The E-commerce Leader

[00:00:00] Michael: 40% to me is a violent discount and not scientifically and others you’ll violate your P and L if, if every time you you’re training people to buy at a point where you’re making a loss, that is not a good idea.
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[00:00:41] Jason: New e-commerce sellers always tell me they want more traffic to their website, but when I ask why they say they need more sales, In this episode, we’re going to talk about how returning customer rates directly impact your conversion rate.
[00:01:29] We’re going to give you eight bonus ways to improve your returning customers to your site, and ultimately the opportunity to make more sales with equal or fewer customers, both to Shopify and to Amazon product listing. So, Michael, are you ready to jump into this?
[00:01:46] Michael: Absolutely. Yeah, I like this a lot and yeah, more traffic is always apparently the answer, but it nearly always isn’t what people really want.
[00:01:53] So yeah, this is great stuff. So, this is really part of our conversion rates, optimization, I suppose, mini series. So, the last time you used a great phrase, conversion rate possibilities frontier, which I thought was very cool. Can you quickly recap what that means? Sure.
[00:02:06] Jason: Yeah. It’s a phrase from production work and a possibilities frontier.
[00:02:10] And so for conversion rates, if we applied to that, Make a standard chart. It, you know, on a piece of paper and in the bottom left corner, draw a little bubble and put your current conversion. In that bubble, that’s your current conversion rate and then draw a second bubble out, further up into the right and double the conversion rate.
[00:02:29] So if you’re at 2%, you know, that bubble would be 4%. If you’re at 3%, it would be six. And then do it again. So you’ve got this chart that represents for you these order of magnitudes, of doublings, of your conversion rate. And the question is what would it mean for you financially if that happened? And so you want to think through that when you double your.
[00:02:48] Conversion rate you’re doubling your revenue was zero additional marketing costs. You double your conversion rate, you’re radically improving the results of your advertising and marketing. You double your conversion rate. You have more money from fewer customers, which is always a good way to go. And you’ll likely more than double your profits.
[00:03:07] You definitely mathematically more than double your profits. If you double your conversion rates. So if there’s one thing to obsess over it is. How to get your conversion rate. You know, and, and definitely before you blow a lot of money on advertising, you know, because it’s like a leaky bucket, right. That, that metaphor of, you know, you don’t, you, you want to fill the holes in your bucket before you add a lot of water.
[00:03:31] And so you don’t want to be spending a lot of money on Facebook ads or anything like that. If you have a real. Conversion rate. So there you go. Yeah,
[00:03:37] Michael: I agree with that. And it’s exactly the same thing on the Amazon world. It would be before you spend a ton of money on Amazon ads, it could be just as bad as Google ads and yeah.
[00:03:44] In fact, one of the main things that I was trying to get people to assess about, and the talk I gave at the white label expo was indeed obsessing about conversion rate optimization as a kind of, you know, the thing to obsess about rather than how to get more traffic. So it’s all good, which then, so we’re talking today then about how to.
[00:04:00] The returning customer rate impacts with conversion rates. So let’s get into this. I mean, first of all, what is returning customer rate and what is it so important? Yeah.
[00:04:08] Jason: Well, in Shopify, analytics dashboard, there’s a very nice couple of charts that you can look at top right corner. You’ve got your new versus returning customer.
[00:04:17] As a percentage for any time period. And it’s a very nice chart to look at. And a lot of people are like, Hmm. Okay. And when I really start to work with our coaching clients on this, I, I obsess over this and they’re like, what is like, what’s your deal with this chart? Let me explain this to you. And so there’s definitely, I guess you could say correlation between the, return.
[00:04:41] Visitor rate and your conversion rate. And so, you know, I’ll just back of the envelope. This is kind of how I would think about it and this isn’t scientific, but I’ll just say, I’ve looked at a ton of Shopify sites with people, and I can tell you it’s something that some scientists should do the work, but it’s something like this.
[00:05:01] If you have less than 10% of your visitors that are returning, meaning 90% of your visitors are new to your site, your conversion rate is going to be less than one. Probably, I mean, I, I would imagine, I mean, you know, this is close knit for horseshoes and hand grenades. If you have a returning customer rate of 10 to 30%, so, you know, you know, 70% of your visitors are brand new, you’re going to have a conversion rate.
[00:05:27] That’s in like the 2% range, 2% conversion rate for Shopify sites is like the industry average. That’s the. And then the ho you see what I’m doing here. So the higher your returning customer, you know, our returning visitor number is the more that conversion rate is going, gonna be drawn up. And so I, you know, and I, I look at sites, all the time.
[00:05:47] And, the conversion rate on one of my sites is 18.4%. And the conversion or the customer rate or the returning, rate is over 40. So, you know, you’ve got this, this, focus on this, how many people are new versus returning and what does that do to my conversion rate? And it’s that simple. And to geek out over that, to think about that, to apply that to your business is really, really central to the idea of this conversion rate frontiers, you know,
[00:06:14] It’s
[00:06:15] Michael: interesting.
[00:06:16] And we, so we are talking about traffic, but we’re talking about not new traffic, but existing people. And we’re also reverse engineering from the conversion rate. So it’s interesting how we’re working back towards that traffic obsession that you say people come to you with, but, but from a sort of conversion rate point.
[00:06:30] Okay. So obviously now we know how important it is to get customers to return a second, third, a 10th, whatever it is, time. Yeah. How do we go about actually doing that?
[00:06:39] Jason: Yeah. There’s so many ways that you can think about doing this. I have a list of eight here. I want to mention, I would just rattle them off and talk about them a little bit, but, that this is not a comprehensive list.
[00:06:48] I mean, there’s a lot of things to be on this. If we really all put our heads together and thought about it. And so, yeah, let me, let me go through a few of these and we can just, you know, spit ball together about the importance of these. The first thing I would just say to everyone on a Shopify site and this doesn’t correlate to, or relate to Amazon so much that Michael you’ll have to rationalize these for us for, for the Amazon audience.
[00:07:13] But, but the first thing you want to do is you want to try to capture that email address on the first go, the first visit. You definitely want to, get their email address. That’s your ticket to future returning, you know, strategies for. It’s not the only ticket, but it’s one of the tickets. So you definitely want to, to try to get their email address with a very powerful, ethical bribe, the ethical bribe you contest over time.
[00:07:37] A lot of people will just do a pop-up that says, you know, Hey, before you go love to have you buy something. Here’s a 10% off first by our COO. No, whatever. Other people will do an info product, how to guide something that feels very meaningful and relevant to your visitor. The goal is to get that email address.
[00:07:55] And then of course you want on the back end of that email address, opt in to have a welcome series. That’s maybe three to six messages that would go to them over the course of the first week to 10 days. Every one of those welcome messages should give them a reason to return to your. So just by capturing the email address, you’ve then put them in the pipeline for, you know, three to six meaningful ways that they should come back to your website.
[00:08:21] And we’ve done a welcome series, conversations before, but there’s, you know, there’s a whole set of things you can include in those automation sequences that help people get back. So that’s, I would say that’s the first tip or trick is absolutely go for email address, as the first thing. So.
[00:08:38] Michael: Yeah, I think that’s a, it’s the old school marketing thing that they still say, you know, the money’s in the list.
[00:08:43] I think it is. Although I would say perhaps it is the money is in the relationship to the list, but assuming that you send them emails that are relevant and interesting and engaging for who they are. Absolutely. Right. And I would say for Amazon sellers, you should start obsessing about list-building off Amazon right now because it’s getting harder and harder, you know, each six month period, really to, to get hold of customer data from Amazon.
[00:09:04] Google SEO plus email list building is a great medium to marketing asset for somebody who sells, even if they sell only on Amazon to start with over time, you then get the choice. Do you want to set you and DTC site up? And if so, that’s a great asset. So I think an email list is great asset for product launch.
[00:09:17] Even if you sell a hundred percent items and at the most absolutely,
[00:09:20] Jason: of course. Yeah. I mean that, that will really impact the algorithm. You send traffic and sales that are high converting traffic and sales to your Amazon listing. And it’s good. You know, it’s going to really, really impact the algorithm.
[00:09:32] Michael: Isn’t it? A hundred percent. Yeah. And also it gives you that control that you have a list. If you know, it does shut you down and you have got to direct to consumer site, that is a small percentage of your sales that you can ramp that up. If you need to, if Amazon does suspend your account, but also, yeah, you will just drive more sales and your competitors won’t be able to reverse engineer directly on the Amazon platform, what it is you’re doing as well.
[00:09:53] So it’s just got a host of upsides to it.
[00:09:55] Ready?
[00:09:56] Jason: I’m sorry. I just added a ninth way. So I’m just thinking I’m increasing our list here. Can I mention one other top first initial thing? You absolutely definitely need to have your pixels set up on your Shopify site. If you’re a Shopify site, you know, person, and that would be.
[00:10:13] Google pixel and Facebook pixel, so that you can then subsequently retarget them. That is your ticket to ride for future retargeting. So if your email address acquisition as the ticket ride for future email marketing, you’re pixeling them as a ticket to ride for the future. You know, add, you know, Advertising work to put back in front of them, your products or your brand, et cetera, et cetera.
[00:10:36] That’s a very obvious setup thing. It’s a one-time thing that you then use in Google or Facebook to build campaigns around. But if you don’t have that set up in your Shopify site, you’re missing out on it. Opportunity to get returning customers. Yeah. And
[00:10:51] Michael: I would say anyone, I was in base sellers, or focused, should we say, this is harder to just find the short-term because it could be very expensive way of doing an Amazon launch, but I would say in the medium term, it still applies because you don’t know whether your DC sites can be taking off in 6, 12, 18 months.
[00:11:07] And if it is at that point, you want to build that list. So it’s kind of building now for future use. Really isn’t it it’s very much a future kind of thing. Yeah. And
[00:11:16] Jason: it’s, if you’re just straight Amazon sellers hard to apply. I mean, this is a Shopify strategy tomorrow. Okay. Yeah. Okay. So that’s the second one.
[00:11:22] So third one is, get them to buy anything on your site, on their first visit. Now I know this sounds like duh is ism, but, what I mean by this specifically is think about like a Walmart or like a convenience store. What you want to do is set up your site so that your customer has a absolute, no brainer checkout process for something that is valuable to them.
[00:11:52] And the simplest way to do this is, and this is really important. So. If you run on Shopify, listen to me really closely right now. I’ve done like 4 million transactions on Shopify. I’m telling you, I know this is, this is the real deal. Lot of people will have like a little guide or a little PDF document and a little, a little manual or something.
[00:12:13] And they’ll just have it on their side as like a PDF or even just page content. And the absolute number. One thing you can do is just convert that into an information product that is a PDF that they get by checking out. So it’s a product in your store. They go through the product checkout system, they add it to their cart.
[00:12:33] Then they download it. They know it’s free, or maybe it’s, you can make it a, you know, a 99 cent thing or whatever. That’s not about making. That is about them setting up an account and having the checkout experience in an early, you know, or ideally first visit to your website. That is so foundationally important.
[00:12:52] I just can’t stress it enough. If you do that, if you get them to go through your site for an item, you know, early in there, you know, visiting the first. They will know your checkout system, but most importantly, you will have all their data. They will have gone through and either set up an account that’s not registered.
[00:13:11] So there’s different rules or treatment there, which is a whole geek-out thing, but then they might, they might, you know, claim their account or set up their account in a way that then you’re good to go in terms of other strategies. Now that couldn’t be unlocked, now that you have all their data, I’m not talking about those other strategies in a minute, but this idea of getting them to buy anything.
[00:13:31] It does not matter your costs, you know, I mean, it’s not about making money. That is central to the idea of getting good, solid returning customer, or returning visitors to your site over time. Yeah.
[00:13:43] Michael: I love it. I’m just trying to think desperately whether there’s a sort of Amazon angle to this, I guess there isn’t particularly, so there’s another reason to have a direct to consumer site.
[00:13:50] Really?
[00:13:51] Jason: I suppose I would say the one thing that you. Th the way in which you would metabolize this for Amazon would be, if you have a suite of products, think about the loss leader product. If you’re in a category, think about what item is hot, hot, hot, that you don’t care if you make any money on. You’re just trying to get your foot in the door with a customer because the domino, the free Dominic.
[00:14:14] Knocks over the other pay dominoes. And so, you know, maybe you sell a collection of, I don’t know, I’m working on my greenhouse right now. So it’s like maybe sell a collection of greenhouse, you know, plastic and roof, you know, Ridge caps and plexiglass. Like I’m buying all this stuff. I’m literally literally spending thousands of dollars on this ridiculous greenhouse.
[00:14:34] Maybe you sell all that stuff on Amazon. And you know, that there’s one thing that’s really, really needed. Maybe it’s the screws that hold down the plexus. Think about what could be a loss leader for you and then branding and, you know, your, your, your, your whole system kicks in to support the customer.
[00:14:49] So that’s the only equivalent I would say for Amazon seller that I can think of.
[00:14:54] Michael: Yeah, it’s, it’s not so applicable, but it’s certainly that the idea of a loss leader, and I really, really love what you’re saying and obviously finding a new, so insight, the idea of turning a sort of free skirmish as it were sort of dipping your toe in the water into an actual transaction there’s psychology and, and data gathering.
[00:15:10] That’s fantastic there. I love that. What’s the fourth way to get the visitors come back then.
[00:15:14] Jason: Yeah. This one gets into sort of marketing strategy stuff, but the. The, the way in which we like to do this one and the title of it would be give them a structured reason to return to your site. And what I mean by structured reason is give them a reason that you can tell them once that they’ll remember forever.
[00:15:31] And the ideas here are, for example, like what we’ve done since 2013 is we have a program we call freebie Friday, come to our side on Friday and you’re going to get a free. We’ve done that. Like, you know, I mean, that’s, that’s, once customers hear that in our welcome series, they’re like, oh, I’m coming next Friday.
[00:15:50] That’s a very simple example of a structured, reason to come back. The other things you could do is like, we drop a new recipe every Monday. If you’re in the, you know, specialty foods, categories or something like that, or you could do something like we do. Thursday night lives, and come at 5:00 PM on Thursday and we’ll, you know, you’ll join us live and we’ll be talking about products and our new items that, you know, and, and, those types of structured events, give customers a mental little open loop, which is the little open loop in their mind.
[00:16:23] Oh, twice yearly sale. Oh, that’s always the first week of June. And the last week of December. Oh, I got to remember that, you know, stuff like that. Oh, black Friday cyber Monday that, you know, they, they, they always do a big, special every year. I’m coming back black Friday, cyber Monday. So these kinds of structured reasons are incredibly important because all the customer has to do is hear that one time.
[00:16:49] And then your opportunity or the odds that they’ll repeat. At those right times, there’s really, really, you know, So that’s lectured. Yeah,
[00:16:58] Michael: I like it a lot. And there’s no reason why Amazon focused sellers and again, seller meaning that’s where you sell, but that doesn’t mean your entire business exists there in terms of your relationships with the customers, which is the piece that is so missing.
[00:17:08] No reason when you can’t do freebie Friday via a coupon code for Amazon. Recipes or anything like that can be on the blog. You can, you do a live on the blog or on zoom or any other way you want really a sale can be run obviously via Amazon, but you can advertise it by your email list or fire live.
[00:17:22] And again, annual event. I think that we give up a bit too much, especially if you focus on Amazon, it’s a sales challenge. Just go, well, we’re just going to go with our black Friday promotions and stuff. There’s no reason why you’re with them. Can’t be different. So really like this a lot, actually, this is all.
[00:17:37] Jason: Well, when I was Alibaba who made friends day, when they did that, I was like, look what they’re doing. That’s just so like obvious, but also genius. Yeah. There’s no reason every brand can have their own annualized special thing. You make your own day, make it your founder’s day when you started your company or make it your birthday, or, you know, whatever, it doesn’t matter.
[00:17:59] You can have your own structure. Annualized event where you give your best sale, you give your best products, new things, whatever, whatever. Yeah. Those are all, that’s the whole category structured, reasons to come back.
[00:18:13] Michael: Yeah. You’re kind of basically developing a rhythm and inviting your customers to step into it rather than being passive.
[00:18:18] I really liked that a lot. Okay. What’s the next thing. So we’ve got a list of nine now, so we’re going to get motoring what’s the fifth
[00:18:24] Jason: week. Exactly. Right. Okay. So, what are we on? We’re on a five. So number five. Very similar, but obviously it’s give them a one-off reason to come back. And this is where your communication, you know, touch points with them are vital.
[00:18:40] So a one-off reason to come back is to have a sale. Hey, this Tuesday 24 hour sale, or, Hey, we’re launching a new product, you know, on November 1st, we’re so excited about it. It’s going to be amazing. You’ve all asked for. Be sure to show up limited quantity, whatever. Or maybe it’s something like an info thing, like a, Hey, we’re having a meetup for all of our, you know, customers virtual event, on our website.
[00:19:04] Everybody come, we’re going to give away prizes, whatever. Maybe it’s a contest, big contest, you know, comment, contest, whatever, these ideas of one-off reasons. They are marketing and. And whenever you have a problem with sales, a problem with bad, you know, returning customer or returning visitor rates, you actually have a creative marketing problem.
[00:19:29] I mean, you, you just have a mental block, you just haven’t thought of a good reason why. And so create a good reason why that’s valuable to you and not giving away the farm. You know, you’re not like slash and burn or anything like that. But, but it is an interesting hook, a reason why people would come back to the, to the, to the website and then to buy something.
[00:19:47] This is, this is probably the most intense energy, required, for, you know, e-commerce marketers, this category of, you know, special reason, but, it’s where, you know, many people just make. They’re huge outcome, a possibility. And the difference between a site that’s run with no creative marketing and special reason why versus one where there’s a special reason why every week the outcomes.
[00:20:11] I mean, you know, you’re talking about doubling and tripling and quadrupling your annual outcome. Yeah, adding this layer. So
[00:20:18] Michael: if we like this and obviously your total specialists in contests, you know, respect for the Providence of this, you know, you absolutely know what you’re talking about with this. I think the, the lack of imagination, as opposed to giving away the farm is a real, real problem with e-commerce particularly those who focus on Amazon, but not only.
[00:20:34] There’s a tendency to go, oh, I’ve got an email list and they do two things. Number one, they neglect them. And then number two, they offer them a violent discounts. Is that only way of interacting with them? It’s like 50% off or 30% off, you know, in other words, what I’m thinking of your profit margin and give it away, you know, and it’s, it’s okay as a desperate way to launch products.
[00:20:54] And if you’re then relying on SEO, The rest of the heavy lifting, but it’s, it’s just, yeah. It’s it’s well, yeah, I save a hundred. Cause it does things to your, your profit and loss statement, for sure. Yeah. It’s, it’s not, it’s not a very good relationship to have because it’s basically a bit like, sort of, yeah, it’s a bit like some guy coming up to in the street, shouting he vaguely know and say, Hey Mike, how you doing?
[00:21:17] You can have this for five quid often feels
[00:21:19] Jason: grumpy and uncomfortable. Meriden.
[00:21:22] Michael: Well, they’re not so much that they could do that anywhere in the world, but it notes suggest kind of like, it’s not a, it’s not a good relationship. If I have a relationship where people keep offering me value and then they offer me a modest discount.
[00:21:32] And I feel like a natural outgrowth of that relationship. Whereas a lot of the time I see people just doing nothing with that list. And then after months they launched your product and they suddenly offer everyone 30% discount once a day
[00:21:42] Jason: for a week and it’s still coming. And the other thing of course that you’re doing there is, you know, there’s an old, whatever phrase that says, you know, what you catch him with, you have to keep them with.
[00:21:53] And if you train your customers that they’re coming back to your website, because you’re violently discounting, then they know that and after a time or two, then they’re like, oh, this is what they do. They, you know, they they’ll, they’ll put a sale on 40% off if I just wait and. And you don’t want to do that.
[00:22:13] So you do have to be more creative than that.
[00:22:15] Michael: Yeah. 40% to me is a violent discount and not scientifically and others you’ll violate your P and L if, if every time you you’re training people to buy at a point where you’re making a loss, that is not a good idea. Yeah. I mean, if you’ve got a decent margin and you can give them 10% off and that’s valuable to them and you still have the nice profit margin that started that sustainable.
[00:22:32] So yeah, I guess that’s what I mean.
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