E-commerce Performance Growth Winning Formulas: Start Your Retail CRM from Basics

0
228

E-commerce Performance Growth Formula for retail businesses

In the realm of e-commerce growth strategies, we’ve all heard the common refrains: “Boost your traffic,” “Generate more leads,” or “Increase your profit margins.”However, success isn’t just about getting traffic and making profit. It’s about using the right strategies for long-term growth.

In this article, we’ll explore how the E-commerce Performance Growth Formula can help improve your business. Own your business, manage it well, and rely on the right retail CRM solutions to transform your e-commerce journey and take your business to the next level.

2024 E-commerce Performance Growth Formula

Traffic x Conversion Rate (CR) x Average Order Value (AOV) = Revenue Performance

流量 x 轉換率 x  AOV (客單價) = 營業額

It’s straightforward: amplify any element, and you amplify your growth potential. While doubling every variable might not be feasible, incremental improvements across the board can set off a compounding effect on your growth.

Now armed with the formula and its context, let’s explore methods to enhance each variable individually.

1. Traffic

When it comes to driving traffic to your website, there are various methods available, from paid advertising on platforms like Facebook and Google to organic strategies like SEO and content marketing. Monitoring key performance indicators (KPIs) such as click-through rate (CTR), bounce rate, and conversion rate is crucial to assessing the effectiveness of your traffic generation efforts.

Quantity, which pertains to the volume of traffic, is a significant KPI to monitor. Organic traffic, although cost-effective in the long term, requires time to build and may not yield immediate results. Conversely, paid traffic offers more control and scalability, allowing you to adjust your efforts based on your business needs.

Ultimately, understanding the nuances of different traffic sources and optimizing their performance is essential for scaling your e-commerce business effectively.

For Ecommerce businesses, traffic can be generated through various channels:

  • SEO management (SEO 经营)
  • Product placement in television shows (电视植入)
  • Collaboration with online influencers (团妈合作)
  • Communication with existing customers (旧客沟通)
  • Management of social media platforms (社群媒体经营)
  • Regular communication with members (定期会员沟通)
  • Consistent advertising efforts (稳定的广告投放)
  • Collaboration with community influencers (社群意见领袖合作)

There are two main types of media buying:

  1. Keyword-Based (e.g., Google Ads): Targets users actively searching for specific keywords. Businesses bid for ad placement based on chosen keywords, with the highest performing ads winning. Ideal for ecommerce brands with sought-after products, known as “Pull Campaigns.”
  2. Interest/Behavior-Based (e.g., Facebook/Instagram): Targets users based on interests or behaviors, rather than specific searches. Ads compete for placement among users who may not be actively seeking the product. Effective for ecommerce brands with unique or innovative products, known as “Push Campaigns.”

Both types offer targeting capabilities like language, geography, and demographics, so choose based on your audience.

To retain traffic and reduce bounce rates, ensure your landing pages match your ads, offer engaging content, optimize for fast loading times (aim for under 3 seconds), and focus on conversions with clear CTAs. Beware of low-quality traffic that doesn’t convert, and optimize campaigns accordingly.

For a Beginner’s Guide: What Are Leads?

Generating leads is vital for ecommerce businesses as it helps establish relationships with potential customers, guide them through the sales funnel, and convert them into paying customers.

Effective lead generation tactics in ecommerce include offering lead magnets, running targeted ad campaigns, optimizing product pages, and using email marketing. Lead magnets, like irresistible offers, capture contact information in exchange for value, converting over 60% of traffic into leads. To boost leads, create quality lead magnets addressing specific problems to broaden audience reach and engagement.

2. Conversion Rate (CR)

Conversion rate in ecommerce refers to the percentage of website visitors who complete a desired action, typically making a purchase. For online businesses, a conversion usually involves a visitor performing a checkout. The conversion rate is calculated by dividing the number of completed checkouts by the number of unique visitors to the site.

Conversion Rate = Number of Checkouts/Number of Unique visitors

Conversion rate = 50/1000

For example, if 50 out of 1000 visitors make a purchase, the conversion rate is 5%. Optimizing for conversion rate involves strategies to increase the number of visitors who become paying customers. This can lead to more cost-effective use of marketing efforts and increased revenue generation. Conversion rate optimization (CRO) aims to improve the likelihood of visitors completing a desired action, ultimately driving business growth.

For ecommerce businesses, the conversion rate can be boosted through various channels:

  • Website Dwell Time (网站停留时间)
  • Product Selling Point Packaging (商品卖点包装)
  • Marketing Campaign Exposure (行销活动曝光)
  • Landing Page Layout Design (承接页排版编排)
  • Smooth Shopping Pathway (购物动线顺畅度)

3. Average Order Value (AOV)

Average order value (AOV) serves as a vital metric in ecommerce, revealing the average monetary value of individual orders made by customers.

Average Order Value (AOV) = Revenue/Number of Orders

By dividing the total revenue earned by the number of orders, businesses can derive their AOV. This metric provides crucial insights into customer purchasing behavior, helping businesses understand their clientele’s spending patterns. Monitoring AOV aids in identifying trends, evaluating marketing strategies, and assessing the overall health of an ecommerce venture.

Firstly, it allows you to assess the effectiveness of your online marketing endeavors and pricing strategies, providing essential metrics to gauge the long-term value derived from individual customers.

Moreover, AOV serves as a benchmark for customer behavior, enabling you to establish goals and formulate strategies while evaluating their efficacy. Unlike increasing website traffic, which often incurs additional expenses, boosting AOV can directly enhance revenue and profitability without incurring extra costs.

Additionally, since each order entails transaction costs, elevating AOV presents an opportunity to drive revenue and augment profits when customers are already engaged with your store, thereby maximizing the return on investment from existing sales channels.

Early-stage Layout Strategy for E-commerce Operations

The early-stage layout strategy for e-commerce operations is divided into four parts:

  1. Boosting performance through main sales channels
  2. Establishing a brand website to accumulate members
  3. Expanding traffic through business partnerships
  4. Member communication to drive repeat orders

Strategy 1: Boosting Performance through Main Sales Channels

If your official website has just been launched and you don’t have much traffic initially, consider listing your products on various platforms such as Shopee, Lazada, etc. These platforms have existing traffic, but they also have drawbacks.

With a vast array of products, there’s a risk of being overshadowed unless you have corresponding promotions. Therefore, carefully assess the effectiveness of listing your products on these platforms.

Revenue = Traffic x Conversion Rate x AOV (Average Order Value)

When brand merchants drive traffic through advertisements, influencer collaborations, or platform partnerships, combined with your existing conversion rate, your revenue will increase.

How can brand merchants conduct a “traffic check”? It can be determined through four indicators:

  1. Whether daily traffic meets expectations
  2. Whether new customer ratio reaches 70% weekly
  3. Whether natural traffic accounts for 30% monthly
  4. Whether repeat customer orders constitute 30% monthly

Key to E-commerce Marketing — Product Page and SEO Actions

Recommended Product Composition Structure:

  1. 20% Limited-Time Offer: Includes clearance items or limited stock products. These items often have high appeal as they are offered in limited quantities or are part of a clearance sale, prompting customers to act quickly and create sales opportunities.
  2. 30% Bestselling Picks: Includes popular ranking products. These are items that customers love and consistently purchase, typically with good reputations and steady sales volumes. Including them in the mix can attract more customers and enhance overall sales performance.
  3. 50% Event Foundation: Includes new arrivals or long-tail products. These items may be newly launched products or those with lower sales volumes but still have demand. Promoting these items in events can increase their exposure and stimulate sales growth.

In the world of online marketing, SEO plays a crucial role in getting your website noticed and attracting visitors over the long term. It’s all about standing out from the competition and meeting the needs of your audience. While basic website SEO is relatively easy for regular sites, it’s a bit trickier for e-commerce sites.

You need to not only have a solid website structure but also make sure your product and category pages are optimized for search engines. It’s like sharpening your tools before you start a job – essential for success.

Strategy 2: Accumulating Members through Brand Website

Building your brand’s official website is essential for accumulating member data and effectively promoting brand activities. Various promotions such as “storewide events” like coupons, reward points, and free shipping for minimum purchase, “seasonal events” such as holiday sales, and “membership activities” like registration gifts, birthday presents, and VIP discounts can enhance member engagement.

Setting up these promotional activities provides a clear direction for future influencer or advertising campaigns.

Strategy 3: Leveraging Influencer Collaborations to Gain More Traffic

When brand owners seek to acquire more traffic through influencer collaborations, they can follow three key points:

  1. Focus on one product.
  2. Highlight two key selling points in the content.
  3. Pay attention to three key photography details.

Typically, brand owners hope influencers will promote multiple products during collaborations, but it’s challenging to maintain focus. We recommend starting with promoting one product, then providing influencers with two key selling points to emphasize in their content.

Finally, when influencers photograph the product, they should pay special attention to three key details to avoid losing focus.

Strategy 4: Membership Management Strategies, Mastering First-Party Data

After successfully attracting new customers, don’t forget to nurture relationships with existing ones! Apart from using social media, communication apps, and developing apps to maintain connections with existing customers, many brands often overlook the highest return on investment channel: Email Direct Marketing (EDM).

In addition to customer relationship maintenance tools, integrating and effectively utilizing these tools is another challenge, especially in the era of the membership economy.

Companies need to use Retail CRM and consumer touchpoint media channels, integrate data from various channels to clearly outline consumer profiles, and establish a “traffic, behavior, transaction, membership, data” data application center to understand customers and uncover user intent.

In Conclusion

In the realm of e-commerce growth, we often hear about boosting traffic and increasing profits. But there’s a crucial piece missing: having the right e-commerce business strategies.

To grow sustainably, it’s essential to own your business, manage your operations well, and rely less on outside platforms. And here’s where retail CRM comes in. It’s about understanding your customers, their likes, and their habits so you can tailor your marketing to them.

By using retail CRM, you can create personalized experiences, target your audience better, and boost your sales. So, as you navigate the e-commerce world, remember the power of retail CRM. It could be the key to doubling or even tripling your growth.

Discover how Exabytes’ new retail solution powered by advanced CRM technology can revolutionize your e-commerce business. Maximize your growth potential and elevate your customer experience today!