In the previous post, Offline to Online: E-Commerce Platforms and Product Ideas, we covered the different types of e-commerce platforms and which kinds of products to sell. Now, let’s explore the elements of an online customer acquisition strategy and how to get your products into the hands of consumers.
In this article:
E-commerce Customers vs. In-Person Customers
Identifying the Best E-commerce Customers
Building ICPs and Personas
Finding Customer Data
Finding Customers Online
Setting Up an In-House Fulfillment Center
E-commerce Customers vs. In-Person Customers
Customers that shop online aren’t the same as customers that shop in person. Online shoppers have different habits, motivations, and preferences. Some of the key differences that brands will need to account for when moving from physical to digital retail are:
Digital customers are less impulsive: The act of shopping online is significantly different than shopping in person. Most customers end up in a virtual store by searching either for a specific product or a specific brand. Without any aisles to browse or neighboring stores to pop in to, a lot of opportunities for impulse buys are eliminated. Brands moving from physical stores to e-commerce shops need to go out of their way to reintroduce these impulse-buy opportunities into the process.
Digital customers are more directed and demanding: Similar to the above point, customers typically are looking for something specific when they get to an e-commerce destination. If they don’t find it quickly, they’ll likely move on to the next retailer that has exactly what they want. Digital retailers need to work hard to make sure that their e-commerce sites are easy to navigate and easy to use, and that customers can quickly find exactly what they need.
Digital customers are more revealing: One of the advantages of e-commerce over traditional shopping is that customers provide brands with much more data: where they came from, how they found the store, what they were looking for, and sometimes why they decided not to purchase. Brands need to leverage that data to get the most out of each shopper.
Identifying the Best E-commerce Customers
Before brands can go to find customers to browse their virtual shelves, it’s important to understand what a good customer looks like. Some metrics that will help you identify the best customers are:
- Average order size: Good customers will buy more than average in every transaction.
- Velocity: Good customers will go from browsers to buyers more quickly.
- Frequency: Good customers will buy more often and in shorter intervals.
- Customer lifetime value (CLV): All of the above will add up to good customers being worth much more over their lifetime of shopping. CLV is the metric used to judge this and comes down to the total dollar amount spent by a customer over a given period of time.
For more on how to increase CLV:
Building ICPs and Personas
In business, ICP stands for the “ideal customer profile.” The ICP is a representation of what a brand thinks its best customers look like. This is helpful because knowing who a brand wants to sell to gives them insight into where these customers might be found and how best to reach them. Some things to consider when putting together an ICP for a new digital shop are:
- Demographics: Who are the best customers likely to be? How old are they? Where do they live? How much do they earn? What gender are they?
- Psychographics: What cultural or social groups do these people belong to? How do they self-identify? What do they think about the world and their place in it?
- Origin: Not where the ideal customer comes from, but how they arrive at the e-commerce shop. Are they finding a link on Google? Do they come from Facebook or Instagram ads? Did they hear about a brand from friends or read about it in a magazine?
- On-site behavior: What do they do when they get to a digital shop? Do they browse category pages or use the search box to find a specific product? Do they read reviews or blogs, or look at shipping and returns information? How do they use e-commerce?
- Off-site behavior: Do they interact with brands outside of their e-commerce sites? What social networks do they use? Do they read reviews, either in publications or on review aggregators?
Every customer is important, but these ideal customers are the core of any brand — 80% of revenue comes from just 20% of customers! Answering all of these questions, and then linking those answers to the metrics presented earlier, can help brands understand who they should be targeting when it comes to customer acquisition.
Find your ICP:
Finding Customer Data
The best source of data on customers is obviously going to be analytics collected from the e-commerce shop. For brands that have just moved online, or are just considering moving online, that data is going to be limited. Some alternatives for finding information on customers are:
- Competitors’ websites: Read the reviews on products, look at the kinds of products being spotlighted, examine the colors and design, if they have a blog see what kind of content they are writing.
- Social media and user groups: The best place to find information on potential customers is on social media. Find people who are talking about top competitors or best-selling products and identify the characteristics they have in common. Join discussion groups and bulletin boards, and become part of the conversation.
- E-commerce giants: There’s a wealth of customer data hidden in plain sight on Amazon and other e-commerce giants. One particularly powerful technique is to find similar products and then browse the “customers who bought this also looked at these” sections. Given some time and a few spreadsheets, it’s possible to form a pretty accurate picture of the kinds of customers that are looking for a specific product.
Finding Customers Online
The first question most businesses have when moving online for the first time is, “Where is everyone?” Without being able to rely on a base of walk-ins, some brands struggle to attract a solid core of shoppers who can keep the virtual lights on as the business grows.
There are a few tried and true methods to capture online shoppers.
Unpaid/organic
Unpaid, or organic, customer acquisition typically takes more time and requires more effort and consistency than paid, but can pay off in creating more loyal customers at a lower cost.
- Bringing physical customers online: The easiest, and most cost-effective way to quickly build up an online customer base is to simply tell existing customers their favorite store is now online. Brands should leverage existing customer lists to kickstart their digital journey.
- Direct outreach: One of the ways to get existing customers (and prospective customers) to notice a new digital store is by reaching out to them directly. The easiest way to do that is email, however, brands shouldn’t ignore the more traditional approach of physical mail — it’s currently very underutilized, and can make a real impact.
- Search engine optimization (SEO): SEO is how people find a website when they type “warm woolen mittens” into Google. The most important aspect of SEO for new e-commerce sites is that products should be clearly labeled and described, using words customers might use to search for those products.
- Social media: In a world of social distancing, consumers are looking for connections and experiences, and social media is where brands can stand out. Many brands are turning to social to reach new customers, but also to provide existing customers with the kinds of experiences once reserved for real-world shops — everything from fashion shows to cooking demonstrations to how-tos and even virtual concerts. The most popular channels right now are Instagram and Facebook, but brands should use their earlier research to figure out which channels their customers are spending time on.
For additional reading around SEO best practices:
Paid
Companies that want business fast can turn to paid advertising. Digital ads come in many different forms and give brands speed and flexibility in exchange for higher costs of organic acquisition tactics.
- CPC and search ads: CPC stands for “cost-per-click,” which means advertisers only spend money when customers click on their ads. The most popular and familiar example is Google AdWords, which places text ads alongside search results when people use the ubiquitous search engine.
CPC ads are popular because of the flexibility they offer. Users often are able to have an estimate of how much clicks will cost them before committing, and can set daily, weekly, or monthly budgets. This gives a relatively predictable flow of traffic that can be adjusted up or down by adjusting the budget.
- Social ads: Anyone that uses social media is familiar with social ads — sponsored posts, promoted stories, and similar content that has become a mainstay of the major social networks. The most common ones used are Facebook ads and promoted stories and Instagram brand stories.
Social ads are simple to set up and can be deployed rapidly. However, they also take some skill to perfect, and businesses that dive in without doing their homework can spend a lot of time and money without seeing strong results.
Which advertising channel a new e-commerce store uses is going to depend heavily on who they are targeting and where those customers live online.
Channels aside, the world of digital advertising can get very complicated very quickly. Lookalike audiences, retargeting, and dynamic ad creation can all dramatically improve the performance of ads, while lowering costs, but also require some knowledge and specialization to implement well. Using an advertising management platform can help streamline the process and allow companies to spend less time figuring out advertising and more time building a top-notch experience for customers.
Setting Up an In-House Fulfillment Center
Everything else — the marketing, the web design, the branding, and social media presence, even the product choice — doesn’t mean much if customers don’t get the things they buy in a timely fashion and in good condition.
This is one of the main reasons why so many modern e-commerce stores use third-party fulfillment platforms, like Fulfilled by Amazon. Using a third party saves companies the headaches and worries that come with self-storage and self-shipping of products. Unfortunately, with COVID-19 disrupting supply chains, setting up a new relationship with a third-party logistics supplier can be challenging. And for many small businesses just getting online for the first time, the costs of using a third party can overwhelm many of the benefits, so for this guide, we’ll focus on self-shipping. Here are some top tips:
- The most important piece of advice for companies starting with self-shipping is that a controlled process is critical. Businesses need a system that carefully tracks and monitors each step of the order process to make sure that nothing falls through the cracks.
- New e-commerce stores should set up dedicated “fulfillment center” areas that are kept distinct and separate from general stock and other areas. Nothing is more frustrating than searching for customer tickets in a pile of unrelated paperwork.
- There’s no “cheapest carrier” — rates can be higher or lower, depending on the size and type of package. Break down inventory by package/shipment types and regularly check pricing to see if they’ve changed.
- As companies try to reduce costs to deal with the pandemic, it’s important to remember that most carriers offer free packaging for certain types of shipments. Switching to free packaging is another opportunity for large savings.
- Packing materials can add up quickly. Bubble wrap, for example, is often more expensive but easier to use than packing peanuts. Play with different packing methods to figure out how to ship items in the most cost-effective way possible.
95% of customers say shipping cost impacts their buying decision. However, offering free shipping isn’t the right move for every digital store. Carefully consider margins and customers’ tolerance for shipping costs before deciding whether to offer free shipping.
- If free shipping isn’t economically viable, consider some alternatives like offering free shipping over a certain order size, or partially subsidizing shipping costs.
- Test ship everything. New product? Test ship it before sending to customers. New carrier? Test. New packing method? Test. Nothing will hurt a brand’s reputation more than customers getting broken items in the mail.
For additional learning:
Follow the Plan
Moving online can seem like a daunting step for many brands. It doesn’t have to be. Starting with a clear strategy and thinking carefully about each step can help make the transition smooth. Following a plan can make it easy. We hope to see many more companies join the digital evolution, and look forward to all of the successful virtual storefronts readers will launch this year — and in the years to come.
Get your copy of our eBook, Diving Into Digital: Bringing Offline Brands Online!
Last updated on January 12th, 2024.
