Shifting your focus to retention
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The increasing number of online retailers on one side and slowing growth of online user population on the other side are the driving forces of change in e-commerce. Number of returning customers is in decline as new competitors are entering the market. Cost of advertising is rising. One-time customers are not profitable anymore so online retailers need to shift focus to retention. In this talk we'll walk you through the process of building the new framework. We'll deep-dive into data-driven digital marketing framework, explain how to use CRM data to enhance your segments and finish up with case studies expaining how to use the new metrics to identify top customers and maximize your profits.
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Shifting your focus to retention
- 1. SHIFTING YOUR FOCUS TO RETENTION #ecommercial18
- 3. Where else could you find things like these…
- 4. And these…
- 5. And these…
- 6. It fulfills our lives
- 7. 25 % increase in retail e-commerce sales in 2017 RECORD NUMBER OF TRANSACTIONS & REVENUE Statista 2018
- 8. €- €50,000.00 €100,000.00 €150,000.00 €200,000.00 €250,000.00 €300,000.00 €350,000.00 €400,000.00 €450,000.00 €500,000.00 Revenue You achieve great results for your client (or company)
- 9. BUT THEN SOMETIMES ALL THIS RESULTS IN TOTALLY UNEXPECTED RESULTS
- 10. We’ve seen a decrease in Paid Search revenues of up to 80 %! GENERIC SEARCH IS IN RAPID DECLINE
- 11. Search is behaving strangely FREE FALL Decrease in generic Branded steady BRAND TAKING OVER Decrease in generic Increase in branded GENERICS RULE Increase in generic
- 12. BRANDS AGE. INDUSTRIES CHANGE. MARKETS GET MATURE. EVEN ON SEARCH.
- 13. Market maturity stages and Search https://www.red-orbit.com/blog/the-decline-of-generic-search-and-how-to-save-your-brand
- 14. THE ONLY WAY OUT OF IT IS TO INVEST IN BRAND
- 15. BRANDED VISITS ARE DRIVEN BY RETURNING USERS
- 16. Ecommerce performance by User Transactions 0% 20% 40% 60% 80% 100% Users w/ 1 transaction Users w/ 2 transactions Users w/ 3 transactions Users w/ 3+ transactions Transactions Revenue per user
- 17. Reteined vs One-time users 6,77x HIGHER REVENUE PER USER
- 20. IMPORT COST OF GOODS SOLD
- 23. Profitable campaigns before and after COGS import 87% 7% without COGS with COGS
- 24. SHIFT IN ONLINE USER BEHAVIOR
- 25. Entry barriers offline are much higher than online Entry barriers Number of competitors Number of competitors is rapidly increasing Growth of online user population is slowing down Number of users Returning customers Number of returning customers is in decline as new competitors are entering the market Cost of advertising is rising and one-time customers are not profitable anymore One-time customers
- 26. One-time customer revenue stream CPA GM CPA <= GM The only way your business could be profitable is achieving CPA much lower then your Gross Margin.
- 27. One-time customer revenue stream CPA GM CPA > GM Due to increased competition CPCs are increasing and CRs are decreasing.
- 28. Shift to retention model CAC GM CLV <= CLC Sum of GM from all customer transactions should be higher then sum of all costs connected to the customer GM GM GM GM GM MRC MRC MRC MRC MRC MRC MRC MRC MRC MRC MRC CLV CLC
- 29. THE SAAS ECOMMERCE CONSUMER JOURNEY
- 30. The SaaS Ecommerce Consumer Journey Addressed Audience Visitors One-time customers Active customers Churned customers LAQA
- 31. CLVP = (P × AOV) × AGM) × ALT The tricky part is calculating your CLV
- 32. The SaaS Ecommerce Funnel Acquire Activate Retain Grow Referrals 2nd purchase1st purchase
- 33. Retention in FMCG Weekly transactions User churned
- 34. Retention for other ecommerce sites 3 months 6 months
- 35. The SaaS Ecommerce Funnel Acquire Activate Retain Grow Referrals 1st purchase 2nd purchase Customer Engagement Score
- 36. Customer Engagement Score 01 02 03 043% 35% 10% 50% 05 10% Days since last session Sessions with product views Interest-based browsing Adds to cart Email engagement rate
- 37. WITH NEW FOCUS NEW KPIs ARISE
- 38. Top Ecommerce metrics 2 31 4 5 6 7 CLV CAC Customer profitability score Repeat rate Retention rate AOV CES
- 39. Data Enrichment & Remarketing
- 40. Data Enrichment & Remarketing
- 41. USE NEW DIMENSIONS TO CREATE ADVANCED USER SEGMENTS
- 42. Segmentation base 02 Geographic country, city,… 01 Demographic age, gender, education,… 03 Product TVs, laptops,... 04 Psychographics Lifestyle or personality characteristics 05 Behavioral Purchasing or usage behaviour
- 43. Behavioral USER STATUS First-time user, Regular user LOYALTY STATUS Loyal, switcher, lapsed BENEFIT SOUGHT economy, quality, service level, convenience, access MARKET MATURITY Early adopter, late adopter, laggard
- 44. 12 types of users https://www.red-orbit.com/blog/12-types-of-google-search-users
- 45. Cost per Transaction by month - 24,24% - 42,43% - 64,31% - 68,48% September October November December January
- 46. Number of transactions by month + 31,88% + 51,45% + 106,52% + 164,49% September October November December January
- 47. FOR EVERY $92 SPENT ON USER ACQUISITION, ONLY $1 IS SPENT ON CONVERSION & RETENTION.
- 48. BUSINESSES LOSE $1.6 TRILLION PER YEAR WHEN CUSTOMERS MOVE AWAY FROM THEM
- 49. Customer clusters segmented by purchase behavior, CES & LTV Size of clusters How are your customers segmented? How to use new metrics and segments? Prevent churn and re-engage users based on deviation in their behavior Predict LTV of newly acquired users and bid accordingly Customer transitions Between clusters SaaS Ecomm metrics like churn, retention, ALT, CES
- 50. LET‘S GO AND DELIVER SUCCESS
- 51. Thank you 01 02 03 04 Email andraz@red-orbit.com Twitter @andrazstalec LinkedIn Andraz Stalec Web www.red-orbit.com