Category : Sales
How to recover more failed payments with detailed ecommerce analytics
Question for the day: If your subscription business could recover failed payments, how much would that add to your monthly revenue? Ah, failed payments—the bane of subscription businesses and membership sites. Unfortunately, these happen more often than one might think. In fact, a 2020 study from LexisNexis Risk Solutions reported that failed payments have cost the global economy an estimate of $118.5 billion in fees, labor, and lost businesses. Pretty alarming, right? When a payment fails, it means your business just lost revenue. Right there and then. Plain and simple. However, here’s some good news: not all failed payments are lost causes. Read on to learn more about how your brand can recover failed payments. Why do payments fail? Did you know that you’re losing 10% of your revenue due to failed payments? Let’s take a look at the most common causes behind failed payments: The credit card has already expired The customer’s credit card is already at the maximum spending limit The credit card used or payment method doesn’t have a sufficient balance The payment gateway has detected suspicious or fraudulent activity and blocked the card or payment method from being used Human errors such as incorrect card number typed or typographical error All of the reasons listed above have one thing in common: they are all involuntary. The customers didn’t do this on purpose. In fact, there’s a big chance that they may not even be aware that their payment failed. How can you recover failed payments? Since most of the reasons for failed payments are involuntary, the possibility of recovering your lost revenue is high—if you play your cards right. Here are three strategies to help recover failed payments. Set up a dunning email automation Dunning emails are the automated emails sent when customers’ payments fail. These emails remind your customers to settle their pending payments—usually in sets of three to five emails. There are also various dunning software options that can help bigger companies set up and monitor their dunning attempts. But while dunning emails are a good attempt to recover failed payments, some business owners are not comfortable with this strategy—mostly due to their own bad experiences of receiving badly written dunning emails. Here’s a tip: Create a personal approach, and avoid sounding too generic or even robotic. Personalized emails can give you higher transaction rates (up to six times). Plus, badly written dunning emails can result in customer complaints after multiple follow-ups instead of the desired outcome of recovered revenue. Reach out via outbound recovery calls and emails Some businesses prefer doing manual outbound calls or emails instead of setting up an automated system. For example, start-ups and smaller companies usually do this because their outbound specialist can still handle the number of “lost” customers. Though it can be tedious and time-consuming, the greatest advantage of this strategy is the amount and quality of personalization you can put into the customer experience. If you are considering this strategy, here are some quick tips for outbound calls and emails: Identify the customers to reach out to and familiarize yourself with their profile and their customer journey so far. Review the individual customer’s subscription and payment history. Take note of two things: why the payment failed and the last dunning email the customer received. Use this information for a super personalized conversation when you call your customer or when you send out an email. Use the opportunity to build an actual conversation so you can guide your customers through the process of payment. [tip]If you can’t reach your customer via phone call and if they are not responding to emails either, try leaving a voicemail message. Don’t forget to leave a number they can call back if they want to.[/tip] Outsource failed payment recovery specialists As your business grows, the instances of failed payments will also go up. While reasons will vary from technical issues, involuntary churn, or suspicious acts—it will get to a point where it will be too tedious for you to handle. At the same time, you can’t just ignore the slew of failed payments. So what should you do? Consider hiring a failed payment recovery specialist who can solely focus on handling the entire recovery process. They can also implement outbound communications via email, chat, or phone to expand and complement your existing dunning system. Because a specialist can focus on recovering failed payments, you can focus on other aspects of your business such as strengthening your customer retention strategies, product development, and operations. How to use ecommerce analytics to recover more failed payments Regardless of the strategies you choose to execute, you will need to assess, monitor, and evaluate the results by looking at the numbers. That way, you’ll know what’s working and what’s not so you can figure out the payment recovery strategy that works the best. Here’s where data tracking and ecommerce analytics come in: Check your customers’ purchase and engagement history so you can further personalize your approach. Review recurring charges and subscription product performance to pinpoint the exact instance of the failed payment. Access demographics of your churned customers to have a better understanding of how to reach out to them. For example, their location will give you an idea of the best times to call them. One important thing to note: data tracking and analytics are not limited to the recovery process. With access to powerful and comprehensive data, you can set up your entire customer lifecycle strategy to be data-driven. You’re not just moving around blindly trying strategy after strategy. You’ll be moving along efficiently with strategies that are backed by data. Here are some examples of how you can maximize a data analytics platform: Study your churn rate patterns by comparing numbers from different time periods. Pinpoint the reasons for churn to see if there’s a recurring reason that you can tackle. Analyze demographics, purchase behavior, and marketing channels to determine where revenue comes from. Connect the platform with your other tools. Littledata, for example, integrates with Shopify, BigCommerce, and even Recharge. Get an overall view of how your eCommerce store is really doing—so you can act accordingly depending on what’s needed. The better your customer experience is, the less you’ll have to worry about customer churn. While failed payments may still occur, your brand already has an established relationship with your customers. Recovering your lost revenue will be a much smoother process. Wrap up: Use eCommerce analytics as your strategy’s foundation Data is literally power and knowledge at your fingertips. Start making better business decisions with accurate data across all touchpoints and channels. Combine Littledata and Recover Payments and start recovering more failed payments—you’ll be surprised at how much more revenue there is. This is a guest post from Regina Ongkiko, content writer at LTVplus. She is passionate about creating content that provides value and impacts businesses. You can read more of her work at reginaongkiko.com. She loves getting her inspiration and ideas from the great outdoors.
9 Best Ecommerce Metrics to Track to Boost Your Sales
Starting up an online store is pretty effortless today. With convenient and inexpensive ecommerce solutions like Shopify, Magento, or Wix, anyone can create a clean-cut online store — even without coding skills — in a couple of hours. But few businesses can ultimately hope to square off with global retail giants like Amazon or eBay. One reason is ineffective and non-scalable business processes. Ecommerce profitability correlates strongly with a seller’s forethought and flexibility. Setting pricing, adding loyalty programs, choosing promotions, managing stock items — the more you control the details, the more predictable your revenues are. The best way to get the information you need to manage those details is by choosing the right metrics to monitor. In this article, we’re going to explore them and give you some practical optimization tips. How to determine which metrics matter for your business Your store’s size and the stage you’re at in its lifecycle will inform which specific metrics you need to pay the closest attention to. As an example, for a small store just starting out with a relatively low number of clients, it may be too early to obsess over average order value or customer lifetime value. On the flip side, for ecommerce giants that launch expensive advertising campaigns and spend millions handling sales and marketing teams, all types of “returns on” metrics may be key to consider. Choosing your “just-right” set of ecommerce indicators comes from experience. It’s neither a good idea to confine the number of metrics to one or two, nor to track several dozen benchmarks without a clear strategy. Likewise, poor analytics drawn from inaccurate data won’t provide enough information for you to make smart business decisions. Before you dive into the “universe” of ecommerce metrics, track where your store’s performance currently stands using the items below: Website trafficTotal number of conversionsOperational expensesAd expensesAbandoned purchases These are the minimum data required for calculations. With these figures, you can define 3 groups of metrics: Gross (e.g. revenue or profit)Mean values (e.g. an average value of the order)Percentages (e.g. returns on advertising expenses) What are the key metrics for retail ecommerce? The nine indicators listed below fit any type of online retail business, regardless of size or industry. You can calculate these metrics as soon as you're done reading this article using Google Analytics or your preferred data reporting tool Total Sales (and Total Revenue) Revenue is the income from selling goods and services. In financial reports, it’s often referred to as a “top line” indicator. Revenue fluctuation reflects the pace of business development and proves that your company can generate profit, making it good for investment. In terms of accounting, sales may be either equal to revenue or simply one of its components if you have additional revenues from supplementary operations. Overall, this metric is a strong high-level indicator of growth and stagnation for your store. Conversion Rate (CR) A conversion is when your lead takes a specific desired action that you’re tracking. Store owners can treat conversions as certain events, such as a click on the “Book a call” button or filling in the contact form. In ecommerce, conversions most often mean the act of purchasing. However, the “total” conversion consists of several subsequent actions, each of which can be monitored separately: Adding an item to the wishlistAdding an item to a shopping cartProceeding with a shopping cart to a checkoutFinalizing payment Conversion Rate is calculated as the number of conversions to the total number of online store visitors. It’s a good metric to judge how relevant your website traffic is. You may have many unique visitors, but if the majority of them leave without a purchase, start investigating your ad targeting and lead generation to make improvements. Average Order Value (AOV) AOV shows how much your leads spend on a single purchase, making it a good indicator for use in revenue predictions. All else being equal, growing traffic will positively influence your total income. But what's more important, AOV shows how commercially successful your product assortment is. If the dynamics for an average order value are negative, it’s time to review your product assortment and pricing strategies. There are some common tactics to increase AOV, and most target actions in the checkout: discounts, upselling, cross-selling, free shipping, and others. You can track checkout actions as well to get an even more complete picture and improve your AOV. Purchase Frequency This metric shows how many times an average customer buys something at your online store within a given period of time. To have meaningful value, you should calculate the metric for a considerable time frame — like six months to a year. Purchase frequency shows the share of repeat customers, as well. If the indicator is greater than 1, it means every lead makes more than one purchase in your online store, on average. Customer Retention Rate (CRR) Aside from acquiring customers, another big issue for ecommerce businesses is retaining them. That’s because nurturing existing clients is much cheaper than gaining new ones. The higher the retention rate is, the fewer expenses a company will need to impose to maintain and increase revenues in the future. You can use various techniques to re-engage online store visitors, with email marketing being one of the most popular retention channels. Create a sequence of nurturing emails or refer to drip campaign examples, e.g. ones by Snov.io, and send out interesting mass emails to clients. These may be assortment updates, reminders, special offers, or exclusive deals. The goal is to keep leads engaged and stay top of mind to drive sales. Customer Lifetime Value (CLV) CLV shows how much revenue a lead generates during their entire history as a client. In other words, this is a predicted sum of money that a customer will spend on products or services. CLV is closely connected with returns on acquisition expenses. If the lifetime value doesn’t cover and (ideally) exceed acquisition costs, the business won’t be profitable in the long term. You can determine CLV in a couple different ways: 1. Cohort analysis Divide your clients into groups with similar characteristics, e.g. upon the time they made the first purchase. Then, calculate the average revenue per user, per every cohort. 2. Individualized CLV Rather than calculating aggregated indicators, you can measure CLV for individual customers. This method requires more time, yet is more precise. Cart Abandonment Rate This metric shows the share of uncompleted shopping deals. An abandoned online shopping cart means your customers picked out items but left the website without purchasing them. Obviously, the higher the rate is, the more potential revenue you’ll lose because of an unclosed funnel. Users may be unable to complete the purchase due to technical issues, e.g. when the link to the checkout page doesn’t work, or due to the nature of goods.So, it makes sense that online stores selling luxury items have, on average, a higher cart abandonment rate than grocery stores. Although it’s impossible to reduce this metric to zero, keep it at 40% or lower and you’ll be in decent shape. Return on Advertising Spend (ROAS) ROAS shows the overall effectiveness of ad campaigns. It is usually calculated for different ad groups to compare the ratio of revenue and costs to earn it. ROAS less than 1 (or 100%) means a company loses money, as it spends more to acquire customers than it earns from them. Cost per Acquisition (CPA) CPA shows an average cost associated with a single conversion. CPA differs from ROAS in that it doesn’t take into account the money a company earns due to a conversion. Consider an example. An advertiser launched 2 ad campaigns and set a budget of $1,000 each. The first campaign resulted in 10 leads and $1,500 revenue, and the second yielded 10 leads and $2,000 revenue. The two campaigns will have equal CPAs ($1,000/10 leads = $100 per lead), but different ROAS (150% and 200%, respectively). Do you need to track all these metrics? It’s up to you which ecommerce metrics to track. Most of them are interrelated or complementary, so if something goes wrong, you’ll notice the issue anyway. For example, if CRR increases over time, the lifetime value and average order value will most likely increase as well. Or, at least, they won’t worsen. Small retailers that don’t run regular ad campaigns can neglect some indicators, e.g. CPA or ROAS. But as you reach a mid-sized level or plan expansion, it’s better to put analysis back on track and monitor all nine metrics. Ecommerce metrics: important questions to ask What’s the most important KPI for online retailers? Every business comes up with a unique set of KPIs, ultimately. However, CLV and Average Order Value are the top 2 metrics to monitor for the majority of retailers. How to increase conversions on an ecommerce website? First, use responsive styles for your online store. Make sure all images are well-optimized so that they look good and don’t worsen website loading speed. It’s also advisable to implement an online chat and a callback option. In the end, planning and development are impossible without frequently assessing performance. The nine metrics we’ve disclosed are basic for the majority of retailers. With these, you’ll see the big picture and have the intelligence to make informed business decisions. This is a guest post from Yulia Zubova, Outreach Specialist from Snov.io.
5 Cool Ways to Convert More with Psychology
Nope, we’re not talking about mind control here or any other Batman-villain-style plots. He did have some sick outfits, though. We won’t be talking about the “psychological tricks” that have gained a bad rep in marketing, either. Using lessons from psychology in your promotion is more about being creative with the sales process — and it can bring fantastic results. If you show truthful information, use data to present customers with relevant products, add gifts to purchases, or lower prices, you create a hassle-free, win-win situation for you and them. The techniques described here can impact the way customers think about their purchase and help them decide in your favor. TL;DR Use the price anchoring technique to improve price perceptionCurb decision fatigue with data-based product recommendationsCreate FOMO and feelings of exclusiveness with limited-time and limited-quantity offersCombine bestsellers and frequently-bought-together items to create good bundles and upsellsEverybody loves free stuff Now, let’s dive into five ways you can take lessons from psychology and apply them to your promotion. #1 Price Anchoring: put price in perspective People most often determine whether a product is expensive or cheap by comparing it to something else. That’s exactly what price anchoring does — it gives customers a main price (anchor price) they can reference to decide if they like the specific deal you’re offering. You’ll often see this technique used to promote sales — i.e. on a sign saying “$125 NOW $90,” that $125 is the anchor price. Use your anchor price in pricing tiers Another way to use price anchoring to increase sales is to show pricing tiers. If you have differently-priced versions of your product, you can list them side by side on your pricing page. That way, your customers can easily evaluate prices and features without switching between tabs or pages. You can see this full page at Littledata.io/plans Keep in mind: It’s best to set the anchor price as the most expensive option. That way, customers will opt for the cheaper offer — the one you originally intended to increase sales for. Your goal might be to boost sales on cheaper products despite being lower value than the more expensive option (a “you get what you pay for” sort of thing). In that case, people will choose the more expensive one because the perceived value is greater. Compare your product with competitors Before buying, customers will usually investigate what else is on the table; there’s no way to prevent that. So, why not use that to your advantage? Take a good look at a competitor’s offer and adjust yours accordingly to make a better deal whenever possible. Create a dedicated comparison page that shows customers what the benefits and features of your product or service look like side by side with your competition. These comparison pages are usually among the resources customers search for most, making them a great opportunity to improve your website’s ranking in search engine results. Be careful not to focus solely on the financial aspect; show feature differences, best use cases for each product, and their actual value. #2 Eliminate indecisiveness When facing a difficult decision, some people (including yours truly) just… run away.https://giphy.com/embed/5WkqT5t0V3DCAeBsju You guess if I'm exaggerating or not. What causes the inability to decide? The main culprits could be: Information overloadLack of informationFearing the consequences of the wrong choice To prevent this, revert to making comparisons and highlighting the exact purpose of items, as suggested above. Another way to help decision-making is to draw attention to specific products with social proof.Listing featured products, highlighting customer reviews, and naming items of the day/week/month are all great ways to suggest other buyers loved your product and help the customer in their buying decision. Utilizing a Recent Sales Notification system adds an element of rush to the buyer's decision. Speaking of... buying behavior analysis is a must! Data capturing capabilities are powerful and can be used to make changes to your store that influence purchase decisions. To do so ethically, use legally obtained data to learn customer preferences and design solutions that fit their needs like a glove. Using this data, you can make tweaks to your store’s appearance — like selecting items most likely to be purchased by certain people and showing them in “Recently Viewed” and “Related Items” sections. Tip: Get inspiration to optimize your store’s design from five successful DTC brands succeeding with Shopify Plus. #3 Fear of Missing Out (FOMO) and exclusivity Scarcity marketing relies on people’s fear that items they desire won’t be as cheap (or available at all) if they don’t hurry and buy them while the offer lasts. And it works. It’s science, baby! Scarce items are perceived as more valuable and have an aura of exclusiveness. There’s something about having what few other people have that gets people going — think designer handbags or rare sneakers. There are plenty of well-known ways to create FOMO and make products seem more exclusive: Limited-time offers like “buy X get Y” or free shippingBuilt-in timers indicating the amount of time left to act; a Cart Reserved Timer can speed things up even more and is incredibly useful for items that sell like hotcakesLow stock alerts — i.e. “Selling out fast” or “only X more left” Don’t rely solely on scarcity tactics, though, as they have limits. Always continue to improve your products and build lasting relationships with customers. Remember to show truthful information only. It’s the right thing to do, and Shopify will penalize the store owners caught embellishing or outright lying about products. #4 Create awesome bundles and upsells Delve into customers’ minds and find out their desires.https://giphy.com/embed/it8307a0XxlVS Or, try a method that actually works and learn from data; it’s simple and feels just as powerful! Here are some foolproof bundle and upsell ideas: Offer bundles of products that are often bought togetherCombine store-wide best-sellersOffer luxurious and expensive minis Sephora creates great sets for people who are too afraid to commit, so they can try multiple high-end brands without breaking the bank. (Screenshot: sephora.com) Offer an add-on gift-wrapping service to increase the average order value during the holiday seasonAllow customers to purchase a money-back guarantee or a warranty for items that rarely require customer complaints or returns #5 BOGO deals BOGOs can be summed up with three words: “Hey, free stuff!” They come in handy when some items in stock just refuse to go away, but you need them to, and fast. An excellent example for using BOGO would be as a holiday strategy: “buy one, and we’ll ship the other one as a gift to your mom/pop/friend/loved one.” Then you can charge for shipping and gift wrapping, and the average cart value will grow as well. While we’re on freebies, never forget the power of free shipping! Setting a free shipping threshold is another easy way to increase customer spending without reinventing the wheel. Typically shoppers would rather spend more to get perks like free shipping than pay extra fees which can feel like more spending for little return. Bottom line Your own store’s data reveals what customers want, when they want it, and how they choose to get it. Having a full, accurate picture of that data gives you critical insight into your buyers’ psychology. Using psychology-based marketing means learning about people so you can help them, not exploit them. Customers today are more informed and aware of sneaky tactics than ever before. So, the best course of action is to stay transparent and provide excellent service and products they’ll love. The tactics above tick all the boxes: they make customers happy and bring extra profit. This is a guest post from Jordie Black. Jordie is a content marketer and strategist specializing in B2B, SaaS, and Influencer Marketing. Jordie is currently building her first DTC e-commerce business.
How COVID-19 has affected Shopify stores so far
In the wake of COVID-19, things in the ecommerce world are hanging in balance. We've been encouraged by businesses and agencies in the Shopify ecosystem stepping up to pool their resources and talents to help more vulnerable store owners (e.g. see how Shopify is helping, as well as Offline2On, an initiative we're involved with at Littledata). But, since we're analysts at heart, we wanted to take a closer look at recent sales trends among Shopify stores to see the impact COVID-19 is actually having on shopping behavior. Shopping behavior during COVID-19 While some stores have seen a surge of shopping activity and orders, others have struggled to match their normal volume. With no end in sight to the global pandemic, many shoppers are choosing to be frugal with non-essential spending. To find out how many Shopify stores were either surging or struggling to stay afloat, we broke down the data, week over week, from Q1 2020 (8 weeks total). We focused on: Order volume Average order value (AOV) We chose these metrics in particular because they're two of the strongest indicators of overall shopping behavior. [note]See how Littledata is responding to COVID-19 to help ecommerce sites survive and thrive during the crisis.[/note] We sampled 200 Shopify stores from across 5 different industries: Beauty Food and drink Health and fitness Pets Style and fashion But before we drill down data by industry, let's look at ecommerce as a whole. Global ecommerce trends and observations While global ecommerce has experienced an increase in order volume over the past 2 months, you can see the recent, steady decline in AOV during the same period (though it has mostly remained unchanged since Feb). It's possible the spike in order volume is due to social distancing, as country after country institutes their own version of stay-at-home orders. Interestingly, AOV's decline could be due to shoppers squeezing their wallets a bit tighter during the pandemic. With uncertainty looming in just about every area of life, some marketers believe shoppers are more reluctant to spend more per order; they're mostly sticking to "essential" purchases. Shopify order volume & AOV by industry The first graph below shows change in order volume by industry. The second graph illustrates changes by average order value, also segmented by industry. Beauty From the middle of February to now, the beauty industry seems to have leveled out in terms of orders. This is a pretty standard showing for beauty, which does not seem to be drastically affected by COVID-19 so far. The beauty industry's AOV may have seen an early drop, but has been steady since. Food and drink Food and drink likely experienced the rise in order volume the past few weeks due a the surge of worrisome shoppers; global uncertainty about the pandemic means grocery stores and supermarkets were packed for weeks as people stocked up as much as possible. Many subscription boxes (and meal replacement brands such as Soylent and Huel) have also seen a surge in order volume. However, the industry has hit a steep decline in the week since. A slight increase in order value overall, but nothing alarming or surprising here. Health and fitness Similar to food and drink, health and fitness saw a spike in AOV a few weeks ago that has since led to a steady decline. With no end in sight to the pandemic, this may continue as people opt to do their workouts at home and spend less on non-essential nutrition supplements and apparel. Pets Interestingly, the pets industry sank into a trough through most of February and March in terms of order volume, but has remained steady in terms of AOV. Style and fashion Style and fashion is looking like the "trendiest" industry (bad pun, I know) since early February, with a sudden spike in order volume (about a month ago) followed by a sudden drop. Style and fashion stores may see a resurgence soon, but it's too early to tell if this shopper behavior was due to COVID-19. As you can see, average order value has increased over the past few months in this space. So what's next? Over the next few months, we'll analyze the data from Q2 for a bigger picture of COVID-19's affect on Shopify stores. In the meantime, check out our benchmarks for Shopify stores and general website performance benchmarks. These tools are designed to help you gauge your site performance, as well as metrics like AOV, ecommerce conversion rate, mobile search bounce rate, server response time, and more. Stay tuned for new Shopify data analysis soon!
4 pricing optimization strategies for Shopify subscription stores
The subscription ecommerce market has an estimated worth of $12B-$15Bn. What’s more, 2018 was the year in which the highest amount of capital was invested into subscription box businesses. Fast-paced growth and yet-to-be-discovered niches attract numerous big retailers and new market entrants. To stay ahead of the competition, you must utilize pricing power to the fullest extent. Luckily, we’ve gathered four pricing optimization strategies for your Shopify store. But before jumping into that, let's figure out why the subscription business model is attractive to online retailers as well as shoppers. [subscribe] What makes people subscribe? People have recurring needs. Instead of shopping for everyday products over and over, they use subscription services that deliver everyday needs to their doorstep. While big retailers apply this model mostly on consumer goods, an increasing number of SMBs utilize it to send subscribers a selection of enjoyable lifestyle products to be discovered. The lifestyle products range from a french press to a book, from candles to clothes, and so on. From a retailer point of view, this model reduces the risks arising from uncertainty. SMBs often have a hard time estimating business costs and profits accurately, whereas subscription stores do not face uncertainty problems thanks to their steady customer base and stable costs. [tip]Trust your subscription tracking with the ultimate ReCharge guide for Shopify[/tip] More and more retailers either switch to this model entirely or apply it on certain products in their assortment. So, what’s a good pricing strategy to outshine the competition? 1) Measure Willingness to Pay (WTP) Willingness to pay is the maximum amount of money people are willing to give up in exchange for your products. Before setting the price of a product, measure WTP. Charge a price in line with customer expectations to substantially increase the likelihood of purchase. Surveys are the easiest way of measuring WTP, and they grant you a chance to get to know your audience better. Ask the value-adding qualities of your service and find out customers’ pain points: "Please rank order the product features below according to the value you see in each" "Which product feature(s) do you think should be improved?" Keep up the good work and improve the negative aspects identified by customers. Perhaps more importantly, customers will be happy to know that their ideas are appreciated and taken seriously. It’ll increase the chance that they refer your subscription store to their friends, and referrals are far more effective than traditional marketing channels. In turn, offer referral discounts to enhance customer loyalty. Out of WTP research, you'll obtain multiple price points around which people are clustered. The following step is to utilize that data to divide your target audience into several segments. 2) Offer a variety of options and pricing Naturally, people differ in their WTP for a product. Now that you've segmented your audience based on shoppers' WTP, it's time to target each segment at different price points. For example, if you sell lifestyle subscription boxes like Birchbox, make boxes of varying quality and charge more for high-quality ones. Tiered pricing structure entices both price-sensitive and luxury customers to subscribe to your boxes. WTP changes over time, but it’s impossible to conduct WTP research frequently. Instead, test different price points to see if they yield better results. Note that even though fewer people buy luxury products, they can generate higher profits. Since high-end buyers don’t look for cheap prices, provide them a truly premium service quality. When it comes to commodity goods, however, no one wants to pay extra money for toothpaste. If your Shopify store specializes in everyday essentials, offer competitive prices. Which brings us to our next point... 3) Track competitor prices Millennials are financially worse off than older generations, and it's reflected in their shopping behavior. Price is the most influential factor when US shoppers decide where to buy a product. Thanks to the transparency of online prices and ease of using comparison shopping engines, shoppers effortlessly find the cheapest deal for their everyday needs. The only way to appeal to a price-sensitive and tech-savvy audience is by offering the cheapest deals for commodity goods. That's why you have to track competitor prices. You can try manual tracking, but the results won't serve the purpose. By the time you finish collecting competitor prices, the data will be irrelevant. Prices change far more frequently than we could track manually. Another option is building an in-house pricing engine. Since it'll only belong to you, you can customize it according to your needs. The important thing to note here is that the software requires maintenance. You'll devote a lot of time and resources to software development, and the expenses will keep coming up. And finally, you can use pricing SaaS with a monthly fee. Your activity is limited to the standardized service the company offers, but you don't spend hours on software development and maintenance. It's more affordable than maintaining an in-house engine. 4) Make use of predictive analytics Predictive analytics is a technique to predict future outcomes based on historical and real-time customer data. What does it mean for a subscription ecommerce store? You know that customer retention is far more important than customer acquisition. Returning customers account for more than 40% of US revenue even though they make up only 8% of all online visitors. What does it have to do with predictive analytics, or pricing to start with? Costs increase over time. Since you can’t sell at a loss, you have to increase prices. But price increases come at a cost. It’s highly likely that a portion of your customers will leave when faced with a price increase. Before making major changes in your pricing structure, use predictive analytics to determine which customers/segments will likely to churn after an increase. Don’t alienate the most price-sensitive customer segments with an increase. A small profit is way better than no profit. Final Words Subscription ecommerce is gaining popularity among online retailers. To stay ahead of the competition, retailers must utilize the power of pricing. Implement these optimization strategies to gain and maintain a competitive edge: Measure Willingness to Pay and take it into account when pricing Provide multiple products at different price points to target each segment Track competitor prices Make use of predictive analytics And of course, track with accuracy – the data never lies, and tools like Littledata's Shopify app for Google Analytics (or Segment) also help optimize your pricing strategy. With better data, you can price better! This is a guest post by Betül Parlak, Inbound Marketer at Prisync, which helps ecommerce companies increase sales by tracking prices automatically from any marketplace around the world.
Why every Shopify store should offer a "Buy Now, Pay Later" payment method
There are so many aspects that go into running your ecommerce store — finding the right combination of products, creating eye-catching product pages with tasteful images, reaching relevant customers with your marketing efforts, managing inventory and shipping, to name a few. The decision of which payment option to use likely falls to the bottom of your list. A payment is a payment, right? Wrong! Selecting a payment method is one of the most critical elements of the customer journey, and offering the right assortment of payment options is one of the most direct ways to impact your conversion rate. Think of it this way: by the time a prospective customer has reached the payment phase of the checkout, they have already made a purchase decision. They’ve found your site, chosen a product, selected the right size and color, etc. They’ve already done the main leg work. At this point, any friction in the payment process can result in a lost sale. A customer is not a customer until they click that pay button. Your job as an online store is to make clicking that button as easy as possible. By now, you've probably heard of “buy now, pay later” solutions, like Sezzle. This new wave of alternative payment methods make optimizing conversions at this critical juncture especially easy. By allowing shoppers to pay for purchases over time (rather than all up front), this new payment solution has opened doors for consumers all over the world that fear the use of traditional credit. What is a “buy now, pay later” solution? Retailers have long provided shoppers the ability to pay over time with installments. “Buy Now, Pay Later” solutions offer a new twist on financing for Shopify merchants (and any online retailer) with simple installment plans. Layaway options became popular in the United States after the Great Depression, when retailers began offering them as a way to generate sales with cash-strapped consumers. In the old layaway model, shoppers would physically go to the store and put down installment payments for merchants to hold an item they wanted. Once a shopper had made enough payments to cover the purchase, the sale was complete. But in the 1950s, a new innovation was introduced that allowed shoppers to pay over time: the credit card. Credit cards allowed shoppers to swipe, receive their items immediately, and then pay the credit card company back at a later date. Credit cards quickly expanded to the nearly ubiquitous presence they are in retail today. Of course, the downside of paying with credit cards is that they are only available to those who are approved for credit; as many of us know, they also carry the threatening potential of exorbitant interest and fees. Luckily, new fintech solutions offer a modern alternative to credit cards designed for the modern consumer. Sezzle, for instance, allows shoppers to pay for ecommerce purchases in four equal, interest-free installments. With this solution, shoppers pay only a fraction of the purchase price during checkout and merchants ship their orders right away. The buy now, pay later platform then pays the merchant upfront for the full amount, less a small processing fee. The remaining installments are automatically collected from the shopper every two weeks, with no interest or additional cost to the consumer. In short, buy now, pay later options provide a new way for shoppers to buy now, get their item now, and pay over time, at no additional cost. Why offer a “buy now, pay later” option? Buy now, pay later solutions are a proven way to increase sales for merchants. There are many benefits to adding an installment payment solution to merchants, including: 1. Reaching new customers To maximize your reach, it's no longer sufficient to offer only credit card options. Credit cards are a great purchasing tool, but only for customers who have them. However, the number of credit card holders in your target audience might be far fewer than you think; only one in three millennials own a credit card, according to a 2016 bankrate study. There are many underlying factors driving this statistic — from the credit crisis of 2008, to mounting student loan debts for young people, to regulatory changes that made it more difficult for credit card companies to extend offers to those under the age of 21. The key point for merchants is this: payment behaviors are changing dramatically for young consumers who have increasingly come to expect to be able to pay with a digital wallet, alternative payment platform, or an installment plan. In fact, over 87% of consumers want a simpler way to pay over time that is not a credit card. By not providing these options, you are leaving potential money in the cart. 2. Increasing conversions More than two-thirds of all online shopping carts are abandoned, according to the Baymard Institute. The second most commonly-cited reason was the cart becoming too expensive. When customers see the total tallied up, they get sticker shock. Offering an installment payment solution that lets shoppers check out now and pay over time dramatically reduces cart abandonment rates. On average, for stores that have added a buy now, pay later method, checkout conversions have increased by almost 40% for first time visitors. Reducing sticker shock of a one time purchase reduces cart abandonment, which means more sales! [note]There are other effective methods for reducing cart abandonment, too.[/note] 3. Reducing return rates High return rates are a pain point for merchants. When customers are consistently returning their purchases, it can add a lot of unwanted and unneeded stress to your store. For merchants that use interest-free installments, return rates have decreased dramatically — some stores even drop down to 1% in returns by adding this alternative payment method. Through lowering these returns rates, buy now, pay later solutions can keep you and your customers happy. 4. Tapping into a millennial trend Buy now, pay later solutions have exploded in popularity in recent months. In other parts of the world, similar payment methods have become the predominant form of payment, with young shoppers mainly driving this trend. Young shoppers like the freedom of paying over time, without the financial pitfalls that credit cards pose. For them, they see these solutions as a kind of layaway on-demand or layaway for the digital age. As more and more major brands accept these payment methods, the trend will only accelerate. Why not get ahead of the curve by implementing this solution for your store now? Global expansion of “buy now, pay later” The rapid customer acceptance and adoption of buy now, pay later solutions led to Sezzle’s first international expansion into Canada in 2019. This market was chosen given the similar customer profile and online shopping habits of American and Canadian consumers. Much like their American neighbors, Canadian consumers have an aversion to credit cards and a desire for more flexible and lenient payment methods, making this move a logical extension of Sezzle’s platform. This entry gives Canadian merchants the opportunity to offer a new payment solution to their customers. As Kappa Canada CEO stated, Sezzle is essential to delivering “flexibility in the buying process” to customers and gives them a platform to extend their brand reach. This expansion also opens up an entirely new market of consumers. The market of Canadian online shoppers is growing at an unprecedented rate and is anticipated to increase by more than 25% by 2021, making this the opportune time to expand into this space. This rapid global expansion of the buy now, pay later space has proved very beneficial to those merchants that sell in multiple countries or use differing currencies. [note]If you have stores on Shopify Plus, learn how you can easily track your multi-currency sales with 100% accuracy.[/note] The US is brimming with merchants that sell their products worldwide, making it difficult when a payment platform only serves US shoppers. However, as the buy now, pay later space maintains its global growth, this problem will continue to diminish. Since its expansion in Canada, Sezzle has seen success with global merchants that now have the ability to sell to both US and Canadian consumers, in both American and Canadian currencies. For merchants looking to expand internationally, it will be important to note the aggressive growth that the buy now, pay later space has seen in recent years and the rapid growth that is expected to continue moving forward. As this alternative form of payment expands, so will its acceptance into international countries, making it an innovative move for every type of merchant. The best pay later solution for small businesses Buy now, pay later payment solutions are a proven way to reach new consumers, increase conversions, and tap into what Visa has called a trillion dollar market. The right payment solution can have a dramatic impact on your sales and customer lifetime value (CLV / LTV). As you consider which payment methods to use, think of the customer first. In the customer’s mind, the payment process is an extension of the store. A bad payment experience — whether it involves high interest rates or getting hit with hidden fees — equals a negative shopping experience. Therefore, it’s important to integrate payment options on your store that fit with the values and customer experience standards of your high-potential customers and buyer personas. This is a guest post by Kevin Wild of Sezzle, a payments disruptor that allows shoppers to budget their payments over time by splitting purchases into four interest-free installments over six weeks. By offering its ‘buy now pay later’ solution, Sezzle provides consumers with the financial freedom to buy what they want without having to fall back on high-interest credit cards.
Top 5 ecommerce benchmarks to track during the holidays [free ebook]
Historically, early-through-late December is one of the biggest sales seasons of the year for ecommerce businesses. We recently took a look at some of the more popular ecommerce metrics and created 20+ benchmarks specifically tailored to the current sales season. With our Benchmark your site tool, compare your site's engagement and conversion metrics with over 10,000 other websites this holiday season. [note]Want to know where you store stands during Black Friday Cyber Monday weekend? Check out our top 9 benchmarks to track during BFCM.[/note] To give insight on your product and digital marketing, we gathered the data from Google Analytics from different industry sectors. So why did we create the benchmarks? Let's take a quick look at last year's holiday sales. Holiday ecommerce sales in 2018 For ease's sake, let's define the holiday shopping period from November through the end of December. Last year, Digital Commerce 360 estimated shoppers spent $122.0 billion with online stores — a massive 17.4% jump from 2017. They also estimated total ecommerce sales grew ~5.6% over the same period, according to their holiday 2018 estimates report. From the same report, ecommerce represented nearly 17% of all holiday spending, up from 15.2% in 2017. Explaining the numbers Over the past decade as online shopping has become more of a preference for consumers (especially when it comes to gift-giving), shoppers have browsed more sites for gift ideas, deals, discounts and more. Shoppers are exercising their options (and taking advantage of stiff seasonal competition between stores), which often leads to increased spending volume across multiple stores — though this may cause stores to see a drop in average order value (AOV) per customer. Of course, stores tend to also increase their digital marketing spend during hot sales periods and peak shopping seasons, which leads to more online sales. What about this December? This past weekend alone (Black Friday Cyber Monday), Shopify reported record-breaking global sales numbers ~$2.9 billion. On the Shopify network alone — which now boasts over 1 million merchants — merchants across 175+ countries sold $2.9+ billion, up from last year’s $1.8+ billion. While the holiday shopping period (which is underway) does not necessarily stack up to BFCM weekend by sheer sales alone, it's a terrific chance for companies to finish out the year strong or get rid of extra inventory from BFCM. Since December will yield massive sales figures to round out 2019, it's crucial to track the metrics that matter to your store. If you don't know where you stand among the stores you compete with, what's the point? That's why we created a free ebook to help you stack up: Top 5 ecommerce benchmarks to track during the holidays. [subscribe heading="Download the top 5 benchmarks free" background_color="green" button_text="get the ebook" button_link="https://www.littledata.io/app/top-5-holiday-benchmarks"]
5 things every Shopify merchant needs to know about customer retention
Every brand using Shopify needs to focus on customer retention if they want to thrive, not survive, long-term. It’s not enough to only acquire customers or simply engage with customers. Without retention marketing strategies to turn one-time shoppers into loyal, repeat customers, you’re missing out on the most valuable customers your Shopify business could have. Here’s why: Retained customers have a higher AOV It’s no secret: customers that spend more are better for your business. But did you know that with every purchase they make, your most loyal customers spend more each time? Research by RJ Metrics showed that of your loyal customers, your top 10% spend over 3 times more per order than the bottom 90% of your business. If that seems crazy, this is even crazier: your top 1% loyal spenders spend 5x more than your bottom 99%. Your most loyal and retained customers don’t just love you, they love buying from you! Retained customers are more likely to convert So if your repeat Shopify customers make more valuable purchases, it probably takes more effort on your end to make those more valuable purchases, right? Wrong! With customer retention strategies in place, your retained customers are actually more likely to convert than first time buyers. To accurately track both first time purchases and repeat purchases (and all the events that lead up to the purchase), Littledata's ReCharge connection is the perfect integration for Shopify stores, particularly subscription stores. [subscribe] Customers that have purchased from you only two times previously arenine times more likely to convert when they land on your store. Even if you’re operating with a small average order value (AOV), you can make huge strides with your bottom line with the right retention strategies in place. Repeat customers have already been through your customer journey (i.e. from discovery through consideration through purchase and post checkout). This means they know and understand your total brand experience. If you’ve done your part to make the customer experience exceptional, customers will be more motivated to add more products to their carts in the future (and re-live their positive shopping experience from before). Retained customers can’t help but talk about your brand Your user-generated content and other social proof can have a profound and lasting impact on your Shopify store’s traffic, conversion rates, and profits. Customers that share their purchases and leave reviews will influence the buying habits of everyone who sees the content they create. The more often customers shop with you, the more likely they are to refer their friends to a store, and with the power of a referral program, you can help motivate your most loyal brand advocates to spread the word about your products. By giving both types of advocates a reward for referring (and giving their friends a reward for accepting the referral) you turn your brand advocates into a self-powered marketing machine that churns out more loyal and retained customers exponentially. Win-win. Retained customers come back during your most profitable seasons As soon as BFCM campaigns come to a stop and the ROI is being analyzed, many Shopify businesses (particularly Shopify Plus stores) already begin planning for next year. For your repeat customers, you never have to wonder if they’re going to come back during your busiest sales season. While most shoppers will spend an extra 17% more during the holiday season, your retained customers will spend 25% more all on their own! While you might want to make sure you’re making the most of Black Friday Cyber Monday, your efforts should be focused on your top customers and making sure they remember that buying from your store is a top option. Retained customers are more likely to return At the beginning of this article, we mentioned that retained customers are more likely to convert. However, before they convert, they have to first find their way back to your store. Luckily, the odds of a customer making a purchase gets better and better with each sequential purchase they make. After one sale, a customer has a 27% chance of converting again, but after a second and third sale, their chances increase to a staggering 54% chance of returning. Tracking customer retention is...simple? Tracking customer retention may seem like a daunting and time-intensive task. Luckily, many of the key metrics that measure ecommerce success and retention are things you’re already keeping an eye on. No matter how intensely you focus on retention, perhaps the two most important metrics to track are: Repeat purchase rate (RPR) - the percentage of your current customer base that has purchased for a second time. This metric is a solid indicator of the value you’re providing to your customers. Average order value (AOV) - the average dollar amount spent each time a customer places an order on your store. To calculate AOV, simply divide total revenue by a given number of orders. As your customers become more engaged with your brand and move from being simply acquired to retained, these metrics should give you a square idea of the affect more retained customers are having on your bottom line (and your customer lifetime value). Two other significant metrics are referral traffic and customer churn rates. Referral traffic - this is easy to see with a Google Analytics integration and easy-to-use loyalty and retention software. Referral traffic will help you know whether you need to hone your referral messaging or change the value of a referral offer. Churn rate - for subscription stores especially, Shopify merchants live and die by churn. This is the rate at which customers stop subscribing to your store (aka the rate of “come and go”). Churn is the flip side of your repeat purchase rate since it tells you how many of your customers shopped with you once but didn’t bother coming back. Knowing this number will help you accurately measure the success of your combined retention strategies. Retained customers are your best customers Even after landing sales, your work isn’t done. The more time and effort you invest in engaging with your existing customer base and motivating them to be loyal to your store, the easier it will be to bring them back and push them to make a repeat purchase. Start building the brand loyalty that will make your Shopify store a success story. This is a guest post by Tim Peckover, the Growth and Content Marketer at Smile.io who lives for a good book, strong cup of coffee, and building community. Smile.io provides easy-to-use loyalty programs to help businesses transform one-time sales into repeat, loyal customers.
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