This episode of Marketing for eCommerce holds my most critical piece of advice for eCommerce professionals: know your marketing math. If you don’t know key metrics such as gross margins, operating margins, and sales conversion rates you’re not setting yourself up for maximum success. Pay close attention to this episode because I share 4 key metrics that will help you monitor costs, scale your business, increase profitability, and blow your competition out of the water. Listen now!
Metric #1 – Utilize a sales funnel to out-convert any storefront
There are 3 main ways to grow a business: get more customers, get those customers to spend more money on their first purchase, and get those customers to return for more purchases. Utilizing a sales funnel allows you to present specific offers to the right customers and close more sales.
It’s a fact in eCommerce business that sales funnels will always convert more than any digital storefront avenue. Set yourself up for an explosion in business by learning the ins and outs of sales funnels and how they can positively impact your profitability. I explain this process in full detail on this episode, so be sure to give it your full attention.
Metric #2 – Identify your average cart profit
The average cart profit is how much money your company makes per sale. This figure is far more important than the upfront value of the products. When you are able to determine how much profit each sale brings in, you then can determine how much money you can spend on getting the customer to make the purchase.
The real eCommerce winners are the ones who can spend the MOST on acquiring new customers, not the least. THAT’S how you suffocate your competition. This metric directly ties into metric #3, and you’ll understand them best by listening to this episode.
Metric #3 – Recognize the lifetime value of a customer
True eCommerce success stories recognize and appreciate the lifetime value of every customer. If you learn this skill, you’ll be in the top 1% of eCommerce sellers.
One example of lifetime value can be found in this scenario. Let’s say the value of one customer via one sale is $20. But your marketing math research shows that with an additional investment in customer acquisition, that customer could make multiple sales in future months. That customer’s worth jumps up to $80. The additional projected profits can be invested in marketing dollars used to convert that customer multiple times. ECommerce companies that hone this strategy will succeed in far greater ways than companies who ignore this opportunity.
Metric #4 – Create a recurring revenue stream to enhance your marketing math profitability
The best way to crush your eCommerce competition is through building a recurring revenue stream. Just because your company focuses on products (and not digital information or a service) does not mean you can’t add this model to your existing business structure. Be creative in thinking of ways a recurring purchase could add value to your original product, and you’ll be amazed at the additional reliable revenue it brings in.
By pairing these 4 metrics with an innate understanding of the marketing math behind your eCommerce business, you’ll be light years ahead of your competition. Combined, it’s a strategy superpower that will allow you to scale in unimaginable ways. Don’t miss the full explanation on this episode of Marketing for eCommerce!
Outline of This Episode
- [0:30] What is the most important thing any business must monitor?
- [3:34] Basic terms necessary for understanding marketing math
- [5:54] Metric #1: Utilize a sales funnel – achieve the first 2 ways to make more money
- [7:30] Metric #2: Average cart profit (ACP) outweighs Average Cart/Order Value for eCommerce sales
- [10:28] Metric #3: Knowing the lifetime value of a customer
- [13:17] Metric #4: Build in monthly recurring revenue
- [15:13] Knowing these 4 metrics will give you the confidence to scale in unimaginable ways
- [17:06] My call to action for current eCommerce business operations
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