Podcast

Learn from Fast Growing 7-8 Figure Online Retailers and eCommerce Experts

EPISODE 04 31:23

10 Best Practises of 8-figure Online Retailers – £10 million and over

Posted on 10th December 2014 ,
by Kunle Campbell


In Episode 04 of the 2x eCommerce Podcast Show, I drill into eight-figure  eCommerce businesses i.e.  online retailers with annual sales of £10 million and over.

I have put together a list of ten areas of marketing, analytics and business operations these super successful online retail businesses do not take lightly.

So this list I’ve put together will take you through each of these 10 habits or best practices these businesses take seriously. Here is a summery of the show:

1. They have a solid product offering with evidential demand which in essence means a strong business case

  • Use AdWords tools
  • Test on Amazon & test with AdWords with cheap solutions like Shopify
  • They KNOW their products

2. They obsess about data

They set up effective reporting and alert systems for: traffic, sales, customer information, cost per click, cost per acquisition, customer life time value, conversions, average order value, return rates,
This enables them plan ahead to scale

3. The obsess about about customer service

Gary Ingram of The Diamond Store refers to the 3 Pillars of Customer Service:

  • Offering a Wide Product Range  – Quality Products (was emphasised by Alok Ruia of Sockshop.co.uk)
  • Offering Great Prices
  • Backed Up by Quality of Customer Service – shipping, returns & response

4. They Understand the Value of Repeat Customers – it is all about REPEAT BUSINESS:

“Repeat customers are important to any business because once you’ve built up momentum your peak customers can cover a huge chunk of your cost base every year. It is important to have repeat customers”

What to measure: BRAND NAME SEARCHES

5. They Use Remarketing or Retargeting

The three core remarketing platforms are Google AdWords, Facebook Audience Targeting and Third parties AdRoll and Criteo.

You are essentially harvesting your prospecting database by building target audiences with these tools

6. The Use a Customer Review System

In the UK Feefo seem to be the most popular or fastest growing platform. Google trusted sites is also up-coming.

7.They are Multi-channel Businesses

They typically do not have all of their eggs in one basket – they will be on eBay, Amazon, Amazon’s International Store, Rakuten, Not on the High Street, Etsy, etc
Although Google appears to play a significant role in customer acquisition, eight figure online retailers do not rely on a single channel like Google for all business.

8. Cross-Border eCommerce

Eight-figure e-tailers are not afraid to sell their ware across the pond…neither are they nervous about the EU. It is all about market expansion

9. They’ve Realised that they are an Email Marketing company

Their core objective is to build their database.
Email is typically their highest last interaction acquisition channel.
They utilise technologies such as exit intent pop-ups and use marketing automation

10. They understand the psychology of mobile users

People Browse E-Commerce Sites On Their Phones, But Buy On Their PCs

 


Transcript

Hello 2xers, welcome to episode 4 of the 2x ecommerce podcast show. I’m your host Kunle Campbell and, as you all know, this is the podcast where I interview ecommerce entrepreneurs and online marketing experts who help uncover ecommerce marketing tactics and strategies to help you, my fellow 2xers and listeners double specific ecommerce group metrics in the online store.
So today’s going to be slightly different, today is going to be a solo show because I’m working on a couple of interviews. Nonetheless, today’s show is going to be kind of introspective for I’m going to try and look back at seven and eight figure businesses. Actually, I’m drilling down to just eight figure businesses, and I have put together ten things eight figure businesses don’t take lightly at all, they take very very seriously. So I’ve put together this list and I will talk through each of these, should I say habits, or practices of things they really take very seriously. So stay tuned and listen.
I’m going to start out with a fundamental which, the very first thing you take seriously is having a solid product offering. They will definitely have a very solid business case, whether they’re selling electronics online, they’re selling photo frames, wine, what have you. There has to be demonstratable demand for their products. If there’s no way to demonstrate demand, they would have to create demand. So, as a fundamental, if you’re thinking about starting out an ecommerce business, or rather if you’re currently running a six figure ecommerce business, or a seven figure ecommerce business, and you’re looking to hit it to eight, you really need to think about what the market place is like. Is there enough or sufficient space for you to expand? Is there sufficient demand? And one of the tools we can use, which you’re probably using, would be Google Adwords, use that to find search volume on keywords around your area. I don’t like using the Google keyword tool blindly. What I tend to do is I would use the Google keyword tool side by side with SEMRush, as well as Google Search, and other third party information repositories like Wikipedia, it really depends. And use these third party tools to build up a keyword cloud or core keyword list and then you look at demand, you also layer that up with Google Trends, even though it’s aggregated, it gives you a good idea of the direction of the market, so take for instance e-cigarettes, if you look at the trajectory over the last 5 years, it’s just been growing and shooting up. However, a lot of people are pouring money into that sector, you think about BitCoin, BitCoin has nothing to do with ecommerce, it’s the same thing. You look at wearable technology for instance, they’re the same thing. You really need to assess, not just your product offering, but how are you going to deliver that at the right price? Because the last thing you want is thin margins that don’t let you deliver good customer service. So the first thing, the business fundamentals have to be right in your ecommerce business, so that’s number one.
Number two is they obsess about data. I have a few eight-figure ecommerce businesses that are clients of mine. I do marketing and traffic building for them, and one of the things that we do is have dashboards that track traffic, sales, customer information, cost per click, cost per acquisition per channel, they know what their customer lifetime value is, they have a number on that, they understand their conversion rate, they know what their average order value is, they know what their return rates are, which is quite important. It just enables them to plan and scale their business well ahead. They also understand seasonality; they understand how to stock up for the December rush if most ecommerce businesses peak out in November and December, so they know how to stock up for that. So it’s all about data, they have this on their dashboards, they’re watching it on a weekly basis, as well as on a monthly basis, and they’re also doing comparisons, not just week on week and not just month on month, but time of year, so if they’re looking at reports for November and they’re looking at how they fared sales-wise, this November as compared to last November. Those are indicators, and they could do that for average order value, conversion rates, all of the metrics I mentioned, they obsess about data. And they just don’t take data for data’s sake, but they look at the right metrics. I wrote an article for Practical Ecommerce on ecommerce metrics you should be measuring and that will give you more ideas. A lot of them are channelled towards the ecommerce funnel, understanding where customers actually drop off in the funnel. But really eight figure businesses will look at data and they act on the data they know how to, they know exactly what they’re looking for and they will act on what they see.
The third thing they obsess about, eight figure ecommerce businesses, is customer service. I spoke with Gary Ingram of The Diamond Store and, it was episode 1, he referred to the three pillars of customer service. One is offering a wide product range, that’s in their case. While the socks shop in episode 3 Alok alluded to the fact that quality products are the first pillar of customer service. The second is offering great prices, in it’s a tough doggy dog world out there. The very fact that you’re trading online means you have advantages to offer. You have advantages over offline bricks and mortar stores, so great prices are important especially for mass market items. For luxurious items you might get away with a few things, but still people shop online for convenience and price. And the third really is backed up with quality customer service, and when I mean quality customer service, we’re talking about shipping time, returns and responses to issues. These three aspects, product, remember a wide range of products and the quality of products, great prices and quality customer service in terms of shipping, returns and response to issues, will get you very high customer ratings, it will get you repeat customers and will grow your brand in general. People would love to interact with your brand. And one company obviously which I don’t want to sound cliché about is Amazon. When you’re in customer service with Amazon, if you own an ecommerce business, interact with the customer service on Amazon. They sympathise with you, not even sympathise, they empathise with you, with your situation. They apologise, they go over and beyond to help you solve the issue. The same thing with Zappos, having read the delivery and happiness book, it’s the same thing, they would surprise, they under-promise and over-deliver. Having or treating your customers as king, as cliché as that might sound, is ley to growing that loyalty. Because at the end of the day, you customer acquisition, costs are sky high. You’re paying for clicks, it could be in several dollars or pounds and acquiring customers is one thing but delivering on your promises is the second thing that will get them to come back to buy from you again and again and again. So that’s the third thing they take really seriously.
Number four has got to do with the fact that they understand the value of repeat customers. At the end of the day, what gets a lot of the business going is repeat business. When I look at the analytics report of a lot of eight figure businesses I’ve had the privilege to look into their data, the number of brand name searches that occur most of the time will overwhelm every other organic Google keyword because they have people who have their brand in mind every time. So having these repeat customers actually maintains sustain their business. Repeat customers will give momentum, they account for a significant chunk of your customer base every year. We could be talking anything from 40 to 60%, and they’re the easiest because you don’t need to pay to acquire them. One channel to use to engage with them, one primary channel would be email. You would also reach out to them via social media. But the key thing really is to understand the value of repeat customers and not over exploiting the access they give you. If they give you their email addresses, don’t over send too many emails. Work out alternation, you want to send them quite relevant emails. Communicate with them via social media. And also don’t go battering them with too many social media messages. The moment you get the importance of repeat customers, you start to grow your business, your average order, your customer lifetime value definitely would increase per customer. So the key thing really is trying to get them to come over and over again, and one way to get them to come over and over again or sometimes might be to offer them special discounts, give them special offers, now they know that they’re special if you run an apparel business, send them something on their birthday if you can get their date of birth. Let them feel special. Let them feel a relationship with you. Email is the core way of nurturing your relationship with your customers. I’m planning to get email marketing experts on the show to talk to us about how to effectively use email as a retention tool.
Number five has got to do with remarketing and retargeting. For the past year and a half, just over two years, remarketing, which is what Google refers to it, and retargeting is what the industry refers to it, has been one of the most effective ways to get potential customers who have been indecisive to convert them back to customers. So it is important that you start to collect data on your site. The three major channels to start to collect data from your website are Facebook, Facebook has a feature called Audiences, it gives you a javascript pixel which you install on your store or your website. The second is Google Adwords, Google Adwords has a remarketing platform, again they call it Audiences too, install it one time from your Adwords account. And the third, there are about two platforms at par, one is called Criteo and the other is called Adroll. They go head on head, from the US Adroll is quite popular in the UK and Criteo is quite popular. So what you want to do is start harvesting and understanding the data of your customers. What retargeting, or remarketing is, in case you don’t know or you’re not very aware of the concept, when people visit your website what remarketing does is when they leave your website and they go to content websites such as blogs and news sites or any website that has ad inventory, ad placements that Google or any of these other third party networks actually have access to, they see your adverts. Your adverts can either be static images which you create or dynamic. Dynamic could be if they were in a category page and they go across the internet, they could see products within that category or you could use similar products if they were on a product page. It’s a way to remarket and remind them. One key thing is you don’t want to retarget or remarket customers who have already bought and all of these platforms have exclusion lists. So you could exclude this chap, he would’ve bought from your list so you only target people who perhaps have even seen two or more pages. Facebook, on the other hand, would only remarket within Facebook. The two benefits of Facebook are that when they go back to their Facebook they see adverts about your store and the other thing is they can like your page and your posts on Facebook. So it increases your engagement within Facebook. You could also get them to click though to get back to your website. All the eight figure businesses I’ve spoken to use remarketing quite effectively, and I’d say remarketing and retargeting is a channel they take really seriously. That’s number five.
Number six is the use of a customer review system. I think six or seven figure businesses use customer review systems anyway. What I found, particularly in the UK, is Feefo seems to be the most popular. I’m sure I head something about their design, the fact that that yellow just stands out. But it seems to be the most popular and fastest growing platform and I’m hoping someone from Feefo will be on this show to take us through their journey and share best practices. The idea is you pay this third party a monthly fee depending on how big, or how many sales you make a month, and they, after a couple of weeks or days from purchase, get in touch with your customers and ask them to review their experience with yourself. It keeps you on your toes in terms of delivering quality customer service. The nice thing about Feefo is it would also integrate with Google Adwords. So Google Adwords has a review system and, this is in no way an advert for Feefo, platforms like TrustPilot, eKomi is another very good one. So there are a number of options and if you hop over to Google Adwords, there’s actually a customer review partner program, and it would help make indecisive customers or browsers turn into shoppers when they see reviews on your store. It helps with the SEO because it’s nice user generated content. And in general, customers tend to look at reviews to make decisions if they’re indecisive, that’s the bottom line. One other platform to watch out is from the almighty Google, they also rolled out a review system called Google Trusted Sites and they’re giving retailers huge incentives to participate in it, huge insurance. What i’m seeing a lot now is people are using the private trust pack which they’ve used from the Gecko and Google Trusted Sites. So this ties in to my point four, which is on repeat customers and also point three which is on customer service. This really is your customer service report card for all to see when you think about it. So using a customer review system is definitely a standard for eight figure businesses.
Number seven is they are multi-channel businesses. They don’t put all their eggs in one basket. They will diversify from a customer acquisition channel, and I don’t mean from a traffic stand point in Facebook, you try and vary Facebook, Google, partner sites and affiliates and the like, they, from a multi-channel perspective, would look at third party marketplaces, whether it’s on Ebay, whether it’s on Amazon, Amazon international stores are really becoming popular in Europe and the US, if it’s Rakuten, even Not On The High Street, very niche platforms like Not On The High Street or Etsy. They would not rely on any one channel. They would try and test a channel, get the experience from it even if it fails, understand why it failed, come out of it, take it from there and try other individual channels. They diversify and have a multi-channel approach to business, although most of the time majority of the business will come from their website as compared to other channels but they diversify. What happens if their website was to go down for a day or for some time, the money’s still coming in because their Amazon store operations are still running, their Ebay store is still running and the like. They have a multi-channel approach to business. The other concepts to bear in mind which is omni-main channel, and omni-channel basically means you’re present both on the high street and on mobile devices as well as the desktops. Let’s not talk about omni-channel now. Let’s talk about the multi-channel experience. They acquire their customers through various platforms and it just not necessarily is from their website.
Number eight is they’re international. They don’t shy away international and there’s a concept of cross border ecommerce sites, the jargon. However, they’re not afraid to cross the pond. They will go to America, they will sell in Canada, they will sell in the Middle-East, they will ship, they’ve organised the fulfilment in a way that they either have really good logistic partners here in the UK or in the US, wherever they’re operating from and they will ship, or they’ll ship through their third party logistic partners or they’ll have actual physical warehouses in locations they choose to do business in internationally. One key channel they use is also Amazon, Amazon international stores really allows them to extend their tentacles to reach new territories and if they test a market, and they test a market with Amazon and it’s really good, then they can invest on perhaps having a country focused website for that region. So it’s really core to expand business because your local business, if you’re in the US, one of the biggest individual markets and you feel that, you’ve got sufficient market share and there really isn’t any space for you to grow in your market then it’s perhaps a good time to start to think about the EU, and if you’re in the UK and you think that the market here isn’t big enough for you then you might think about going into EU our US or both of them at the same time. So cross border ecommerce really expands businesses but the key thing is getting the fundamentals right in your territory and once that’s sorted and you’ve got the engine running and you’re confident you’ve reached a certain stage and you need to expand, then cross border ecommerce would be a very good way to do that.
Number nine. This is very important and I keep on having conversations with growing businesses about this. This point is the fact that a lot of businesses have to realise that they’re no marketing companies, they’re direct mail companies, they’re like catalogue, basically ecommerce has its origin from the catalogue business, and what a lot of ecommerce businesses are missing to this day is the fact that the bigger your email database, the more money you can make, and you need to grow your email database because every time you send out those podcast emails, which should be targeted by the way, you will make money, it’s just that simple. The bigger the database, as long as it’s targeted, the more money it can make. So the two things I found they do very well, one is they acquire email so apart from sales, the secondary conversion, the secondary goal if they don’t make a sale from a customer, the next thing they want is their email. They want to get that email so they can market to that email because, at some point, that email is going to generate a sale for that business, so they want to get that email and email is considered a win a long term win. It’s an investment. So you invest to get those emails, whether it’s through exit intent pop up, whether it’s doing an incentive or voucher incentive, whether it’s through cookies, you want to get that email, they have to obtain it. You have to get it legally, they opt-in and then you start to try and get information around that email so that you can send them really targeted emails. When I look at analytics accounts of eight or nine figure businesses, you see that from a last interaction stand point, meaning that the last acquisition channel, in terms of the last channel that could be attributed to a sale, 30-50% of the time it’s down to email. Don’t be fooled or think it’s the holy grail, they could start out with an organic search and then they got into the email and these guys use their email to get their Facebook and then they’re targeted via social and then they click through to an Adwords campaign and eventually sent out an email and at that point somebody’s looking at exactly what she sent out to them and then they purchase. It’s a journey with various touch points. However, email tends to generate direct sales, so the key thing they have realised is they’re email marketing companies. And if you’re doing email, maybe you’re a six figure business or you’re running a seven figure business, consider your goal to be stellar at the moment, you’re not really taking email seriously. If you take the bull by its horns and you get this email right, you could potentially double your business. It’s really key. I remember my first job in digital back in 2005, I worked for a company in 2005 for about 3 years and I was a digital marketing manager and the initial stage of the business, SEO and PPC, search engine optimisation or search traffic was really key to driving those conversions. Once they go those emails into their database, and people were making enquiries and things, they had a business. They could just send out emails and they knew that they were going to make sales. The same thing would apply to ecommerce. The bigger your email database, the more sales you’re likely to make via your existing customers. Again it ties in to repeat customers and customer service, connect to the dot making sure you have their email is really key.
The final part of this talk is to do with the fact that eight figure businesses understand the psychology of mobile users. They understand, at least in the west, that mobile users don’t necessarily buy, which is ok. There are two areas. They realise that mobile users actually browse a lot, those same users eventually buy with a desktop. So here is how it goes, I’m in the morning, I’m in London, I’m commuting to work, I hop on a bus and then I go into the underground and I’m on my phone all through, on the underground obviously there’s a blackout, but while i’m commuting over ground, I’m on my phone and I’m thinking about buying a television or something and I’m looking at options, I’m going through review sites taking me to ecommerce stores and checking them out. I get to work, I’m working all morning and then at about noon, it’s lunchtime, I get my sandwich at my desk chewing and munching through my sandwich and then, bingo, I’m on my desktop again browsing through, I just think about it, give it about 10 minutes. Then in the evening on my commute back home, I’m on my mobile again having a look at it and I really want to buy it so I intend to buy it in the evening when I get home, I bring up my tablet or my Macbook Pro or my laptop, I’m watching Eastenders and then, bingo, I buy. So there’s a connection it’s a multi-device multi-screen world. They’ve accepted the fact that we live in a multi-screen world. Certain devices are used for certain things, for viewing, however it all connects. So they make sure the websites are mobile friendly. They don’t just concentrate on the fact that all sales come from desktops and so we’ll only focus all our efforts on desktops. Whether it’s mobile responsive, in which the challenge is from a UI stand point or they have dedicated mobile sites, they focus on a superb mobile experience that’s equally as comfortable to use or easy to use as desktops.
So that wraps it up for 10 points I made, and I will just summarise them again. The first is they have their business fundamentals right, they understand the size of the market, they understand how big the market is in relation to what they have to offer, they have solid products and they’ve got the business fundamentals right.
The second is they obsess about data from traffic to customer acquisition to cost per click through to things like return rates.
Number three is they obsess about customer service. They understand that customer service requires having fantastic products and choice of products. Having great prices to compliment the choice of products and also backed up with people. Not just people, but the fact that you ship on time, you handle returns very well, as well as you respond to customers quite timely.
They understand the value of repeat customers, it is all about repeat business. They understand that the business could double, 40% of the business could be attributed to repeat customers and they value that and they use email to retain them.
They understand the concept of remarketing and retargeting to gain customers and acquire more aggressively.
Number six, they use customer review systems, which is like a public report card or a public testament to the quality of service they give to their existing customers so that potential customers feel at ease.
They’re typically multi-channel businesses so they just don’t make money through their websites. They use other platforms or marketplaces to acquire new customers, they don’t keep all their eggs in one basket.
Number eight is they’re very open to cross border ecommerce. They don’t mind going across the pond, over and beyond the borders to find business. They’ll go to the next continent, to the next country to find business.
Number nine is they realise that they’re an email marketing company. They’ve realise how to master email. They work on segmentation of their emails as well as knowing how to acquire customers, they know how to acquire emails and they’re not just sending out big broadcasts, they segment and they schedule and they nurture existing relationships on there. And email would account for a significant chunk of last interaction revenue.
Finally they understand the value and psychology of mobile users and they make sure their websites are mobile friendly.
So that about wraps up the show. I hope it was good knowledge. I’ll be open to your feedback. I’m going to write a blog post about this. There are ten of them, so I think I’ll just write a blog post around this podcast so be sure to check it out on 2xecommerce.com. Thank you guys so much for listening, support me on iTunes please, leave us a review, tell your friends about it, listen and have a really good one and if you listened to this show up until now, I appreciate it.
I will catch you guys on the next show, cheers, bye bye.

About the host:

Kunle Campbell

An ecommerce advisor to ambitious, agile online retailers and funded ecommerce startups seeking exponentially sales growth through scalable customer acquisition, retention, conversion optimisation, product/market fit optimisation and customer referrals.

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