Continuing our series on the ‘false truths’ of various e-merchants (following articles on I don’t have enough time and the blind acceptance of Google Analytics), we look into the misconception that you always need invest heavily in traffic acquisition when piloting an online business. Here are some explanations to show why it’s not always the best idea…

To read the other articles, please click below:

Fake Analytics 1: “I don’t have time for Analytics”
Fake Analytics 3: “I do all my reports in Excel!”

E-commerce strategy: some useful figures*

  • 70% of the organisations surveyed agree that it costs less to retain a user than to acquire one
  • The probability of selling a product to an existing customer is between 60% and 70%, compared to 5% to 20% for a prospect
  • Existing customers are 50% more likely to try new products and 31% more likely to spend more than new customers

*According to an investment study

In short, it can be very expensive to develop brand awareness and once you get to your site, the probability of converting leads is very low.

Acquisition: why continue to fill a leaky bucket?

Despite the figures mentioned above, there are various outdated processes that still persist. In e-commerce, these usually equate to: Budget Increase = Traffic Increase = ROI Increase

Of course, there are a range of acquisition levers: SEO, display, affiliation, social networks, marketplaces… But if there is a large rise in spending in terms of acquisition, a lot of e-merchants won’t get anywhere near their ROI.

The analogy of the Leaky bucket or bucket drilled with holes sums up the inefficiency of an acquisition-based approach – it is useless to continually add more water to a porous container so why not try to fill in the holes…

Traffic acquisition is essential because without visitors, it is tricky to retain anyone. However, before looking at acquisition, it is safer to evaluate the performance of your site. There are many areas you can optimise: product catalogue, customisation of the purchasing process, UX of critical phases (product sheets, shopping cart, payment), loyalty, etc.

Upstream optimisation based on data analysis, is key to ensuring that you stand out from the crowd as an e-merchant – improving customer engagement and gaining in efficiency.

Loyalty: methods and KPI to be followed

As an effective e-merchant, it is important to consult your reference indicators such as turnover, visit volume or conversion rate.

In terms of retention, you can deepen the analysis with indicators specific to your buyers. Their behaviour on your site can be segmented. RFM segmentation takes into account the recency of the last purchase, the frequency of orders and the monetary value (the total amount of expenses). It gives you information on your customers’ loyalty rate. By cross-referencing these criteria, users are classified into different segments (for example, “recently subscribed customers”, “sceptical customers” and “most loyal customers”). The interest of this analysis is also to see its evolution over time, and in particular the changes in customer categories: will a recent customer become loyal? Will a sleeping customer completely disengage? The key is to be able to use tools based on machine learning algorithms that will predict the customer’s propensity to remain loyal or not, depending on the buying cycle, product type, average basket, etc.

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The retention graph is another very useful tool for assessing customer loyalty. It allows you to analyse cohorts of visitors who return to your site over a defined period of time.

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This allows you to compare different aspects of the audience for different campaigns, sites and devices. It is the complete and cross-functional analysis of your device (web, web responsive, applications) that is the most relevant. Indeed, limiting the measurement to a single device can mislead you and give you a partial customer commitment to your brand.

If a user disengages from your responsive site, but is increasingly loyal to your mobile application, why spend money to attract them back to your responsive site? The key is to maintain the relationship between the user and the brand, regardless of the channel.

Points to remember

  • Acquiring new prospects is always good, but it is very expensive
  • Retaining your existing customers and understanding their needs is far more profitable
  • Web analytics provides you with key indicators to improve customer retention
  • Once your offer/site has been optimised, you can attract additional prospects by investing in different acquisition channels

Tune into AT Internet’s e-commerce webinar (in English) to find out how you can optimise your e-marketing activity, remove your blindfold and drive your site into the fast lane.

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AT Internet’s E-Commerce guide also explains how information obtained through web analytics can help you create an ideal shopping experience:
  • Improve your sales techniques, purchasing channels and customer loyalty
  • Discover how to optimise the product catalog by presenting an attractive and relevant offer for the visitor, strengthen visitor engagement through product sheets and encourage them to place your product in a shopping cart
  • Provide an effective purchasing channel to support the potential buyer until conversion, increase the re-purchase rate, and monitor interactions with your brand to build customer loyalty
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Author

Editorial Manager. Bernard is responsible for the content strategy of the AT Internet brand. He has almost 10 years’ experience in technical and marketing writing in the Software industry. A word specialist, Bernard’s job sees him working on many different mediums including blogs, white papers, interviews, business cases, press, infographics, videos etc. His specialist fields? Marketing and digital analytics content of course!

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