Why Most Brands Fail At E-Commerce (And 4 Keys To How To Fix It)
The first step: stop waiting for sales to come to you. Columnist David Rekuc believes that for online retail success, your website should act as a salesperson, not a waiter.
I’m told e-commerce is a breakneck industry — “innovate or die.” Yet I see so many successful brands more or less doing what they’ve been doing since the 90s, at least when it comes to online sales. Usually, the problem lies in the fundamental approach they take to online retail.
Too many brands have built a digital presence with a “waiter” mentality, relying on a website that acts as a glorified order form and delivering product to consumers who have come looking for it. Instead, e-commerce should be thought of as a “salesperson,” a workhorse increasing the value of current customers and actively acquiring new ones.
For the record, I focus on brands in this article, but a lot of this advice holds true for successful retailers who have built their empire offline.
A few years ago, my company helped shift the online mentality of a B2B brand from waiter to salesperson. After the first 12 months with this new approach, the brand’s online sales increased more than 30% year-over-year. In the following three years, the entire organization’s revenue grew by more than 50%.
So, how do you know if your digital footprint is more waiter or salesperson? I’ll go through four ways brands (and multichannel retailers) regularly drop the ball – as well as the first steps to addressing each issue. But it all starts with your e-commerce site.
1. Your Site Doesn’t Sell Itself
First, understand there is no showroom, no staff, and no catalog to supplement your website. It is not enough to have a site that converts well with your existing customer base. To take your digital presence to the next level, your e-commerce site has to convince brand new users to buy.
First Step: Your product detail pages must sell the product, or the customer is gone. Your homepage, your about page, and – perhaps most importantly – your policy pages must instill trust as if your site visitor has never heard of you. This starts with compelling copy, a place for customer reviews, 21st century shipping/return policies, and professional photography.
2. Your Digital Marketing Needs Work
One of the biggest problems many brands face is that their core competency isn’t in digital marketing. They have a direct-to-consumer website because it’s in vogue, but most are brick-and-mortar devotees at heart. To them, e-commerce is a symptom of other retailing success.
However, if you believe in making your site a salesperson (read: marketing vehicle) rather than just a waiter (read: operational tool), you’ve got to start playing in the digital marketing world. Here are some spaces where you could probably use a boost:
Waiter: Brands playing the waiter role use paid search to protect existing demand. They may dabble in some non-brand or shopping campaigns, but the bread and butter of their account is a campaign built on branded keywords. And because the volume of their brand search is largely out of their hands, their focus is to capitalize on volume that exists efficiently and effectively.
Salesperson: For enterprising brand marketers, paid search is first and foremost a customer acquisition vehicle. They use it to introduce new “in market” shoppers to their products and convert them into paying customers, making sure to cut down on wasteful ad spend with the use of targeted negative keywords. Sure, they protect their brand terms with the requisite campaigns, but the lion’s share of spend goes towards non-brand keywords and shopping campaigns that acquire new business.
Waiter: Many brands are unable to profitably sustain themselves on comparison-shopping engines. Very often it has little to do with the actual channel management itself. Instead it’s a symptom of the organization’s unwillingness to compete with other online merchants. They’re victim to high prices and shipping costs, product detail pages that fall flat, and unfavorable return policies.
Salesperson: A highly competitive brand can typically support multiple comparison-shopping engines, including eBay shopping network, Google Shopping, and Nextag, among others. Brands can sustain these channels simply because the products they carry are competitive in the marketplace, their site effectively sells them, and their digital marketing team goes after new customers ruthlessly.
Waiter: You may be a waiter if… you track SEO traffic, but you feel a sense of powerlessness when it comes to increasing it. The fundamental flaw in this logic is that your current traffic is almost exclusively finding you using branded terms. A quick way to tell if this is the case is by taking a look at a landing page report for natural search; it would show that the overwhelming majority of traffic lands on your homepage with very little activity on interior pages.
Salesperson: A site using SEO to acquire new business is focusing on driving new customers with non-brand terms. They have their brand terms locked down and optimized, but the majority of their time is focused on driving new traffic with key search terms. Most of this actually happens away from the homepage, primarily on category and product pages.
Waiter: The waiter’s social media presence looks a lot like a town hall meeting. There are a few folks there to complain, but for the most part the person running your accounts is talking to him or herself. Social media should not act (only) as a glorified customer service channel. For what it’s worth, I think Pinterest might be the single best social media platform for online retail.
Salesperson: The salesperson uses social media to encourage customer conversations, create an engaging culture associated with the brand, and drive micro-conversions (email sign ups, shares, referrals, etc.) that can lead to increased sales. And they revel in relatively affordable ad inventory, knowing that social media users are typically worth more than their non-tweeting, non-pinning counterparts.
First Step: The first step towards using a digital marketing channel as a customer acquisition vehicle is looking at the right metrics. How many new customers are you acquiring with each digital channel? Once you consider this your primary performance metric – and are determined to do what it takes to see it grow – you’re ready to start tinkering with each channel.
3. Your Offers Aren’t Good Enough
If you want your digital marketing channels to succeed at acquiring new customers, you have to support them with aggressive promotions that are hard to turn down. The good news is that by investing in aggressive offers, you make the rest of your marketing endeavors that much more efficient. Pure play e-commerce companies are a great place to look for inspiration.
Let’s take online retailer (and e-commerce darling) Warby Parker as an example. The company allows new visitors to try on 5 pairs of glasses completely for free.
Warby Parker also pays shipping and returns with no commitment on the part of the shopper. That’s a pretty convincing way to get customers to try their product. Another example is Audible.com (an Amazon company), which lets shoppers try their first audio book completely free.
Both of these companies use a loss leader to act as a salesperson on their site. They remove the traditional e-commerce barriers – shipping costs and product uncertainty – to drastically improve initial conversion rates. To sustain this strategy, they’ve got to be diligent about making sure these loss leaders result in paying customers and making sure lifetime customer values exceed customer acquisition costs.
First Step: Experiment with different hard offers. The goal is to find something that not only increases conversion rates on those first orders but also creates a valuable customer after the first transaction. Think, “How can I make it easier for new customers to give our brand a try?”
4. You Don’t Value The Almighty Email
A waiter might say, “Hope you come back!” at the end of a meal, but a good salesperson always gets a phone number (or in recent years an email address) to actively follow up after a potential customer has gone home.
Smart brand marketers know that even when they drive a ton of new traffic to their site, they’re only going to get orders from a very small percentage of those visitors. Typical conversion rates hover around 2% or 3%. The next step is to convince the other 97% of visitors to return.
Both Warby Parker and Audible.com collect email addresses in exchange for their free trials. Not only are they giving the customer a taste of their product, they’ve made it easy to follow up on that sample later on.
In the same vein, Blue Nile, an online jeweler, uses a giveaway pop-up to collect emails as soon as a customer “walks in the door.” According to the official rules, this giveaway runs until July 7, or almost 4 months after I first grabbed this screenshot.
Given how many visitors land on their site on a daily basis, Blue Nile is probably subscribing tens of thousands of email subscriptions for the cost of a single giveaway. And considering the only cost to run this giveaway is the $5,000 diamond itself (which Blue Nile is not actually paying $5,000 for, of course), this is an incredibly affordable campaign that, once again, makes every single marketing tactic they run that much more efficient.
It’s been said before, but it bears repeating: email may not be as cool and shiny and new as other digital marketing channels, but it is incredibly effective.
First Step: Come up with an immediate discount or giveaway and start collecting emails aggressively, as soon as a visitor lands on your site. Once you start building a database of email subscribers, you can begin reaching out to them with marketing emails and eventually increase the efficiency of your list with clever A/B tests. By tracking the value of the email addresses you’ve collected over the following 3, 6, 12 months, you’ll be able to determine what a new email is worth for future campaigns.
Wrapping It Up
The reality is many brands will continue to use their direct-to-consumer site as a glorified order form for years to come. But the next round (and arguably the best of the current round) of brand marketing all-stars understands the key to growth is using their online presence to attract new customers.
The fundamental difference between both camps is how you approach e-commerce. Does your online store exist to cater to current brand advocates? Or should it sell your brand in a way that acquires new, loyal shoppers?