The current e-commerce landscape can be challenging to navigate, to say the least. Logistics challenges, production disruptions, cash flow issues, and changing consumer behavior is creating uncertainty for many businesses.
In our latest e-commerce focused webinar, Mason Interactive Founder, Brook Shepard, and Adrian Padron, Director of Media, weighed in on questions all business stakeholders are facing today: how to stay in the market and on the top of your customer’s mind. We summarized the key takeaways from the webinar, including a case study of our client who successfully pivoted their strategy to drive long term revenue.
The electric vehicle analogy
To illustrate the importance of staying in-market, Brook shared an analogy around EV’s (Electric Vehicles):
Imagine a bucket that could hold all the potential EV buyers in America. It would be’d be a pretty big bucket.
The hard truth for car manufacturers, though, is that EV’s cost $12,000 more to produce than vehicles powered by internal-combustion engines; carmakers often struggle to recoup these costs through pricing alone. As a result, car manufacturers stand to lose money on almost every electronic vehicle sold.
So, in the current economic environment, most manufacturers are shuttering EV production and furloughing staff. “If we’re all going to buy electric vehicles soon, then they should be staying in the market and continuing to improve technology to make these cars more effective.
Now, imagine being the one EV manufacturer who continued advertising and improving their product during these months. Don’t you think they would have a leg-up on brand recognition and product when we come out of this? Honestly, I think that’s half the reason for Elon Musk’s outrageous tweets – he’s staying in front of the consumer, filling a bucket of potential Tesla buyers.”
The theory of customer bucket
One of the simplest and most logical ways to look at the health of your marketing ecosystem is based on the idea of a customer bucket. Think about your website as a bucket filled with water, where your customer base or the traffic you are driving to your site is the water. That bucket is full once you have healthy traffic coming to your website.
“We don’t want high bounce rates, low page view consumption, or low engagement post click,” Adrian says. The quality of your water is crucial to this. “If we’re not constantly filling [the bucket], that bucket will leak”.
Why? Because of pixels and tracking. Google and Facebook have pixels on your website that track users within up to 180 day windows, during which they will be available to you to remarket to. “If you stop the flow of traffic, you will stop the flow of the water, and so your bucket will continue to leak and eventually empties out,” Adrian explains.
Why an empty customer bucket can become a huge risk
Imagine you have let your bucket dry out, with just a handful of customers in it. You might think it will be easy to bounce back, relaunch advertising when the time is right and start generating revenue straightaway.
In this scenario, you will A) cause significant damage to the user experience B) double your future advertising cost and C) possibly lose contact with your most-loyal, high-value customers.
Doesn’t sound right? Let us explain to you why.
1. Increased ad frequency will have negative impact on user experience
If your bucket doesn’t have enough users to serve your ads to, the ad frequency will increase. This will lead to a poor user experience for those in the bucket because they are constantly seeing the same messages and creatives at a higher frequency [because they are the only ones in the bucket].
2. The impact on cost metrics
When you are ready to re-enter the market, after the market surges and your production comes back to full capacity, you will now have to fill the bucket up, and also acquire customers. “Now we’re looking at higher cost per averages than we would have had we kept that bucket full with quality users in the long term,” Adrian says.
If you are experiencing cash flow issues, and your focus is on profitability, we can shift your advertising strategy to brand search and remarketing. However, this strategy can only be applied short term whereas over time, when that bucket continues to drop, remarketing performance will also begin to decline.
The biggest long term risk? As we approach the holiday season in November – December, that is the key shopping time frame when most of our ecommerce clients drive more than 60% of their annual revenue from, you can’t build an efficient strategy if you enter the season with an empty bucket. “At that point, we’re not just talking about volume, but we also need to be as efficient and profitable as possible. And that strategy is only available if you have a healthy flow of customers to begin with” Adrian adds.
3. Losing the market to your competitors
Another negative impact occurs when you stop nurturing your high value customers [the good water in your bucket], and allow your competitors to grab them into their ecosystem. If your customer doesn’t see your brand in the market, your competitor will quickly capture their interest and as a result, you have lost a customer with a really high Lifetime Value (LTV).
How to keep your bucket full (without breaking the bank)
In order to achieve the best possible results in the current environment, change your campaign objectives to drive cost-effective Cost Per Impressions (CPMs). “We know for a fact that within our internal data set, there’s a CPM trend that shows that it is cheaper to be in the market today, Adrian says. “If you implement the strategy correctly, you can get more impressions with less, and therefore more traffic to your website, he ads.
Adrian shared a real-life example, supported by client data, on how his team pivoted strategy for a client who needed to cut their advertising budget. The new approach was to maintain a consistent level of traffic, while reducing advertising costs.
His team shifted from revenue-centric strategy (driving sales, which is an impossibility given that this client’s factory is closed) to embrace storytelling. The revised messaging, that focused on video assets and authenticity, achieved huge engagement with thousands of likes per post and a record hitting number of video views.
The biggest win of the new strategy was maintaining a flat bounce rate despite the major shifts in the market, and thus continuing to drive not just steady volumes of traffic, but good quality traffic to the client’s website.
Using ad creatives that emphasized social relevance and brand values, enabled the client to build trust on the brand and its products. Once the market returns back to normal, the team will shift to a remarketing strategy to engage with these new and existing customers who have engaged with the content and built a relationship with the brand during the pandemic.
Key takeaways to adapt to your strategy
When looking at your marketing funnel, focus on consideration and awareness strategies to make real impact and drive those brand value bringing interactions to continuously drive traffic, and attract new customers. Pivot your objectives and positioning, while controlling the overall advertising cost, in order to keep your customer bucket full for the future.
Contact our team of digital experts to help you set up the right strategy for your brand and drive online sales today, and in the future.