Works Darn Near Every Time
Having an ecommerce store is definitely one of the most popular and hottest businesses going today. With an estimated 500,000 new ecommerce stores launching each and every month and over 24 million in existence globally, it’s safe to say ecommerce will be an integral part of our lives for a long time to come.
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However, starting an ecommerce business is one thing. Actually GROWING an ecommerce business is another. According to various studies, an estimated 70% to 90% of new ecommerce businesses fail within their first year of operation, meaning a large majority of new online stores do not survive long term. What!!!
Yes, part of the reason is because the ecommerce industry is very easy to get into and comparatively inexpensive to start. This is why it has such a high failure rate compared to other business types. Surprisingly, according to a research project completed by Forbes, Huffington Post, and Marketing Signals, it was found that 90% of all eCommerce (online only) businesses fail within the first 120 days of launch (roughly 4 months). So why do so many ecommerce businesses fail?
Top 5 Common reasons ecommerce businesses fail:
• Poor marketing strategies
• No knowledge and understanding of how to successfully run and GROW a business
• Inadequate customer service
• Lack of market research
• Inefficient supply chain management
In this article, we’re going to address the 1st and 2nd bullet point from above. Our goal is to help you start to think about some PROVEN Strategies that will empower you to not only run a more successful company yet even grow it to the next level. So let’s begin.
Let’s Take A Look At An Example eCommerce Store
For simplicity sake, we’re going to use a small ecommerce company that just had it’s best month last month in Q3. They generated a total of 30k in sales revenue for all of Q3. They want to greatly increase their sales, so what do they do?
Simple, they just increase the amount of lead generation spending that they’ve been doing. They do this believing that it’ll help them greatly increase their sales. Yet they learn what many ecommerce business owners learn, that by simply doing more of what you’ve been doing, it doesn’t mean that you get any significant increase in sales or growth. The net result? They waste a bunch of money resulting in only a meager increase in sales.
One of the things that we share with our clients, is a clear PROVEN path for doubling their sales revenue in 90 days, or 6 months or 12 months. All based on their motivation, budget and comfort level. The strategy we’re about to share with you is from our patented ‘Back End Sales 360 System’. This is our proven system for increasing ecommerce stores sales revenues by 200% to 1,000% or more. This is done without investing a ton of money paid advertising.
Here’s how the strategy works. Three of the most important KPIs for 2x – 10x your sales revenue are:
1. Number of your Customers (C)
2. Average order value (AOV)
3. Frequency of your customer purchases (F)
Your revenue (R) is basically your customers, your order frequency and your average order value. All of your other metrics and KPIs matter as well, yet these 3 are the most important for growing an ecommerce business. So once you’ve identified these three KPIs, now we can set goals that will effectively, at the very least double the sales revenues in a specific period of time.
We like to use a conservative growth goal of 30%. This means that we wish to improve each of those three KPIs by just 30% per unit of time. For the unit of time, we’ll say 90 days (since this was our promise in the headline of this article).
OK so let’s see how the numbers work out before and after an increase of just 30% for each of the 3 crucial KPIs for our example ecommerce business:
eCom Company 1
3rd Quarter Performance:
Customers – 100
AOV – $100.00
Frequency – 1
Sales Revenue – $10,000.00
Now we increase each of the 3 KPIs by just 30% and observe how the numbers work out.
With a 30% increase
Customers – 100 x 30% = 30
AOV – $100 x 30% = $30
Frequency per Quarter – 1 x 30% = .3 (more of your customers, not all, make additional purchases and it averages out to this overall)
4th Quarter Performance:
Customers –130
AOV – $130
Frequency per Quarter – 1.3
Sales Revenue – $21,970
Now as you can see by simply increasing those three key KPIs we actually MORE than doubled the ecommerce business’s sales revenues by the end of the next quarter! That’s just 90 days!
Let’s do one more example for a company generating on average100k per month and having generated 300k in revenue for their second quarter:
eCom Company 2
2nd Quarter Performance:
Customers – 3,334
AOV – $90
Frequency per quarter – 1
Sales Revenue – $300,060
Now we increase each of the 3 KPIs by just 30% and observe how the numbers work out.
With a 30% increase
Customers – 3,334 x 30% = 1,020.20
AOV – $90 x 30% = $27
Frequency – 1 x 30% = .3 (more of your customers, not all, make additional purchases and it averages out to this overall)
3rd Quarter Performance:
Customers – 4,334.20
AOV – $117
Frequency – 1.3
Sales Revenue – $659,232
Once again, you see we more than doubled the sales revenue in just 90 days by increasing these 3 KPIs. Both of the examples above are no different from your company. Meaning you can do the exact same thing! In our examples we used 90 days. Yet it could be 6 months or 12 months. All based on your motivation, budget and comfort level.
So How Exactly Do You Increase Each KPI by 30%?
SMARTER Prospecting’s ‘Back-End Sales 360 System’ helps you maximize and optimize your company’s profits by squeezing every possible sale from each of your existing customers each year, getting those existing customers to buy more frequently from you per quarter and finally getting your customers to generate 3 – 10 referral leads each per year.
We do all this without radically increasing the amount of paid ads you invest in. What surprises many ecommerce business owners is that it starts by designing their strategy for growing their sales including:
• Making improvements to your email flows for better conversions
• Building in (OTO) one touch upsells when a customer adds something to their cart
• Cross selling in your shopping cart
• Adjusting your shipping threshold
• Robust ongoing customer referral programs
• Tiered Customer loyalty programs
• Quarterly contests and sweepstakes
• and more
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The examples we listed above are just some of the marketing tools that we leverage when we design your ‘Back End Sales 360 System’ marketing strategy. All the strategies and marketing tools that we leverage are PROVEN and recognized by all eCommerce industry authorities to consistently and predictably grow ecommerce businesses to the next level.
In future blog posts, we’ll share additional tips on how you can increase your sales revenues, number of customers and your average order value. You’ll be 2xing or more your sales in no time at all.
