Recall from our previous articles — such as “Who Needs an Ecommerce Strategy, Anyway?” — a “strategy” is an idea. A “tactic” is a plan or action to support your idea. Here are seven revenue-growth strategies to consider.
- Acquiring new customers.
- Targeting new markets.
- Sell more to existing customers.
- Increase your average order size.
- Expand your product lines.
- Increase prices.
- Cross-channel marketing.
Some of these strategies are quick and inexpensive to implement — remarketing to your existing customer base, for example. Others are more expensive and time consuming. When evaluating strategies, remember the big picture. Though more expensive and time consuming, investing in a new store serving a new market may double your business, versus the incremental bump you may receive from another idea.
Acquiring New Customers
Every ecommerce business presumably seeks new customers. But, are you really focused in that effort? Here are some ideas.
- Referral sales. Set up a referral program to leverage your existing customers. Give them an incentive to refer your to their friends through social media, email or other venues.
- Increase advertising. Pay-per-click ads, remarketing ads, content ads, print ads targeting new customers, keywords, or products.
- Social media buzz Run a sweepstakes or contest in Facebook to get new email subscribers, blog a lot, Tweet about your specials and new products, expand your followers and fans.
- New positioning. Create a new marketing campaign with a fresh look and feel that will appeal to a different market segment, refresh your website with a more modern look, get some media exposure and create buzz about something you do differently than your competition.
If you want to increase your sales by 20 percent, you need to acquire 20 percent more customers. It’s possible that your new customers will not buy quite as much initially as your current ones, so factor that into your plans.
Targeting New Markets
By “new markets,” I’m referring to entirely new consumers that don’t know your store exists.
In some cases new markets may be reached through a new store. In other cases, such as targeting an overseas market, it may require translating your website into the local language.
- Overseas markets. Consider localizing your website for various languages and target those countries through ads, social media and other marketing efforts. In the case of English-speaking countries, it may be as simple as creating new landing pages to reassure customers that you are committed to serving their country and understand shipping, customs processes, and local habits.
- Niche market. You can expand your offerings in a niche market and open a new store to just service it. We did that in my previous ecommerce business by opening a store that focused on jewelry, instead of beads and pendants.
- Broader market. If you have a niche store, consider expanding your offerings to a broader market.
- Wholesale or retail? There are many stores that start out either wholesale or retail and find that by simply modifying their pricing strategies they are able to serve the other market. Be clear about the differences — there are many. But it is a viable alternative for many ecommerce businesses.
- Sell in a new channel. Expand your product offerings to marketplaces like Amazon, Buy.com, Overstock.com, Sears.com, or eBay. In many cases, these are different consumers than your existing ones. When we added an Amazon store in 2010, for example, we found a great new market for products we had previously sold mostly wholesale. It turned out to be a high-volume and high-margin marketplace for some very obscure gemstone pendants that were not selling well in our original target market.
The advantage to targeting new markets as a strategy is the impact can be huge versus incremental. The disadvantages are that the investment can be substantial and the risk higher.
Sell More to Existing Customers
I like this strategy for most businesses. Merchants sometimes get lost in trying to get new customers and forget about the thousands of customers who buy from them already. There are many ways to get more revenue from your existing customers. Most of them require little investment.
- More remarketing. Email newsletters are a tremendous way to do remarketing. You can email promotions for abandoned shopping carts, send transactional email promotions with all orders and shipping confirmations. You can target promotions to the most likely buyers for the products you sell.
- Aggressive promotions. Target your email subscribers, Facebook fans, and Twitter followers with aggressive promotions on a limited number of items. Offer them deals only on the products you know they like and try to up-sell and cross sell other products with higher margins. People like a deal. We found that customers will also spend money on other impulse buys at the same time.
- Loyalty programs. This is a no brainer to me. Offer your most loyal customers an enticement. It can be as simple as free or same day shipping. In our case, we offered customers who spent over a certain threshold an additional annual discount. That kept them loyal to us and decreased the likelihood they would shop around for a better price.
- Daily deals. Offer a daily deal to keep people looking at your store and keep your brand front and center. It will increase the likelihood of purchasing from your store, even if they don’t respond to the deal of the day
Increase Average Order Size
Many companies overlook this strategy. Here are a few specific ideas.
- Cross-product selling. Present relevant related products on your product detail pages and within your shopping cart. Some carts are highly automated to present items that are frequently sold together. But we found that by adding specific complementary items ourselves, we increased selling them together.
- Volume promotions. If your shopping cart will support it, offer a volume discount. If your average order size is £50, offer a 10 percent discount at £75.
Increasing the average order size as a strategy can be elusive in the long run, as your order size probably fluctuates seasonally and over time. But, if you choose it as a strategy and execute a plan to make it successful, you will likely find success.
Of all the strategies listed here, this may be the most effective. It also may carry a hefty price tag if you need to make a substantial investment in inventory and manpower to get the products in your store and promoted to your customer base.
It is straightforward: Know your customers and add the products they are likely to buy. Troll your competitors and figure out what’s selling well. Talk to your suppliers and see what other stores are selling. Ask your customers what they want.
- Add new product lines. In this case, I’m talking about products that are loosely related to your current product lines. You may get the benefit of additional sales to existing customers and you may also be able to target customers who were not likely to visit your stores before you sold them.
- Expand selection of existing lines. In our ecommerce sites, we added “known” sellers first, whenever possible. Over time, we would add other colors, styles, sizes, and so forth. This is a very low risk investment and a logical way to grow your store over time.
Adding a new product line may require learning about a new market and developing a different way of merchandising it. It may also require more resources to display online or fulfill the orders. Make sure you consider the impact on the rest of your business before you proceed.
Here’s an old concept that still works. Increase your prices by a very small percentage. You don’t have to do it on everything. It does not have to be a huge amount. If you increase your prices across the board by 5 percent, your revenues go up by 5 percent. The risk of losing sales exists. A 15 percent increase will be noticed, but not 1 to 5 percent, typically.
- Mark up prices across the board. Try a small increase and see if anyone notices.
- Mark up prices for select items, You may have certain items that do not have much price elasticity. Increasing the price on those items would raise a stir with your customers. In that case, leave those prices intact and only raise the prices on more niche or less popular items.
- Charge for shipping. In this era of free shipping, this is a different approach. But, give it a try. Charge for shipping on smaller orders. Charge a small handling fee on all orders. Shipping costs go up every year — usually two or three times per year. Why pay that on an ongoing basis? It’s reducing your profits. If you ship 500 small orders per month and recover £3.00 per order, that’s £1,500 in revenue.
For those of you with both a physical and online presence, coordinate those efforts. Here are some cross-channel marketing ideas that many larger retailers use.
- Sell online, pick up in stores. If you have an online store, allow your customers to pick the order up in the physical store. This allows them to have something now, not pay for shipping, and it gets them into your store where they may actually buy something else.
- Buy in store, offer free shipping. If a customer is in your physical store and wants to buy something but you do not have in stock, order it for them online and have it shipped to them at no cost. This is a particular pet peeve for me. Retailers simply don’t carry the selections they used to and inevitably I find myself frustrated that they never seem to have what’s in their catalog in their store. Do the right thing and order it for them and ship it to them.