Many of us get bogged down searching for big ideas that will win new customers and get them to buy – buy now and buy more over time. The truth is there are no silver bullets. The reality of building sales growth and velocity lies in simple, small refinements made over time, as intelligence is gained and used to optimize the entire online transaction chain.
Smart e-tailers have all the necessary components in place to monitor and track performance, bringing to light any enhancements in the process that can be fine-tuned to maximize sales and wring every cent out of marketing investments.
The elements that build the framework of an effective optimization strategy are as follows:
How is it made? When is it made? What incentives are in place to get action now? The interplay of variables in any offer is nearly limitless, yet they impact each other in confounding ways. In the world of e-commerce, just like anywhere a decision is involved, emotion is always a valuable tool. It's important to study consumer psychology so that you can better understand your customer and in turn craft more persuasive messages and offers. If you've got a great product, you should want as many people as possible to buy it so they can benefit from it.
Each channel comes with its own costs and performance expectations. The ability to optimize a channel to improve its results is often the ultimate determinant of e-commerce success. My indoctrination to e-commerce began with a single channel—e-mail marketing.
Those first primitive attempts, although failures in terms of ROI, delivered just enough promise to continue. From that early lesson came the importance of focusing on one channel at a time, cracking its code and mastering it before adding another channel to the mix.
With each e-mail identify small improvements which, compounded over time, unlocked great opportunity in a channel that showed little promise at first. The key was relentless optimization—constant tinkering and improvement, but not without great analysis.
To make smart optimization decisions, retailers need a model that accounts for every variable and can distinguish between changes that are clear winners and losers. Models—or algorithms—are complex equations that take into account the rich interplay of mixing offers with channels and lifetime values with retention rates. More than anything, a solid model provides a microscope into how small changes impact return as a whole.
For instance, based on the model, a retailer might accept a channel that has a higher customer acquisition cost, if the acquired customer maintains longer relationships and is more likely to buy more product over time. At the same time, models can balance a slate of tradeoffs to calculate overall profitability. So, for instance, a retailer might accept a lower ROI from a specific channel if it still contributes to its overall contribution margin—in short, if it in some way pays the bills and accelerates growth.
Dan Roitman is founder and CEO of Stroll, a next generation e-commerce platform company that specializes in marketing educational products to consumers.