Why you should be very selective when it comes to customers
But not just any audience this time! This time you are going to be very picky in who you let into your store, and where you will direct them to. This time you will make sure every visitor gets the funnel that suits them best, so that they have a compelling customer experience and are very much inclined to come back more often.
This time you will implement your very own ‘sorting hat’, in other words. The first and arguably most important bit of your sales funnel, which will determine your success in charming the visitor into a bespoke buying frenzy.
In addition, you will start sourcing your customers differently. You will realise that there’s Traffic … and then there’s quality Traffic, which you can only find through clever customer sourcing tactics. You will purposely seek them out in places where your current favourite customers are to be found regularly. Apparently that’s where your crowd likes to hang out, right? So you should be there too.
And finally, you will make sure that nothing gets in the way of your customers’ enjoyment of your store and any other channels you have. In short, you will implement these three strategies to add more quality customers to your customer base:
- Start categorising your customers
- Go where your customers already are
- Remove any remaining barriers
Below you will find a few useful tips and pointers on all three - but first, let’s return to our e-commerce formula for a bit to see where these strategies fit in.
How to get the best new customers (and raise your Conversion Rate)
To put it in the terms of the e-commerce growth formula, this blog is about optimising your Customer Count:
Customer Count = Traffic x Conversion Rate
Customer Count is the combination of the remaining two levers: Traffic and Conversion Rate. We already showed you how Traffic in itself is not a very efficient lever for growth: only when visitors ‘convert’ and turn customer, and even then only when they return more often than once, will they keep contributing to your revenue.
Hence, you will want to hold off investing in Traffic until you have some funnels in place that will all but guarantee you that every new visitor finds everything they need to become a loyal client.
Say what? Every visitor? No, we’re joking obviously - did you know the average conversion rate in the e-commerce world as a whole is a mere 2%? That is a sobering benchmark if ever we saw one.
But hey, it also means that even if you only convert 1% more visitors than you did in your pre-funnel days, your business will be booming like never before. But at least 2% should be feasible, in our experience. Only then is Traffic worth the investment: when you made absolutely sure that everything on your end is fully optimised for conversion.
The good thing about Conversion Rate Optimization (or CRO, in short) is that you can automate it to a high degree. If you find something that works in this blog, make sure to automate it: this is almost always a small investment that keeps paying itself back with every new visitor.
But let’s start by getting a razor sharp focus on who is actually in your customer base right now, and who else you would want in it.
Start categorising your customers
Remember how you don’t necessarily want more customers, but better ones? Keep that in mind while formulating retention strategies and optimising your funnel. Who are you optimising it for? You’re not trying to please your average visitor, you’re trying to please your ideal customer - and hoping to turn average customers into ideal customers by putting them through your optimised funnel.
To do that, it is a good idea to study the ideal customers that are already in your customer base, and test any strategies to increase Conversion on them first. If they respond well, your strategies will very likely work well with other people like them.
Tip 1: Identify your whales (and your minnows)
Who’s your favourite customer? The one who orders often, spends a lot, doesn’t need discounts to buy more, promotes you among their friends and relatives, gushes about your products on social media, opens all your emails and clicks on all the buttons. Such love deserves to be cherished and rewarded!
Which customer pisses you off? The one who only orders your cheapest or most discounted product, reaches out to your customer service with an issue, returns their product, never signs up for your newsletter and basically costs you money.
We call those customer types whales and minnows, respectively.
Whales are very, very good for your business. Imagine your goal for this year is to grow your revenue by a million. Would you prefer to realise that through servicing 100 whales, or through servicing 10.000 minnows? A no-brainer: imagine how much more it costs to fulfil 10.000 orders and to offer customer service to 10.000 people, compared to 100… And they cost the same in terms of acquisition!
Hence, you will want to build your business around your whales. Identify the ones already in your customer base, formulate a Buyer’s Persona if you like (here’s a template for that from Shopify!), optimise your funnel with them in mind, and find new whales wherever you can.
How do you identify them? Check your Shopify admin and look for ‘Loyal customers’ (or if you’re using some other software, go with that):
While designing and optimising a funnel for your VIP clients, ask yourself: what would they want and need? To find that out you could visualise their customer journey (check this tip from our blog on improving Frequency on how to do that), or compile a Buyer’s Persona for them - but why not ask them directly? Send your favourite customers a questionnaire with questions like these, for instance:
- Why did you search for this specific product on our website?
- How did you find the product?
- What helped you buy the product?
- What competing stores did you visit?
- Why did you choose us?
- How do you feel about your purchase?
- What could we improve?
Make sure you reward them for their answers with a nice gift, or a bunch of loyalty points!
Tip 2. Define customer segments
We all dream of a customer base consisting exclusively of whales, obviously. Alas, ‘tis not so in real life. You will always have some minnows, and a lot of average, run-of-the-mill customers. But don’t forget: while some people are incorrigible jerks, many customers need to see some proof of your love before they show you theirs. Hence, it’s a smart move to define some customer segments, and design a funnel specifically geared towards showing any not-yet-whales so much love they will turn into whales.
How do you define customer segments? By using the RFM model to determine the value of all the individual customers in your database. RFM is an abbreviation of these three elements:
- Recency is the number of days since a customer purchased something. R1 means the customer bought something yesterday, R365 means it’s been a year since they bought anything.
- Frequency is the number of times a customer purchased something. At F0 they haven’t bought anything yet, at F10 they ordered something 10 times already.
- Monetary value is the total amount of money the customer spent on your products so far.
With these three numbers and some useful software, you can summarise how good of a customer any person in your database is. Or, in e-com lingo: these three show you what the Customer Lifetime Value of your customer is. Customer Lifetime Value or CLV is a metric that estimates the total revenue you can expect from a customer while they are your customer, based on their current purchasing behaviour.
If you know what your customers’ value is, you can group them in categories. Like this:
- Segment 1: One-time buyers → F1, R is relatively high
- Segment 2: Minnows → F1, M is low
- Segment 3: Whales → R is low, F and M are (very) high compared to other customers
- Segment 4: Could-be whales → R is relatively low, F and M are relatively high
- Segment 5: Average Joes → R, F and M are all average
And with those segments, you already have the beginnings of a comprehensive retention strategy. Each of these segments needs their own funnel, with retention strategies optimised for this specific group of customers. Even the Minnows? Yes, even the Minnows might respond well to a cleverly thought out re-engagement funnel. But of course you will leave that funnel for last - and we won’t hold it against you if you leave it altogether.
Tip 3. Design a targeted campaign to turn one-time buyers into repeat customers
Now that you have your customer segments sorted, the challenge is to see if you can get people to move categories. What would help to seduce your F1’s into placing a second order and becoming F2’s? To find answers, look at your current F2 customers: what behaviour do they show, and how can you recreate that path for your F1’s?
If most of your customers become F2 within 30 days after becoming F1, then it might be a good idea to email your F1 clients with an offer within 30 days after their first purchase. And if they tend to buy a product that is complementary to their first purchase, or of the same brand, you know what sort of offer to make to your future F2’s.
Discounts often work to get people over the threshold. Make them time-limited to create an extra incentive.
Tip 4. Design a targeted campaign to win back inactive customers
Do you have customers in your database that you haven’t heard from in ages? Try to re-engage them in some way, for instance with an offer they absolutely cannot refuse, by asking them if something’s holding them back, or by sending them a sunset series. This is a series of emails in which you ask the customer if they would like to keep receiving your emails, or if they would prefer to unsubscribe. If they don’t react, unsubscribe them automatically. You will benefit from this: that’s one less recipient of your emails that never opens them and makes Google suspect you as a spammer.
If they do unsubscribe, let them go without fuss and do not contact them again unless they do.
Go where your customers already are
Throughout this blog series, we talk mainly about how to get people to visit you. But how about you visit them for a change? Instead of trying to get them to your store, you could just bring your store or products to any places where your customers regularly spend (screen-)time. Here are a few ways to do this:
Tip 5. Sell on the platforms where your customers are
These are omnichannel times in e-commerce, and your audience is everywhere at once. If you haven’t already, figure out which different groups within your customer base use which platforms - and start selling on those platforms. Where would they like to follow you, and how would they like to communicate at a specific platform? Each platform has its own preferred ways and media: on Instagram the quality of your images should be altogether different than on TikTok, for instance.
Tip 6. Collaborate with influencers
On those platforms, your customers follow influencers of all kinds. Find out which accounts are popular with your own customers, and see if you can get your products on those accounts by collaborating with the owner of the account. They don’t even have to be big accounts with millions of followers: even a small account can be a winner for your brand if it is relevant to your audience.
Tip 7. Sell your products in complementary webshops
Every customer uses a range of different brands and products. All these brands have a customer base, like yours. What if you could reach out to the customers of complementary webshops by selling your product in those stores? Imagine you sell exclusive sneakers, and you know that your target audience is also very enamoured with high-quality headphones. You might come to an agreement with a seller of headphones to offer a bundle deal on your sneakers and their headphones, give discounts to each other's clients, or join forces on a promotion campaign.
Tip 8. Encourage word-of-mouth and referrals
Your best customers might know other people like themselves. Other people that totally fit your definition of the ideal customer, that is. Encourage your favourite customers to be your brand ambassadors, and reward both them and the people they brought in with a discount. You can easily incorporate this in your loyalty program, by the way!
Tip 9. Open a pop-up store (or a permanent one)
Brick-and-mortar retail has been more or less overtaken by e-commerce in recent years, but there are countless scenarios imaginable where a brand still profits from having a physical presence somewhere, even if it’s for a short time.
Especially when it’s for a short time, in fact - because it makes your appearance special and rare and offers a host of marketing opportunities. Think pop-up store in a city where your customers are; stand at a festival or event where your audience goes; temporary shop-in-shop in a big department store during Black Friday - the options are endless.
Works well to introduce your product in a new country, for instance, or to seek out and delight a customer base in a faraway country where your store has gathered a lot of fans even though shipping cost is high for them. Although digital flagship stores are fast becoming the norm, people will always want to see your collection or product in real life - and might travel great distances to do so, if they are true fans!
Remove any remaining barriers
Conversion has a lot to do with removing any obstacles that keep your visitors from placing an order in your store. These might be technical, psychological or practical: whichever category they fall in, it is a very good idea to eliminate them, for the benefit of both your existing and your new customers.
Below you will find a list with some interventions known to have a positive effect on your conversion rate. In addition to removing barriers, some of them are about giving visitors incentives and nudges to get them over the threshold and actually place an order.
Tip 10. Fix any technical issues
Bugs in your website can be a major reason why visitors don’t convert. A page might be taking too long to load, or show up all wrong in a little-used browser, or some other minor annoyance will chase visitors away. Fix these bugs wherever you can: they are guaranteed to improve the numbers!
Tip 11. Check and improve your bounce rate
Your bounce rate shows you the percentage of visitors that leave your site almost as soon as they arrive. If it is relatively high, you might want to figure out why these people bounce. Most of the time it’s due to some technical hiccup. See if fixing this improves your conversion rate.
Tip 12. Offer free shipping and returns
Shipping cost - any hidden cost that only shows up at the checkout, really - is a major turnoff for people. As is having to pay for sending returns back. A lot of visitors check your return policy before they place an order, because a lot of visitors already know that it is very likely they will return their order. This is especially true for the fashion industry, where products have to be tried on physically to determine if they are a good fit.
A compromise could be to set your threshold for free shipping. As a bonus, this usually has a positive effect on your Average Order Value.
Tip 13. Offer social proof, reviews, and/or a trustmark
Another barrier for visitors might be that they have no way of knowing if you are legit and whether they can trust you. Therefore, you have to give them something to prove your trustworthiness. Showing customer reviews on your site is an excellent way to do this. Register with an independent website that collects customer reviews, or install a review app from the Shopify Appstore to implement this.
Adding a known trustmark is also a good move. Choose one that your target audience is familiar with and place it prominently on your website.
A third option is to encourage your existing customers to share their experiences with your brand on social media. Reward them for an unboxing video, share their pictures with your products on them in your webshop and social media channels, or collaborate with an influencer. Again something you can incorporate in your loyalty program!
Tip 14. Implement a live chat in your store
If your visitors run into an issue on your website, or have a question that will determine whether they are going to buy something or not, they usually do not want to wait around until you have time for them. They want their problem or question addressed straight away - or they will simply leave. Hence, offering them a live chat on your website is a good way to keep them in your store and possibly even make them place an order. Our favorite live chat app (and best helpdesk solution) is Gorgias.
Tip 15. Offer visitors the option to keep a wishlist
Even if customers are not yet interested in purchasing anything, they might still be interested in your products. Giving them the option to save their favourite items in a wishlist, with or without registering an account, might make them come back at a later time - and gives you an idea of what products they like and what deals they might be interested in.
Tip 16. Have an email opt-in (and a good welcome message)
Show people that you are interested in building a long-term relationship with them from the start: ask them to subscribe to your emails. Even if they aren’t yet in a buying mood but still like what they see in your webshop, your emails will remind them of your existence on a regular basis.
Since growth begins with email marketing, an opt-in for your emails in place is of vital importance for your store. Find out the best places for it through A/B testing, test which message, button colour, and microcopy convert best, and follow up with a well-crafted welcome message.
Offering visitors a time-limited discount on their first purchase in exchange for their email address can be an extra nudge to make people subscribe. Want to know more about what should be in a welcome message? Make sure to read our Email Marketing Inspiration Book here.
Need some expert help? Get in touch!
Yes! You made it to the end of the blog series. Congrats! And now you’re probably eager to get started with all of those tips… but you might not really know where to begin. What is the right growth strategy for your brand, and how do you tackle the most effective things first?
We’ve got one final tip for you if you feel slightly overwhelmed or just want some expert help and advice: get in touch with Code! We have the expertise to help you design a sustainable, long-term growth strategy that is tailored to your brand and business. We can offer you the tools and benchmarks you need and have a million more tips like the ones in the four blogs you just read.
Notice how we didn’t say anything about UX yet, or copywriting, or branding for instance? This series would have gotten way more instalments if we had included everything we know… so make sure to tap into all that useful knowledge by making Code your growth partner!
Code has been in the e-com business since forever. More specifically, we started building and scaling Shopify stores in 2017, and are now one of Europe’s leading Shopify agencies. In addition to Shopify, we love working with Klaviyo to offer our clients state-of-the-art automated email marketing. And we know a lot of other tools and apps to help you grow your business: just ask for our recommendations or have a look at our preferred partners.
Also, we hear from many clients that we’re a dream to work with: great communicators, laid back vibe, really thinking along with you on what’s best for your business, finding you cheaper or easier shortcuts when you need them, and just generally good at what we do.
So if you’re looking for a good, dependable growth partner: look no further! Want to know what you can expect from a growth project with Code? Learn more about our e-commerce growth service here!
