If you want your online business to keep pace, you need to find new customers and retain existing ones.
According to Internet Retailer, Amazon grew its business 40.6% last year. If we're being honest about the world of e-commerce, the reality is that there's Amazon, and then there's everyone else. Amazon sets the standard.
But let's ignore Amazon's $48 billion in revenue and focus instead on its growth number: Did your business (or your client's) also grow 40% last year? If so, congratulations--you're killing it. If not, let's talk about why. Maybe you're farming without hunting.
The old adage is that there are two types of salespeople: hunters and farmers. The hunter goes after new deals, always on the prowl, and the farmer is more comfortable tilling the soil of customer relationships to cultivate continued business.
It turns out that these two approaches don't just apply to salespeople--they apply to a company's online marketing strategy, too. To generate substantial growth like Amazon, your company needs to be both the hunter AND the farmer. That is, you need to hunt for new and lapsed customers, while farming your relationship with existing ones.
Does your current online marketing strategy devote the right dollars and incentives to obtaining new or lapsed customers WHILE retaining existing ones, or are you stuck merely feeding off the bottom of the sales funnel?
Here are some key considerations as you measure your growth against the Amazon benchmark:
- What's your cost to hunt down a new or lapsed customer? Cultivate an existing relationship?
If you're not growing as fast as your competition, you need to hunt for new and lapsed customers, while both ensuring that your existing ones remain loyal and enticing them to buy more frequently. Many online businesses use remarketing as their primary display tactic, but this can give a false sense of success because they're ultimately targeting many recent users who would have made purchases anyway. They're only farming. To allocate your dollars more effectively, you need to use display to prospect for new and lapsed users--it might cost more, but it's the only way you will grow profitably.
- Are you using the right channels to capture and keep your customers?
Not to pick on email, but if you're relying on it as your sole re-engagement tool, you're not reaching as many existing and lapsed customers as you could. Email open rates are only about 20% (according to Silverpop). Similarly, if you just use search engine marketing to hunt for new customers, you're not reaching your full potential because search is a reactive tool and does not span the full sales funnel. Only display has true full-funnel impact (check out Bizo's "Display Advertising by the Numbers").
- How do you tell if your hunt or harvest was successful?
If you're still using last-view, or last-click, attribution because it's the easiest way to correlate marketing spend and a conversion event, you're fooling yourself and actually cheating yourself out of new business. That's because this attribution method assumes that the last ad displayed converts the user and ignores the action that initiated the funnel activity; the truth is the user may have been exposed to several display ads before making the decision to click. This model doesn't actually tell you which programs are working because it only incentivizes targeting the most recent visitors and cart abandoners. Last-in attribution therefore encourages you to stick to tilling the land and not venturing out into the wild for new customers. It's time to explore multi-channel, or fractional, attribution systems in order to achieve a fuller view of how your marketing dollars are working top to bottom and how you can devote your resources to getting new business.
So, is your online business measuring up to Amazon? To achieve true, meaningful growth, your company should be deploying a combined strategy of pursuing new and lapsed customers while encouraging your existing ones to continue purchasing.
It's time to be both the hunter and the farmer.
Avi Spivack is Product Marketing Strategist for Akamai