a query, they turn to their smartphones. Consumers now spend more than 15 hours per week researching on their smartphones.
Impact of mobile on the store visit
There was a time when people would have to get to their computers. But now, searches on the desktop have dropped as mobile is always in reach. It is found that 21 percent of in-store shopping in urban India is influenced by digital and 18 percent is influenced by mobile. If you have a physical store, then mobile search is the new threshold to your store.
Store visits after online research
Most offline retailers in India are not aware of various mobile marketing techniques which they think are only for e-commerce players. This has led to them not making efficient use of the web to provide necessary information to the customer. Whereas, according to research customers are likely to go to an offline store when they find the store they are looking for listed in search results. It is found that 3 out of 4 shoppers who find local information in search results helpful are more likely to visit stores.
The retailers need to realize that consumers shop digitally before going into the store and they should make sure they provide all the information that customers are looking for online. Thus, retailers should have the right digital marketers as this will help to drive more customers to visit the stores.
Online Advertising Techniques To Create Online Presence
What most offline retailers lack is the right guidance how digital marketing can be leveraged to bring sales. There are many different ways in which the visits to their local store can be boosted.
This is the most effective method to reach out to as many customers as possible as shown by recent statistics. Many big companies engage in Pay Per Click (PPC) advertising. This is because PPC ads work in a way that brings best customer attention with minimal expenditure.
Brand Search Advertising reinforces the brand name, increases brand value and brings about brand awareness. These ads are so effective because they give the customer all the information he/she needs to know about the brand within a few lines. This way the customer does not spend a lot of time reading the ad, but manages to get the required information.
Also, ads can be shown to the people who search for the products using relevant terms. For example, one who is looking for a laptop store close to his location can be targeted using relevant search terms like laptop store near me, laptop stores in Chennai, which people normally use.
Another advantage of the PPC ads is that they can be targeted to the desired audience of a particular location, preferably places around their stores using Radius targeting. This way the ads are shown only to the people who might be interested in the product or service and more likely visit the store.
Since the retailer is charged each time these ads are clicked, showing these ads to a targeted audience will result in an increased conversion rate which will in turn result in an increased ROI. Where they appear is chosen by the retailer, but its ranking is decided by Google based on a number of factors.
Organic Search Listings
This is the most traditional method by which offline retailers can show up on a customer’s search field below top PPC ads without having to pay a penny. A link to the retailer’s website automatically shows on the customer’s screen when he/she searches for something relevant to the products offered by the local store.
Where the retailer’s website is listed is again decided by Google based on the relevance of content and other factors. What the retailer should ensure is to provide the right and relevant content on the website of the store so that it shows up higher in the organic search listings. Hence, by this way the store can get a few more customers to visit its website by making sure it has a user -friendly website.
Google Business Local Listings
An important feature that drags customers to stores near their current location is the store locator available on Google. Using this feature the customers can know exactly how far the store is located from their present location and they can head straight to the store with the navigation feature of Google maps. Hence it is essential that all stores add their location on Google using Business map locator.
When a customer searches for something like textile stores, a list of textile stores nearby his/her location shows up with the address information of each store. By clicking on any of these stores in the list the customer can know exactly how far the store is and how long will it take to get there with the help of Google maps. Hence, if a customer knows that a store is close by to his/her location, then it drives the customer to visit the store.
In order to track the source of the leads that we receive through the above advertising methods, it’s recommended to generate unique phone numbers for each advertising channel. This way we can measure the effectiveness of each channel.
Digital bridges the gap between customers and stores
Today the consumer’s path to purchase is becoming increasingly mobile. Retailers that provide relevant, local information online will increase both reach and sales. While helping to drive customer in-store it will also help to enhance the customer’s experience once he/she has entered the store. Mobile has reshaped the way the people shop, that is in a good way and retailers who make use of this in the right way will see themselves moving ahead.
At the beginning of 2015, we had spoken about how social media analytics is going to change in 2015, especially for ecommerce companies. Since then we have seen significant strides in multiple aspects. Each of the social media channels, their targeting and analytics has become a lot more powerful. In terms of integrated CRMs to build a single view of the customer we have seen lots of new products such as BetaOut which have made advanced personalization tools available to even SMEs and mid-sized businesses. In terms of content creation and using analytics, there are tools like BuzzSumo which help understand what kind of content is trending and being shared.
Introduction to the ISB Programme
2016 is going to be an even more exciting year for such advancements & we hope to see a lot more interesting tools being launched. With so many advancements, one needs to be abreast with the new trends and how to effectively integrate it into a singular approach. In this context, we came across the programme on Marketing & Analytics for Ecommerce Industry by Indian School of Business (ISB), Hyderabad. We have a list of digital marketing courses in India and this programme is an essential addition to it. This is a 5 day programme and ideal for CMOs, Digital Marketing Strategists, Ecommerce entrepreneurs. With faculty from ISB & Emory University, the programme is designed to give a strategic and hands-on perspective of cutting edge topics in eCommerce & mCommerce marketing.
Website/app analytics and social media analytics is also a key element of the programme and that is absolutely essential for ecommerce startups. By using tools like Google Analytics or Omniture for websites or MixPanel for apps, companies can get a lot of structured data in terms of which channels of acquisition are working, what content & messaging is getting better results and as to which demographics of users are converting. At the same there is a lot of unstructured data because still a lot of startups don’t have a single view of the consumer – there are emailing tools like MailChimp, On Site engagement tools like WebEngage, Intercom & HelloBar and ofcourse the ecommerce platforms like Magento, WooCommerce. All these tools don’t talk to each other yet and tools like BetaOut are trying to fix the issue. There are also a lot of conversations & comments across social media channels and it can be challenging to manage this and to decipher meaningful insights because it’s unstructured data.
Cost effective Customer Acquisition & Customer Retention is the only way to make it sustainable
Experimenting with different channels, messaging & audiences is an essential way to optimize customer acquisition cost. Granular targeting & advertising has never been easier to accomplish and each of the tools – be it Facebook, Google Search, Twitter or even Native Advertising, the tools are getting better at segmenting the audience and their interests. To add to this complexity users have multiple touch points with an app or ecommerce site – across multiple devices, multiple locations and gaps during their interactions. So attribution becomes a challenge as the last touch point cannot be attributed just to the last touch point. Zarget or Improvely are great tools to set this right where it captures each touchpoint of the user so that attribution can be made appropriately. This allows for optimization of marketing spends in the right channel. With immense competition in ecommerce with each company vying to retain the customer, retention strategies and personalized messaging is key to success.
Optimising your website and especially optimizing the product pages is critical to effective cost per acquisition (CPA). As Neil Patel points out in the above article, product pages is where visitors become customers and that should be the page that needs to be made persuasive, not just the homepage. Tools such as Zarget, CrazyEgg and Inspectlet help you understand how users are behaving on the site and how it can be optimized to get better conversions at lower costs.
The programme at ISB has a key component to understand how this structured & unstructured data can be used to get actionable insights on acquisition, retention and conversion optimisation. Usage of many of the advanced tools will also be covered. The ISB Programme is from 4th to 8th Jan at Hyderabad and would be a great opportunity to get practical insights into the above aspects and to also cross learn from other specialists who will be attending the programme too.
You cannot acquire a customer for life. In ecommerce, loyalty is a thing of the past. Many startups and new businesses struggle to find the right balance between customer acquisition & retention. This is especially true for the ecommerce industry. In the quest to growth hack to the next level, ecommerce businesses go all out to acquire new customers sometimes at unsustainable costs.
Over a longer term, online retailers might want to discontinue the channels that have a consistently higher cost of acquisition (CoA). But customer acquisition cost alone is not the right metric to evaluate the performance of an acquisition channel. Ecommerce businesses should instead be including average customer lifecycle value for customers from a particular channel as an important metric for strategic decision-making. This article can help ecommerce businesses garner a better perspective to guide their business decisions.
Customer Lifecycle Value (CLV)
In simple terms, customer lifecycle value is the projected value a customer generates over the entire lifetime of their interaction with the brand. Focusing on CLV can help a company determine optimize the marketing spends, allowing it to focus on more profitable customers.
CLV as a metric assumes greater significance when put together with CAC. The CLV:CAC ratio is a powerful metric to define the Return on Investment (ROI). Focus on both the levers can help you devise a winning strategy.
Let’s take a look at the comparative illustration of 3 customers from different acquisition channels (A, B & C) assuming 1 year as the time period under consideration:
How to calculate the Customer Lifetime Value
First step would be to segregate the customer acquisition and purchase data on the basis of marketing channels. Once this is done, there are 2 principal models of calculating the customer lifecycle value:
Under this model, the gross profit from all historic purchases of individual customers is summed up & divided by the total number of customers. This gives the average CLV for each acquisition channel.
This is an advanced method built upon the historic model. Predictive model uses the past customer behavioral pattern to predict the lifetime value of customers. This factors taken into account by this model are as follows:
Number of visits per month (N)
Average customer basket size per visit (B)
Average profit margin per customer (m)
Historical customer retention rate (r)
Discount rate for future cash flows (d)
Average customer lifespan (l)
Assuming next 10 years as the time period (T) for consideration, let us look at the formula that can help you arrive the lifetime value.
Average customer value per month (v) = N*B
Total customer value per year = S = v*12
Total lifetime spend of the customer = L = S*10
Average gross margin per customer lifespan = G = L*m
The final CLV value obtained can be plugged in the ROI ratio (CLV:CoA). Greater the ratio, the better the impact on the company’s growth strategy. The ROI ratio can be used as a good measure to evaluate the performance of the marketing channels and accordingly optimize the budget allocation.
Factors boosting customer lifecycle value
For the CLV model to work, the data set under consideration has to be long enough to provide. CLV is not just for evaluating the marketing channels and campaigns, it can be a great lever to look at the overall business strategy for ecommerce businesses. There is nothing wrong in looking out for new customers. But, it’s important to look at the value brought by ten new customers acquired vis-a-vis ten retained customers. From the cost perspective, it mostly turns out cheaper to retain existing customers. With the wide array of choices thrown open to the consumers with just a click of a mouse, brand loyalty and customer retention becomes more important.
A quick look at Nielsen’s Global Loyalty Sentiment Report provides good insights into the consumer sentiments that result in switching retailer & brand-hopping.
The 5 factors listed above- price, quality, service, selection and features; can together drive the lifetime value of your customers. Doubling the CLV of existing customers is equivalent to doubling the customer base. Here’s some handy tips that can help online retailers increase the CLV:
Loyalty programs has been used by offline retailers for a long time to create long term loyalty and drive repeat purchases.
Do not charge for product returns. It does put in a load on the operations side but brings in the baggage of good experience and more future purchases.
Size Fittings is one of the major reasons for product returns. Interactive tools for size fittings can go a long way in aiding customers to find the right size for categories like footwear, apparels, etc.
Ecommerce is all about providing easy access to products and services from the comfort of the home. Similarly, customers expect an excellent 24*7 support to aid them for their queries and complaints.
Wider range of custom delivery options is required. Ecommerce players like Amazon provide different delivery options that allow you to get the product delivered even in 1 day. Other possibilities can be incorporated like the option for nominating friends, etc. to be delivered the product in the absence of the customer.
Being in touch is important. Sending post purchase emails and festival wishes can be a way to continue to have relevant mind space. We usually recommend using Mailchimp or Sendgrid for sending out emailers and tracking its results.
Do not fail to surprise them. Sending a small reward or gift along with their purchased product can win their heart and create a long term goodwill for your ecommerce brand.
Don’t stop marketing on unprofitable customers but start actively engaging with profitable customers
In the rapid-growth ecommerce boom, it’s easy to get lost in the race for acquiring new customers. Brands go upto the extent of acquiring new customers at 10x the historical averages. They fail to remember that retaining your existing customer can cost lesser and would pay in the longer run to get hold of these low-hanging fruits.
For any marketing and strategic assistance with your ecommerce business, feel free to reach out to us at [email protected].
As the growing digital population is all set to rock India’s economy and business landscape, it has become vital for businesses to go online as well. A budding entrepreneur who is looking at selling his products online can create his own e-commerce website or sell products on other online marketplaces such as Flipkart, eBay, Amazon, etc.
After registering with these online marketplaces that allow you to sell products for a commission, managing different dashboards, stock list & inventories becomes difficult. In order to simplify the online selling process, tools have been developed to integrate all of these into one single dashboard.
Tools like Browntape, ecomdash, boostmysale, etc provide one common dashboard to manage all your orders and inventories across e-commerce platforms. Let’s take a look at what each of these softwares have to offer:
Selling across multiple ecommerce marketplaces in India
If Indian market is your main business focus, the below mentioned tools are some of the key players in providing inventory and order management solutions:
Unicommerce, recently acquired by Snapdeal has an inventory management software for e-commerce, integrated with some of the world’s leading online marketplaces and cart solutions.
It helps in complete order fulfillment life-cycle through real-time maintenance of inventory, orders and shipping process. One can also view key metrics and insights with respect to sales and performance using a single dashboard.
Browntape lets you sell your products across 8 platforms which includes eBay, Amazon, Flipkart, Snapdeal, Rediff Shopping, Tradus, Naaptol, shopclues, etc.
It provides a centralised inventory management system that keeps track of the stocks and orders that come in on a real-time basis. One can also print out the shipping labels and send out automated emails to the customer about purchase order status.
This easy to use e-commerce solutions provider integrates inventories, sales and other management factors in one single window. It not only streamlines and automates the processes but also provides insights on scaling up your business and visibility. With real-time inventory and sales figures, Boost My Sale helps in quick decision making and growing the business without having to worry about everyday challenges in sales & supply chain management.
Selling across multiple ecommerce marketplaces globally
Businesses that operate on a large scale and have tie-ups with global online marketplaces can make use of these tools for hassle-free sales and operations:
ecomdash is yet another inventory management & order fulfillment software for multi-channel e-commerce sellers. It provides a single view of all e-commerce operations using a single dashboard. Sales, shipping & inventory management is all automated and also lets us monitor sales & supply chain through effective data management.
Orderhive is a multichannel order & inventory management system that is integrated with leading marketplaces and businesses. It cuts down on the additional infrastructure and maintenance cost for online sellers through its simplified back-end process management. It also provides customised offerings to suit your business needs, in terms of having a dedicated server (such as Bluehost) and managing it efficiently.
It’s a cloud based inventory management application that consolidates and processes orders from multiple marketplaces. It removes the clutter out of multichannel selling and gives real-time updates on competitor’s pricing as well. It also analyses shipping rates and gets the most cost-efficient rates from leading delivery companies to process the orders.
Online selling across various marketplaces means having to oversee and manage different channels and processes. As and when the business grows in terms of more online marketplaces and product orders, resorting to such tools & solutions providers becomes inevitable. They greatly help in streamlining processes, reducing the infrastructure cost and provide great insights, which might otherwise go unnoticed in a daily tracking routine.
Do try out the trial versions or subscribe for the above mentioned tools for your business and share your experience with us in the ‘Comments’ section. And in case we have missed out on other important channel & inventory management tools, do write to us.