Why Repeat Customers Are the Lifeblood of Your Ecommerce Business (And How to Woo Them)

PayHelm on August 25, 2020

Smart retailers both online and off value one kind of customer above all others: repeat buyers. Why? Because the most profitable customers are those you already have, so it pays to keep them coming back.

The average ecommerce storeowner spends more than 80% of their marketing budget on customer acquisition. Yet an Adobe Digital Index study that analyzed data from 33 billion visits to 180 retail websites showed that more than 40% of the total revenue generated came from only 8% of the sites’ visitors: namely, returning customers (those who bought once before) and repeat buyers (those who made at least 2 previous purchases).

In fact, 61% of small and medium-size businesses report that more than 50% of their revenue comes from repeat customers. During economic slowdowns and the holiday season, returning and repeat purchasers account for even more revenue

It’s less expensive to retain customers than it is to acquire them. It takes 5-7 new shoppers to bring in the same amount of revenue as a single repeat buyer. In addition, it costs 5 times as much to acquire a new customer than it does to keep an existing one. Furthermore, it costs 16 times as much to bring a new customer up to the spending level of repeat purchasers.

It’s also easier to sell to repeat buyers: Whereas the average conversion rate for ecommerce businesses is 1%-3%, a repeat customer has a 60%-70% chance of converting. According to Adobe, repeat buyers are 9 times more likely to convert than a first-time shopper. This especially comes in handy when you’re introducing new products.

Repeat purchasers tend to spend more the longer they stay with you, too. A study by Bain & Co. shows that in the apparel category, a shopper’s 5th  purchase was 40% larger than their first purchase, while their 10th purchase was 80% larger.

But the payoff from repeat buyers doesn’t stop there. Repeat purchasers double as your best brand advocates, telling an average of 4-6 other people (50% more than one-time buyers) about their experience with you. That’s the kind of advertising money can’t buy!

Multiplied by social media, word of mouth from happy customers adds up to a whole lot of free marketing. It works, too: More than 90% of consumers trust and buy from a brand recommended by friends or family. In addition, 43% are more likely to purchase a new product after learning about it via social media.

But here’s the best news of all: A mere 2% increase in customer retention is the equivalent of cutting costs by 10%, while increasing customer retention by just 5% boosts the average company’s profitability by a staggering 75%.

So how difficult is it to get a customer to come back and shop with you again? After his or her initial purchase, there’s a 27% chance of that shopper returning. But if you can get them to come back for a second purchase, the odds of them returning again jump to 45%. After a third purchase, there’s a 54% chance that they’ll continue coming back.

But you don’t have to rely on chance. There are a number of proven strategies for enticing customers to shop with you again and again. And this being the 21st century, there’s an app for that. Smile.io specializes in loyalty programs for small businesses. Their goal is to help you build your repeat customer base into an engaged community, which in turn will enable you to grow your business.

An effective loyalty program helps you to establish and maintain an emotional relationship with every member of your community. It’s not just about discounts; simply offering the customer a discount on their next order may bring them back, but then they’ll expect a discount every time and/or wait until they receive one to make another purchase. Either way, it’s a downward spiral.

Nowadays, a well-designed loyalty program motivates valuable customer actions and increases engagement. It also creates an effective switching barrier: Your customers will be less likely to jump ship to a competitor if future rewards from you are in store for them!

You can reward customers for all kinds of activities in addition to purchases:

  • Account creation
  • Social media follows or shares
  • Birthdays
  • Referrals and reviews
  • Anything else you can think of

Smile.io integrates with BigCommerce, Shopify, Shopify Plus, and Wix, empowering you to create a customized loyalty program especially tailored to your ecommerce business via Points, VIP recognition, Referrals, and more. Their Resource Center features a reference library of ebooks — including industry-specific how-to guides — to help you get started. Finally, Smile-io also offers one-click integration with an impressive array of related tools.

So follow the smart money: Stop spending most of your marketing budget on customer acquisition, and start focusing instead on customer retention. Your bottom line will thank you!

5 Ways to Screw Up Your Ecommerce Business

PayHelm on June 11, 2020

Ecommerce has come a long way from the early days of eBayers mailing Beanie Babies across the country in old cereal boxes. Online sales now account for more than 75% of all retail growth worldwide; in fact, global ecommerce sales are predicted to grow by an incredible 19% this year alone. That’s a projected total of some $4 trillion in 2020, spent by approximately 2 billion shoppers — 185 or so million of them on eBay alone.

So how hard can it be to cut yourself a profitable slice of this sizeable pie? That depends on you. Ecommerce is one retail playing field where small and medium-size enterprises (SMEs) can hold their own against the mega-brands and still prosper; brick-and-mortar shops largely depend upon local patronage, but an online store’s niche market encompasses a whole world’s worth of potential customers. Yes, competition can be fierce, but in the immortal words of Homer Simpson, “This is your chance…just don’t screw it up!”

Here are the top 5 pitfalls you’ll need to avoid in order to succeed as an online retailer.

  1. Choosing the wrong platform(s).

Where you choose to start your ecommerce business may well determine its success or failure right from the get-go. If you’re building it from the ground up, find your footing as a seller on one of the major ecommerce marketplaces; that way you can take advantage of their broad international customer base. Some are specialized — e.g., Etsy for handmade and vintage, Poshmark for fashion and home décor, or Ruby Lane for antiques and collectibles — while others showcase a broad range of merchandise.

eBay hits the sweet spot for fledgling ecommerce entrepreneurs:

  • Robust branding opportunities and selling tools for eBay storeowners
  • 88% of all merchandise is sold at fixed price; the rest is sold at auction
  • 80/20 mix of new and pre-owned merchandise
  • Inventory encompasses not just commodity items but also the unique and unusual (“Whatever it is, you can find it on eBay”)

From eBay, you can easily expand to other selling channels. When you’re ready for your own website, BigCommerce and Shopify are good solutions for starters. Magento is a great platform for larger businesses; it’s open source, so you can add custom apps. The downside is that developing those apps can be very costly.

So be aware of what platforms are available, but do your due diligence to determine the right launching pad for your ecommerce enterprise.

Choosing the wrong product(s).

When it comes to deciding what you’ll sell, you can make some major mistakes. A product must be:

  • In demand, but not a flash in the pan. Beanie Babies put a lot of eBayers in business, but not all of them stayed in business once that fad fizzled out — and many got left holding a sizeable bagful of no-longer-hot Beanies.
  • Not overly niche, i.e., having a too-limited market. Furthermore, a niche with no competitors may turn out to be a niche with no potential traffic.
  • Consistently available. Thrifting items one at a time limits your ability to scale, whereas partnering with wholesalers means you can sell items in multiple quantities.
  • Affordable. If you can’t make a profit on it, then it’s not the product for you.

Not every product you source will turn to gold. Liquidate the losers, and put the proceeds into something that will hopefully sell better.

  • Being user-unfriendly

It’s harder to commit this cardinal ecommerce sin when you’re using a marketplace format as opposed to building your own store from scratch. Still, plenty of eBay stores manage to do so by:

  • Lumping all their products together into the default “Other” category rather than creating intuitive categories and subcategories (e.g., “Men’s Apparel” > “Men’s Suits”, “Men’s Casual Wear” or “Holiday Gifts” > “Holiday Gifts for Him”, “Holiday Gifts for Her”, “Holiday Gifts for Kids” — you get the drift).
  • Not branding their eBay store with their business’ logo, an eye-catching billboard, and a keyword-rich description, then carrying the look through to their listings and sales collateral.
  • Failing to optimize listings for mobile (62% of all eBay transactions involve a mobile device).
  • Neglecting to use eBay’s powerful selling tools (including Markdown Manager, Promoted Listings, and store newsletters, and affiliate marketing through eBay Partner Network).
  • Posting listings with ineffective titles, lousy and/or not enough photos, missing item specifics, incomplete or way too wordy descriptions, and/or overly onerous terms of sale.

Learning eBay best practices will serve you well, because most of them align with ecommerce standards and thus will apply to any selling channel.

  • Not being customer-centric

If your customer’s complete satisfaction is not your bottom line, then your ecommerce success is going to be limited at best. It’s absolutely crucial that you give a great buying experience!

Here are just a few of the ways you can fail to put your customer’s happiness front and center:

  • Have unappealing or even off-putting terms of service, especially around shipping and returns.
  • Poor customer relations management. For example —
  • Don’t communicate, i.e.. respond promptly to inquiries; set buyer expectations as to shipping and delivery windows; and/or cheerfully and professionally resolve post-sale issues.
  • Pack sloppily and/or ship items in a less than timely manner, especially if you ship without providing tracking information.
  • Assume every buyer is out to scam you. This will cast a negative pall over every customer interaction!
  • Ignore customer feedback. Remember, only about 1 in 3 customers takes time to leave feedback; if one person expresses disgruntlement with some aspect of a transaction, chances are you’ve also got other unhappy customers who just won’t buy from you again. So take both positive and negative comments to heart, learn from them, and move on.

(Bonus points if you reach out to dissatisfied buyers with a public apology and an offer to make right whatever went wrong. Do this well enough, and you could even turn them into loyal returning customers!)

  • Don’t build a customer database, from enlisting subscribers to your eBay Store newsletter to harvesting customer names and addresses into your private resource for generating repeat business.
  • Avoid social media. Social media marketing doesn’t just mean sharing your listings on Facebook, Pinterest, etc. It also means building a community, whether via Instagram followers, on a Facebook Business Page, or through your own blog.
  • Ignoring your numbers

This is the biggest pitfall of all — and the cause of most retail business’ downfall, be it online or off. Numbers measure the health of your business. If you do not know your numbers, you cannot measure your business. If you cannot measure your business, then you cannot manage your business. And that means sooner or later, your business will go belly up.

Here are a few of the numbers you need to know:

  • Previous year’s sales, both gross and net
  • Cost of goods sold for that period
  • Your profit margin(s)
  • Operating expenses —
    • Facilities (warehouse space, etc.)
    • Selling fees
    • Shipping costs
    • Supplies
    • Transaction losses (lost or damaged shipments, returns, etc.)
    • Marketing, i.e., advertising and promotion
    • Miscellaneous other costs of doing business
  • Conversion (a.k.a. sell-through) rate —
    • For all sales
    • For each channel and format
    • By category and product
  • Return/refund rate —
    • Number of returns per total transactions (expressed as a percentage)
    • Dollar amount of total returns (important for determining loss rate)
  • Sales velocity, i.e., the speed at which an item sells. Remember, unsold inventory is your cash, sitting on a shelf, laughing at you!

However, there are more complex metrics you should track as well. This is where PayHelm can help. Among other useful reports, it enables you to:

  • Monitor global sales performance
  • Filter and chart an overview of your buyers by location
  • Analyze your sales across multiple channels and platforms

Keep an eye on your numbers, and watch for trends. Formulate hypotheses to account for these trends. Then test, test, test to see if your hypothesis is correct.

Now go forth and make the most of your chance to succeed as an ecommerce entrepreneur. Just don’t screw it up!

Join PayHelm at the Ultimate D2C Stack

PayHelm on May 21, 2020

We’ve partnered up with BigCommerce and Skubana to put on a webinar featuring speakers from BigCommerce, ShipperHQ, Happy Returns, and PayHelm of course!  

It’s a live webinar on June 3 and 4 featuring several other major companies all offering input and strategies on how eCommerce companies are using technology to optimize and scale their business – and we would love to see you there!

Register Now

This webinar series focuses on best practices for growing and operating a lean and resilient e-commerce business in the post-COVID economy.

Ecommerce operators are often overwhelmed by the endless ecosystem of software providers. Many of these technologies are nice “add-ons”. But your operational tech stack is fundamental to building and running your business. 

These tools can often make or break a brand especially during times of economic downturn. Without the correct systems in place, you run the risk of failing.

This virtual summit focuses on key operational technology to grow and future-proof your brand.

Register Now

Taking Care of (Online) Business: eCommerce Workflows

PayHelm on May 11, 2020

If this is the workflow for your ecommerce business, it’s time to clean up your act!

Whether you’re an accidental entrepreneur whose hobby selling on eBay became a full-time occupation or a purpose-driven e-tailer who deliberately set out to build an ecommerce empire, you’re in business now.

But are you running your business, or is your business running you…ragged? If it’s the latter, then it’s time to review your procedures with an eye towards streamlining and automating whatever you can.

Because when it comes to your ecommerce business, it literally pays to mind your Ps and Qs. Here’s how the workflows boil down, step by step:

  1. Product sourcing
  2. Post items for sale
  3. Promote your listings and store
  4. Quick shipping
  5. Prompt and professional customer service
  6. Quantify your business’ success via key metrics

Let’s take a closer look at each of those workflows.

Product Sourcing = Homework + Legwork

Before you can start selling anything, you’ve got to have something to sell. Time to go product sourcing! But where to start?

You’ve got plenty of options. Many online sellers swear by thrift shops and garage or estate sales, because they love the thrill of the hunt. But scaling a business based entirely on unique items — “one-offs” —can be brutal; you’ve got to list items as fast as you sell them just to keep your virtual store stocked. Unlisted inventory is your tied-up cash just sitting on the shelf, laughing at you.

Another viable sourcing option is retail arbitrage: buying marked-down, limited edition, and/or hard-to-find merchandise at brick-and-mortar shops or online, then flipping it for a profit. The drawback to this business model is that it’s unpredictable.

Ditto for buying liquidation goods; you can never be sure where your next hot product is coming from or what it may be.So start at the very beginning (a very good place to start!) by doing some market research. Maybe you’ve already got a product category (or categories) in mind; maybe you’re wide open to suggestion; or maybe you just want to find your next hot niche. Or maybe all of the above. Whichever it is, make sure you do your homework!

List More, Sell More

Once you’ve settled on a saleable and sustainable product mix, you’re ready to start listing. That can be the most challenging part of your business to scale, and you can’t do it manually — or singlehandedly.

So start automating whatever you can — the sooner, the better. Eventually, you’ll also need to add somebody else, or even several somebodies, to your payroll. Because even with stock photos, listing takes time. And if you’ve got to do your own product photography to boot, forget going solo. You’re going to need help from third-party tools and/or human employees.

The best third-party ecommerce tools offer multiple plans to accommodate your growing business. Most offer free trials, too, so don’t hesitate to shop around until you figure out what feels right for your business.

Then choose the tools that can best handle what you need them to do, whether it’s importing/exporting listings across platforms, keeping tabs on your inventory, streamlining customer relations management, or shaping up your shipping. Whatever tool(s)’ you use should include some kind of reports or metrics.

Keep Calm and Leave Feedback

Speaking of customers, you’d better be prepared to deal with them — preferably promptly and professionally. One word: Communication. Answer questions ASAP; manage buyer expectations whenever possible; and focus on each customer’s complete satisfaction as your bottom line.

Start each customer on the road to happiness  — and set yourself up for reciprocal feedback — by leaving feedback for buyers as soon as payment is received. The buyer’s job is to purchase and pay; once they’ve done that, show them some feedback love. (Hint: You can automate it.)

Of course, if they don’t pay, you’ll need to have a system in place to deal with that as well. For example, on eBay, you simply open an Unpaid Item case — or let Unpaid Item Assistant do it for you.

But don’t just sit back and wait for shoppers to stumble across your listings and store. Get out there and promote them via social media, Facebook ads, or marketplace tools such as eBay’s Promotions Manager and Promoted Listings. Consider rewarding repeat buyers in some way. Set up volume discounts. The more traffic you can drive your way, the bigger the boost in sales.

Fast Shipping and Happy Returns

Once you do make a sale and receive payment, that’s your cue to ship quickly. Ideally, your shipping solution of choice should allow you to purchase and print shipping labels; generate packing slips and customs labels; upload tracking; and notify buyers that their item has shipped and when they can expect to receive it.

Your job doesn’t end there, though. After-sale customer care is critical to your ongoing success. If they’re happy, great; if not, you’ve got to negotiate an amicable resolution. You might also have to process a return and/or issue a refund. Just don’t ask for feedback! Take care of your buyers, and your feedback will take care of itself.

Know Your Numbers

You can’t manage your business unless you can take its measure via certain key metrics. You’ve got to keep tabs on gross profit versus net profit; cost of goods sold; and overhead expenses.

Drilling down, you need to know how well each product is performing along with what’s selling best on which channel(s). It’s also useful to analyze sales by SKU; by buyer location; by price point; by order size; and more. Quantifying this information enables you to see what’s working versus what’s not working and allows you to gauge your success (or lack thereof).

Each marketplace provides sellers with a certain amount of data and some type of sales reports, but to really keep your fingers on the pulse of your ecommerce business, you’re better off using a third-party analytics tool that you can tailor to suit your needs.

Remember: You can’t manage what you don’t measure. If you don’t know your numbers, sooner or later, your business is going to crash and burn.

So there you have it, the soup to nuts of ecommerce:

  • Source products that will sell and enable you to scale
  • Post listings as quickly as possible
  • Promote your products and store
  • Ship quickly (and cost effectively)
  • Communicate with customers every step of the way
  • Streamline and/or automate as much of the above as you can
  • Monitor your business’ health via key metrics

Now go forth and sell!

You’re Not the Easter Bunny: Going Multichannel with Your Ecommerce Business

PayHelm on April 22, 2020

Putting all your eggs in one basket is fine if you’re the Easter Bunny. But when it comes to running your ecommerce business? Not so much. Nowadays, the smart move is going multichannel. Here’s why and how.

Why Go Multichannel?

First of all, business on any given ecommerce platform is going to ebb and flow over time. It’s just the nature of the retail beast. If you sell on multiple platforms, chances are your sales will remain steadier overall.

Furthermore, if you sell through only one channel, your business is entirely dependent on that channel. If something goes wrong — for example, an eBay site glitch — there goes your entire revenue stream. And if your one marketplace changes their rules, as happens on eBay at least twice a year, it could take you days or even weeks to get compliant and back up to speed. Time is money in ecommerce, so delays are costly!

Selling via a single channel also means that you reach only a limited segment of the market, i.e., potential customers for your products. By selling via more than one ecommerce platform, you’re going to reach a wider audience. That alone is going to boost sales and grow your brand.

In fact, a recent study showed that retailers who sell on just two separate online platforms saw a 190% increase in revenue over those selling in only one marketplace. Those who sold from their own website and added a marketplace channel increased revenue by an average of 38%, while adding two marketplace channels bumped it up by 120%!

It’s just simple common-sense math. Not all shopping journeys follow the same path; some people start with a Google search, while others go straight to Amazon or eBay. Buyers also are not necessarily loyal to a single channel. Chances are they’ll check more than one before they make a purchase. The more ways and places that would-be customers can find you, the more opportunities they’ll have to buy from you.

In addition, studies show that multi-channel shoppers — those who interact with your company through more than one channel — buy more overall than those who engage with your company using only a single channel.

Finally, especially if you sell only on your own website, driving traffic can be a challenge (and expensive, too). Marketplace sites have built-in traffic. Many shoppers prefer marketplaces because they offer conveniences that a single-merchant site cannot.

How to Go Multichannel: The Nuts & Bolts

So now you’re sold on the idea of taking your ecommerce business multichannel. But where to begin?

Start by prioritizing channels. Not all marketplaces will work equally well for your particular brand. You’ve got to consider each available option from two sides:

  1. Are your target customers going to be there?
  2. Does that marketplace offer acceptable terms for doing business there?

For example, if you sell handmade and/or vintage goods, you probably want to be on Etsy. If speed of delivery is your top priority, consider Amazon. For a marketplace that meets all of the above criteria, eBay is likely to be your best bet.

Look at the demographics for each marketplace as well as their terms of service. Each channel you select should work for your business model, industry, and target market.

At the same time, it’s important to realize and prepare for the fact that whatever new channel(s) you decide to add, you’re going to have to meet certain logistical challenges. The most obvious and important of these is keeping your inventory synced up across channels. More opportunities to make sales means more chances to over-sell or find yourself short-stocked.

Don’t even think of trying to do what some small sellers of unique items make the mistake of attempting: namely, manually removing each item that sells on one ecommerce platform from all the other platforms where it’s listed. That doesn’t even work well for casual sellers!

No matter how small or hobbyish your business may seem to you, it is still a business. So you need to handle it accordingly. And if you’re already thinking with your business hat on (because that’s just how you roll), then you’ll immediately understand why it’s time to find a multichannel selling tool that will enable you to manage your business from a single centralized location — from listing to shipping and fulfillment to managing customer relations.

Remember: More sales means more packages to be shipped in an appropriately timely fashion — not to mention more returns to process — while more customers means more potential problems to resolve plus a general increase in the volume of customer communications, including feedback, shipping notifications, etc.

Multichannel selling tools such as SixBit Software, inkFrog Channel Advisor offer a variety of plans to suit your business (and grow with you), and most offer a free trial as well. So don’t be afraid to try more than one. But do start auditioning multichannel selling tools ASAP, before you get in over your head and harm your business’ reputation with customers and/or any of your new selling channels due to late shipping, stock-outs, or other growing pains.

In addition to finding a user interface you like, be sure your multichannel selling software enables you to generate essential reports measuring the health of your business. To get the whole picture, you should also check your marketplace dashboards on a weekly and monthly basis.

Last but not least, bear in mind that going multichannel doesn’t mean just listing your items on additional ecommerce marketplaces, sitting back, and waiting for sales to roll in. You’ll need to test, tweak, and optimize those listings for each channel.

For best results, you’ll also need to develop a multichannel marketing strategy…which is a topic for a whole ‘nother article! For now, let’s just say that you’ll need to extend your brand’s messaging to encompass your new selling channels.

In sum, what advantages and benefits can you expect to reap by going multichannel with your ecommerce business? Let’s look at what your ecommerce peers recently had to say:

  • 75% of companies surveyed said that going multichannel increased sales
  • 64% said that going multichannel increased customer loyalty
  • 62% said that going multichannel gave them a competitive advantage

Now stop running your ecommerce business like the Easter Bunny. Go multichannel — the way your customers are already shopping!

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