Many #ecommerce business owners believe that in order to increase their business ROI, they need to present an elaborate plan of action, which takes a long time to complete, takes many resources and changes the face of the business.
But the reality is that all that is needed is a few subtle changes to increase ROI by 100% and, most of the time, by much more!
PurpleLight HUB created a 5 steps protocol for you to follow in order to optimise the sh*t out of your eCommerce business and skyrocket your profit margin!
So get your coffee ready, and let’s start, shall we?
1.Optimise COGs (Cost of Goods Sold)
Optimising your cost of goods sold is perfect for an eCommerce business which moves a large number of goods. If you are all about quantity, the following changes can prove a jaw-dropping increase in profit margin and, consequently, an increase in ROI.
But don’t get it wrong, any size eCommerce can benefit from those optimisations, so pay attention.
A. Physical Trait: Analyse your product’s physical attributes and packaging. Can you reduce the size or weight, or/and can you find cheaper alternative material wize without compromising quality? Making these adjustments can help reduce shipping and manufacturing costs and provide thicker margins for your business!
B. Fulfilment Prices: Evaluate your fulfilment process and see how you can improve. Negotiate better rates with your logistics providers. There are plenty of alternatives, and while they all do the same, one specialises in organic delivery, the other in heavy shipments and so on. Optimise packaging and shipping methods to minimise expenses and continue increasing your eCommerce business’s gross margin!
C. Find Tax Loopholes: Work with a tax professional to identify potential tax breaks or credits that apply to your business. Have a larger perspective and think about international laws and regulations. Proper tax planning can help reduce your tax burden and invent money out of thin air!
2.Increase AOV (#AverageOrderValue)
Raising your average order value has proven to be one of the best tactics for eCommerce businesses to achieve breathtaking ROIs. For many instances, increasing the #AVO alone boosts ROI by 100%, and if done correctly, it can be the tipping point for many brands.
A. Correct Cart Journey: Streamline your checkout process to remove any friction points that may discourage customers from completing their purchases. Simplify the steps, offer guest checkout options, and display relevant product recommendations to encourage #upsells.
For example:
As you can see, at the bottom of the cart, you have 3 different options to choose from:
- Checkout
- Add 10 years warranty
- Assemble by a pro
You create friction points by giving your customers 3 different products on the same page (items, warranty, assembly), and now they need to choose. And therefore, a customer will take only 1 out of the 3 options. A loss of 519.99$.
Another point to keep in mind is that there is no information about the warranty or assembly. With no information, the customer will never buy.
Furthermore, underneath the price tag, you see the shipping price in small letters; while this info is pretty standard, it creates another friction point. When a customer sees he needs to pay an extra 89.99$ on top of the price of the items he chose, he will 100% won’t add another item or 2 to his order.
On the other hand:
Step one: the customers choose their items and see their prices, including tax and shipping. They have no other options but the “Continue” button, indicating that the purchase process is incomplete.
Step two: the customer moves to a unique page where he receives full details about the warranty. As you can see, all the information indicates that this is a common add-on, and after correcting the pricing, it’s a no-brainer.
Step three: the last phase is where we introduce him to Jerry, an actual human being with an incredible smile. When the customer sees a smile, he automatically feels positive emotion based on psychology, which helps our Cross sale manoeuvre. Finally, underneath the “Buy Now” button, there are 3 icons indicating safety and security. All of the above give the customer a positive cart journey and prime him for purchasing.
B. Create Variations: Expand your product range by introducing variations or complementary products that cater to different customer preferences. If done correctly, you will cross-sale consistently and see an increased AOV with ease.
For example:
A good variation gives each product a personality of its own. Even though it’s the same product, the experience it provides is different. As described, one for the office, one for the living room and one for the masters. It is essential to understand the customer behaviour behind each scenario and brand the variation accordingly.
On the other hand:
In this example, there is no difference between the chairs but their colours. Nobody will buy 2 of them in the same order. There is no need. But when you sell the experience and give them a real reason to buy, you will be surprised by the outcome.
C. Up-Sale Via Discount: Create a limited-time offer for specific deals only. Make the discount available only by up-sale, not as a promo code or as a general discount. And make sure that the customer knows that is the situation. Doing so creates a sense of urgency and encourages the customer to an Up sale.
For example:
As you can see, the customer gets a pop-up before he continues to check out about a secret and lucrative deal. Currently, he buys a 1-seater, but thanks to the discount available only on this page, he can add friction of a price for the 2-seaters. Now, he might not need one but be surprised what greed can make a human being do.
D. Give Insurance And Warranties: Provide valuable insurance and warranties options for customer purchases. For example, offer extended warranties, buyer protection plans, or product insurance to safeguard their investment. Doing so creates customer satisfaction and makes your AVO a win-win situation. Remember, 95% of the time, the customer won’t use the insurance, so in those cases, you net a 100% profit.
For example:
The problem with this offer is the pricing. 399.99$ on warranty suggests to the customer that the product is often dysfunctional and in need of repair. Plus, 399.99$ it’s a major friction point compared to 3737.96$, the item cost. The gap is too narrow, and the customer will feel ripped off.
Another key point is that in this particular example, there is no information about the warranty whatsoever.
On the other hand:
A good offer, first and foremost, gives the customer information that will support the decision to buy. In this instant is letting the customer know it’s a popular choice among fellow customers. Secondly, price wisely. The warranty needs to feel like a no-brainer. The #1 rule is to avoid creating friction points in a product that, 95% of the time, nets you 100% revenue. 59.99$ seems like nickels in front of 3737.96$, an easy pick. Sell 1000 units of warranty and make 59,990$ extra a month \ quarterly.
3.Increase CLV (#customerlifetimevalue )
Increasing the customer lifetime value (CLV) is essential for healthy and sustainable business growth and can be the only optimisation an eCommerce business truly needs in order to thrive. Focus on building long-term customer relationships with the understanding that your journey is a marathon, not a sprint, so use the strategies below and see how you enjoy an increase in revenue over time!
A. Create Variations: Just like described, a good variation will increase CLV significantly and if done correctly, the customer will come back in a time of need and buy the experience he needs. Thanks to a well-rounded product definition, the customer will remember your product over the competitors.
B. Create Pre-orders: Offer pre-order options for upcoming products or limited editions. This generates anticipation and excitement and boosts sales before the product is even available. Use pre-orders as an elusive way of making your customers feel important by sanding secret pre-order links or make the pre-order links public, and give your customers a great user experience. Either way, pre-orders can contribute significantly to your CLV.
C. Collaborate with Other Brands: Form strategic partnerships with complementary brands to create exclusive product bundles or co-branded items. Collaborations can introduce your brand to new audiences, increase perceived value, and enhance customer loyalty, which boosts your CLV in the long run.
For example:
Seems counterintuitive, right? The funny thing is that by doing a collaboration with a direct competitor, you don’t achieve a wow factor. There are no complimentary feathers in a direct competitor because there is no difference. Your target audience sees the same thing he already sees from you but in a different package. For a furniture eCommerce brand to do a collab with Ikea is exactly like Nike X Adidas will occur. It doesn’t make sense.
On the other hand:
For a furniture brand to collaborate with 4 seasons, it’s the perfect choice. 4 Seasons takes pride in its luxurious experience, and it’s the perfect collab for a furniture eCommerce brand. In addition, the amount of “cloth” or “stardust” that a conglomerate like 4 Seasons can cast on a furniture eCommerce brand is an extra 00 to the current revenue of the business.
Keep in mind: while it’s pretty difficult to collab with big players, collaborating with smaller brands with complementary features to yours is an excellent way to show your potential customers that your brand is more relevant than ever.
D. Introduce subscriptions: Implement a subscription model for products that can benefit from recurring purchases. Offer incentives such as discounts, exclusive content, or free shipping to entice customers to subscribe. The nature of subscriptions grants you an INFINITE customer lifetime, a win, don’t you think?
For example:
This subscription is a bad offer for the customer because their needs are unmet. Think about it, does a customer need a large amount of cleaning supplies every month for his furniture?
Let me rephrase it, do you use 2 whole bottles of cleaning detergent on your furniture every month? Well, you are not, so why will other customers?
See, a good subscription provides value to the customer. Sanding the items to the customer is not the value, but sending them to the customer in the right amount that suits their needs is a good deal.
Plus, the pricing is way too high, which means that the mystery item will need to be extraordinary every month to meet the expected standard of the customer.
On the other hand:
A good subscription understands the customer’s needs and can see from their perspective. For example, a bimonthly subscription gives the customer the right amount of cleaning solutions he needs without turning his house into a warehouse.
Another critical element is the magazine and V.I.P. discount, and this pairing is not by luck…
When you expose your customers to new ideas for house decor, you create a constant desire in them to reinvent their living environment. By planting the seed of never enough, you prime your customers for another order. Giving them a PAID V.I.P. badge makes them feel obligated to use the discount and acquire new items from you.
And the mystery item? Well, good for 2 things:
- Entice feeling of excitement in your customers
- Provide half a solution and keep them investing.
For example: send a nice candle in the first month without his matching stand, and tell the customer that the following package from the “perfect home package” will include the stand needed. And then, once they get the stand, tell them that in the next package, you will send them a matching decor to the candle & stand and so forth.
When you create something to anticipate but don’t show your customers exactly what it is, you stir deep desire in them and poke an ancient human behaviour in them. For more, go –> (SOON)
By asking only 89.99$, you make it seem absurd not to join the “perfect home package” after providing so much value!
E. Remarketing Correctly: Use targeted remarketing campaigns to upsell and cross-sell to existing customers. Show personalised product recommendations based on their previous purchases or browsing history. Effective remarketing can leave the customer no choice but to buy, and it’s a favourite here at PurpleLight HUB. For more, go –> HERE
4.Review Marketing Funnel and Find Alternatives
Regularly evaluating and optimising your marketing funnel is crucial for maximising your ROI. 92% of the time, the success of an eCommerce business is how effective its marketing is and with no surprise. But sometimes, it’s not enough to change offers or implement technical changes to your marketing funnel. If that is the case for you, Test and experiment with the following elements and, based on the data, make changes and see your ROI soaring.
A. A/B Test Your Copy: Test different variations of your website copy, product descriptions, and marketing messages. Keep in mind the belief and individuality of your brand and spin your copy from a different direction. Create at least 3 variations and see how they affect your ROI.
For example:
Try to change the headline from “discount alert” to other variations like:
“DISCOUNT DISCLAIMER”, “DISCOUNT FOR YOU”, or “SPECIAL OFFER”
See what type of language resonates with your customers the most based on ROI changes, and follow along.
B. A/B Test Your Pricing: Experiment with different pricing strategies to find the sweet spot that maximises your revenue. Test different price points, discounts, bundling options, or tiered pricing models to determine the most effective approach. Remember, 87% of eCommerce businesses report that once they increase the price, surprisingly, their sales increase too. Important to remember.
For example:
Play with different discount bundling and see which combo produces the most purchases. Let’s review these 3 examples:
2999.99$ -> 999.99$ – if, after testing, this option has the most purchases, then you understand that your customer base loves discounts and prefer quality over quantity.
1699.99$-> 999.99$ – if, after tasting, this option has the most purchases, then you understand that your customer base loves a good quality product with an understandable discount. They want the best deal inside their PRICE RANGE.
1899.99$-> 1299.99$- if, after tasting, this option has the most purchases, then you understand that your customer base is willing to pay more to get more. They want the best deal REGARDLESS of price.
Price correctly and see how your ROI increases quickly. You will be surprised by the results.
C. Test Different Marketing Agencies: If you work with #marketingagency or freelancers, periodically evaluate their performance. Consider working with different agencies or professionals to test their strategies and ideologies. The market is full of upcoming agencies that work on small teams and provide exceptional yields, so there is not really a wrong choice. All you need to do is get on a call with a few of them, see their results and hear what they have to offer. Remember, the most important thing is to not stay stagnant and keep your motion!
5.Review Marketing Budgeting
Optimising your marketing budget is crucial for achieving higher ROI. Unfortunately, many eCommerce businesses don’t put much time and thought into this subject. Consider the following aspects:
A. Are You Putting in Enough: Assess whether you are allocating sufficient funds for your marketing efforts. Invest more in strategic channels and campaigns that have proven to deliver results in the past. Ensure that your budget aligns with your business goals and the competitiveness of your industry. Keep in mind, a steady stream of potential customers is the ONLY solution for healthy ROIs.
B. Are You Putting in Too Much: On the other hand, review your marketing expenses to determine if you’re overspending. Eliminate ineffective marketing channels or campaigns that have not yielded satisfactory returns. Shift your budget towards high-performing initiatives to maximise your ROI. This correlates directly to testing different agencies.
C. Are You Dividing the Budget Correctly: Analyse your budget allocation across different marketing funnels and campaigns. First, ensure you’re investing in a well-balanced mix of channels that reach your target audience effectively. Then, adjust the allocation based on the performance of each funnel to optimise your ROI greatly.
Ok, I know. We said 5 and gave you 17 Do’s. Sometimes we over-deliver…
The following Do’s are based on past experience and have proved their effectiveness on different clients of ours in different niches across different markets across the globe. While tackling these Do’s, keep an open mind and know that you will not be able to increase your ROI until you take action and see feedback from the data. We just simplify and showcase the MOs of the most profitable eCommerce businesses so you can do so, too and see business flourish!
