As we leave 2021 behind and look ahead to 2022, many of us will be making New Year’s resolutions in our personal lives, but what about in business?
Here Fran Quilty, CEO and co-founder of Conjura, asks how businesses can get the most out of their e-commerce offering through the application of an intelligent data strategy.
The start of another year and as we take a breath after the ‘golden quarter’ it’s time for e-commerce businesses to set their New Year data resolutions.
I’ve previously covered the basics and how more mature businesses can employ predictive modelling to get one step ahead. However, if there’s one key thing online jewellery players should look to nail in Q1, it’s getting the digital mix right.
The wealth of channels available to shoppers never stops growing. Trying to cover the right digital channels for your audience is looking increasingly like alchemy over judgement though: should you be focusing on developing your own e-commerce platforms, work through a third-party marketplace, or is the time now ripe to take the leap into social commerce? The possibilities may seem endless, but budgets are finite.
“how can you make sense of what is an increasingly fragmented e-commerce landscape?”
Consumers are becoming more platform-agnostic too – they expect to be able to shop using whatever device is at hand and they don’t necessarily start with a search engine. So, how can you make sense of what is an increasingly fragmented e-commerce landscape to make sure your budgets are optimised?
The answer is – you’ve guessed it – data. Here are three simple steps to follow to find the right balance:
1. Identify which channels you are under-indexing in
Audiences, particularly younger people, use a host of digital channels when making purchase decisions. The result is often more shopping spaghetti than a traditional funnel, but it’s important to make sense of this data as far as possible.
What can be just as valuable is to then benchmark performance across each channel in relation to your competitors. Doing so can be both enlightening and profitable.
As a first step, audit the digital outlets you own as well as the organic ones to understand where the best and worst conversion rates lie. What is particularly important is to identify which channels bring in the most valuable customers.
However, a deeper exploration into marketing channel performance can then reveal which are under-used. When aligned to industry benchmarking, this can highlight new opportunities. The results often differ significantly to any assumptions you may have previously made about what platforms should work, or what have worked previously.
2. Which sales and marketing channels best target your specific audience?
Google has given cookies a stay of execution for another year, which means e-commerce businesses have a little more time to focus on audience acquisition before this becomes much harder. As such, the next 12 months could be hugely significant, especially for any brands that are arriving late to digital.
Finding customers is one thing; keeping them is another entirely though. Consumers have different motivations for shopping online, where convenience is king, to offline where the experience and price are the defining factors.
Interrogating the data helps you understand the motivations of particular audience segments. This allows you to make the most of your omnichannel estate by using the appropriate digital channels to meet the particular needs of customers at any given time.
“the next 12 months could be hugely significant, especially for any brands that are arriving late to digital”
For example, use tailored content in the right places to drive acquisition, typically social media. You might produce a guide to buying a wedding ring to attract customers to your site and encourage them to sign up to email marketing/newsletters.
Do bear in mind though that the boundaries between social and e-commerce are blurring for younger consumers, so your online shop shouldn’t necessarily be the only end-point in the sales funnel.
Next, seek to convert the most engaged to in-person or virtual consultations. A one-off purchase, even for a high-value item, is one thing but what’s more important is the customer’s lifetime value. Brand loyalty is hard to come by, especially online, so every effort should be made to nurture those that do make repeat purchases. Particularly if these regularly exceed a defined basket spend.
Understanding people’s particular motivations and catering to those with timely communications, and as necessary offers, are key to longer-term success. So, if you do sell someone a wedding ring, encourage them to opt in to other communications and make a note of the approximate wedding date – a lifetime of anniversaries awaits!
3. Work out which channels offer the best long-term value
In the digital world revenue figures only tell half the story. As we’ve seen, the path to long-term growth depends on your ability to call on data to understand where this will come from at a channel, customer and product level.
Consequently, you need to be able to read the data so your strategies for customer acquisition and retention are balanced with the ROI on acquisition. In practice, this means keeping a close eye on repurchase rates and lifetime value metrics.
If the customer acquisition costs (CAC) negate their spend, then it’s time to rethink what audiences you’re chasing with what products, and through what channels.
“if you have one New Year’s resolution for 2022 it should be to get your digital platform mix right”
The e-commerce sector is Darwinian in nature. There are only so many customers to go around and the market cannot support wholesale growth in the face of rising competition. To extend an analogy, we can probably expect a mass extinction event for those businesses unable to keep up.
Realistically, the only way to stay ahead of the pack is to become the category leader for your given audience. So, in the face of market saturation, success will be predicated on understanding how to collect and use data to ensure you are reaching the most valuable customers through the right mix of channels to keep them engaged for the long-term.
So, if you have one New Year’s resolution for 2022 it should be to get your digital platform mix right.