The Levers of Ecommerce Growth

Posted by Ivan Mazour 31 Mar 14

shutterstock_110765462As the ecommerce industry starts to mature, new frameworks of understanding it are developed and debated. With Rocket Internet able to repeatedly build ecommerce businesses with 100%+ year on year growth, it's clear that there are strategies out there which can drive fast, and profitable growth. The levers of ecommerce growth, as it were.
We founded Ometria with a singular purpose - to give all retailers access to those levers, through one simple but powerful technology. It all starts with the customer. The customer is who pays, and so is the absolute foundation on which the business must be built. Customers can be acquired and customers can be retained, but before you can retain them, you need to acquire them, so it makes sense to start there.
Many ecommerce businesses attempt to grow organically, expecting customers to tell others about the brand, or come across their website through general browsing. This may well work, but what it is not is a lever. There is no way of saying, "I'd like some more of this, please." So to have control over acquisition, it's necessary to focus on those channels that can be scaled through investment - paid search, affiliate, content, social, and other more niche ones. 
Each one of these top-level channels will have many different components. Google is not the only place to advertise on the internet! And there will be many different campaigns, creatives, and keywords to try. The fundamental concept to understand here is marketing leverage. If you can grow by 60% while only increasing your marketing spend by 30%, you've got it. If the numbers are the other way around, you haven't. The first will lead to a successful, profitable growth strategy. The second will be the end of your business.
So how do you get marketing leverage. Well you can spend some money on a varied marketing mix, see what revenues come back, and hope that it works, or you can start actively, regularly, analysing the outcome of each individual channel and campaign, and start doubling down on the ones that work. The ones that drive the best possible customers - customers who buy a lot, who buy the high-margin items, who don't return products. What doesn't work is just looking at your revenue-based ROI. You've spent £1k, and you've got £2k in revenue - success! Well not if all of that revenue is for sale items, for one-time purchasers who then return everything..
Many studies out there have shown quite how much cheaper it is to get an existing customer to purchase, compared to acquiring a new one. The lowest multiple in studies is approximately three times cheaper, and the highest is thirty. Either way, customer retention is definitely more effective than customer acquisition. So once you've optimised the mix and started acquiring many hero customers, it's time to think about getting them to buy more often. The levers here are clear. There's three of them. Customer experience, merchandising and remarketing. 
The best possible lever, the cheapest one and the one that drives truly one of a kind companies, is the first - creating an incredible customer experience. There are many facets to this, from a perfect online customer journey, such as the Amazon 1-click checkout button, to a fantastic and emotional unboxing experience such as that of Net-A-Porter. If you can get the customer to remember how good it felt to shop with your brand, you've primed them to come back next time they want to buy.
The next best lever is merchandising. Your audience want something - they've come to your site for a reason. If you can work out exactly what that is, and you can make sure that your product mix is perfect, more than that, it's unique, then they will come and buy from you anyway. The data shows you what those products are - per-product conversion rates and add to basket rates can be rolled up to identify trends, and power data-driven purchasing and visual merchandising decisions, to make sure that you sell the right products, and present them in the right way.
And the final lever is remarketing. If they haven't come back because they've fallen in love with the experience, and they haven't come back because your product mix is unique and perfect for them, then it's time to give them a nudge. Technology moves quick, and you can now given them a nudge in all sorts of ways. You can re-target them online. You can give them a push notification on their mobile phone. But really, there's still only one core lever here - good old e-mail. There's a specific time when they are ready to buy again, and there's a specific product that they'd be interested in buying. If you get them the message at that time, and make sure it contains that product, they're going to come back and buy it.
So that's a lot of levers to play with. Optimising your marketing mix to acquiring the best customers and increase your marketing leverage, improving your on-site experience by locating problems in conversion, creating the perfect product mix and merchandising it in the right way, and sending targeted and personalised messages to the right customer at the right time - all of this is possible, and easy, right now. The only question is, which lever will you pull first?

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