Increase Focus On Existing Customers
For many companies, the primary focus is on selling to new customers, and little attention is given to the tremendous potential in the existing customer list. But when consumers become more skittish and conservative in their purchase behavior, they become less likely to take a risk on a new, untested vendor — opting instead to do business with the vendors they already know and trust.
So while economic uncertainty can make customer acquisition more challenging and expensive, it can also make remarketing to existing customers for repeat sales and referrals more productive. In times like these, your past investments in providing great customer service and a flawless experience can produce solid dividends.
Tune-Up Your Profit Path
In great economic times, the rising tide can float all boats — even the boats that aren’t as “ship shape” as they could be. But when you can’t count on that rising tide, you have to squeeze everything you can out of everything you’ve got, making sure that all of the elements of your profit path are working at full potential.
Optimizing your profit path could involve making improvements to your traffic-generation — quickly shifting money away from marginally productive placements toward those that are clearly more profitable. Optimization might also include improving the performance of your conversion funnel — paying particular attention to fallout occurring in the lower portions, where prospects have demonstrated greater purchase intent and qualification.
Pricing is another area where more attention and focus can be very productive. For a typical ecommerce company, pricing has tremendous leverage on profits and even small improvements can have big bottom-line impacts. And let’s not forget cross selling and upselling. By putting just a little more thought into what’s being offered and how, attach-rates and order-values can often be improved significantly.
Reinforce Warranties And Guarantees
Again, when consumers are skittish, they become more risk-averse. They don’t stop spending, but they do put more consideration and thought into their purchase decisions. And they do everything they can to minimize their risk of making a mistake. By reinforcing your warranties and guarantees, you help alleviate this concern and aid the prospects’ decision-making processes.
If you have great warranties and guarantees, now’s the time to be making a big deal of that fact. And if your warranties and guarantees are lacking, now’s the time to work on them — a powerful risk-reversal strategy can often be the deciding factor for a prospect who’s on the fence and cautious.
Understand And Match True Demand
Sales and demand are two very different things, and what’s selling the most is not always reflective of what’s in highest demand. In our work, we often identify big pockets of untapped potential by simply understanding how true demand is actually flowing on an ecommerce site. And by working to sell more-effectively into that true demand, growth and profits can be increased from existing traffic levels.
Take a look at how demand is actually breaking out on your site. Identify the most visited product pages and use your actual sales data to see how well you’re converting on those discrete segments of demand. Don’t be surprised if you find big discrepancies between the true demand picture and the actual sales picture. These gaps simply represent untapped opportunities you can capitalize on with a little more attention and focused effort.
Put Profitability First
In the heat of battle, it’s all too easy to forget that top line revenues don’t pay the bills or keep the lights on, and it’s not what you make, it’s what you keep that matters most. So while hitting your top-line growth objectives might be a bit more challenging in an uncertain economic climate, always remember that you have much more control over what really matters — your bottom line.
So put profitability first. Say “no” to those bad revenues that pad your top line while gutting your bottom line. Focus on more profitable prospects with higher lifetime net values. Be aggressive in reallocating funds toward more productive activities. Put pencil to paper and actually calculate the profitability impacts before executing those discounts and price promotions. Drive changes that will improve your per-order and per-customer profit contributions. Identify waste and eliminate it — fast.
The point is that there are many, many ways to improve bottom line performance in an ecommerce company. And double-digit revenue-growth shouldn’t be your only option — particularly in an uncertain economic climate.