3 ways to supercharge your e-commerce strategy in 2021
The future of e-commerce is incredibly bright. But scaling an e-commerce business is hard work and requires taking the right steps at the right time.
Covid-19 has left a lasting mark on the consumer landscape. Immediacy, convenience, and speed have risen to the top of the list for customer demands.
Competing on these metrics will help you stand out in a crowded marketplace. As competition ramps up, here are three ways to supercharge your e-commerce strategy in 2021.
- Maximise customer lifetime value
The old rule of thumb was that it cost five times more to acquire a new customer than retain an existing one. For many businesses, this has only become more true, raising the importance of increasing the lifetime value of your customers.
One way to determine acquisition strategy is to calculate your customer lifetime value (CLV). This is the projected revenue that a customer will generate during a lifetime spending with you. Put this in the context of your customer acquisition cost (CAC) to work out the long-term viability of your strategy.
Suppose The E-commerce Company has spent $10,000 on search engine marketing and social media marketing, to acquire 1000 new customers. Their average revenue per customer is $50, and average order fulfilment costs $30. The E-commerce Company retains 50 per cent of its customers each year.
Customer contribution margin: $50 – $30 = $20
CLV: $20 / (1 – 50%) = $40
CAC: $10,000 / 1,000 = $10
CLV/CAC ratio = $40 / $10 = 4x
Generally speaking, the higher the ratio, the better the company is at generating value relative to the cost of acquiring a customer.
There are many ways to improve this ratio, including a couple of simple ways to boost average revenue per customer, which is at the heart of this calculation. Offer product bundles, launch a customer loyalty program, and experiment with triggering personalised product recommendations based on purchase history.
- Integrate marketing automation
According to HubSpot, 79 per cent of high-performing companies have been using some form of marketing automation for more than three years. Automation improves efficiency, removes the need to follow up manually, and helps ensure a better customer experience.
Keep on the front foot with potential new customers, and capture first-time online shoppers, by integrating marketing automation tools that support your customer service, marketing, and sales teams. With lead capture tools, you can send an automated email reply to any prospect who submits a form, personalising the content based on their query.
Automation software can also safeguard against people who click on products they feel like purchasing, and then abandon their cart. Based on different studies, roughly seven out of every 10 customers in 2020 didn’t complete their transaction. While careful not to spam, don’t be afraid to ping your potential a couple of times. According to Omnisend, a series of abandoned cart emails works 63 per cent better than a single reminder email.
- Access business finance to invest in growth
Whether you’re looking to invest in automation software, or place larger stock orders with suppliers to capitalise on special offers, business finance can help.
Calculating ROI is a quick way to size up an opportunity and see if a business loan can help you grow. For example, let’s assume you can purchase inventory at a 20 per cent discount for a total of $200,000. You can resell this stock for $600,000, and access $200,000 on a 12-month term at an annualised percentage rate of 15 per cent.
The total cost of your loan including interest is $220,224. Minus the investment from the total revenue and you have a profit of $379,776. Crunch the numbers with this calculation:
ROI(%) = (Net profit / Investment) x 100
Using this formula, you can estimate the ROI of the business loan to be 172 per cent.
For e-commerce businesses, the opportunity is now, and speed is key to seizing any opportunity. With Moula, you can apply for funding in seven minutes, and get a decision within 24 hours. Find out how a business loan from Moula can help your business seize opportunity.