In this post, I just want to articulate my marketing strategy so that I have it written down and I can refer to it and tell whether or not I am still on track to meeting my goals.
So far, to keep the shop running, I have done a few marketing bits here and there to keep sales coming in, and also to be certain of what is working and what isn’t working. However, I realise that I need to have a solid marketing strategy that strongly aligns with my goals if I really want to achieve these goals. We all know what they say about goals without plans. Well, this is the plan.
E-commerce store goal setting
The goal is to make $50,000 by July 31st 2020. Initially, I wanted to earn $5,000 from my store but then I read Frank Kern’s book – 10x. The whole book rests on the idea of setting goals that are 10x bigger to buffer any uncertainties the economy might throw our way. This resonated strongly, given the state of the world in the first 3 months of 2020.
Anyway, so here we are – my new goal is $50,000 and my deadline is July 31st. All my marketing efforts need to be aligned towards this, so to create a good plan, I decided to work backwards from my goal – or reverse-engineer the process of meeting my goals.
E-commerce marketing strategy based on current store data
Marketing is risky, mostly because it is often impossible to accurately predict what strategies are likely to work – the best strategy remains an unknown only to be revealed by testing. So, the best way to work towards this unknown is to start from what we know.
Thankfully, as this store was not a blank slate, I had some known metrics to work with. Two things I needed to set realistic targets were my conversion rate and my average order value. My conversion rate told me what percentage of visitors to my store actually made a purchase, and the average order value (AOV) told me how much, on average each buyer spent in my store.
To get these numbers, I took the average rates over the stores entire history.
Horrendous figures – but a starting point, nonetheless. This would help me ensure that I work slightly harder to reach and maybe even exceed my goal.
Average order value
Bringing my goal of a store sold at $50,000 together with my 0.92% conversion rate reality, I tried to work how much I needed in daily sales to hit my goal.
To get my 30x profit multiple, I looked at several store selling sites and found that most stores sell for a 30x multiple of their monthly profit.
This means that to be able to sell my store for $50,000, I will need to make $1,667 profit each month. To be able to get this amount of profit monthly at 20% profit margin, I will need to make $8,335 in total monthly sales or $278 daily sales.
Next I tried to calculate how much traffic realistically I would need to get these figures. This is where the conversion rate and my average order value from earlier came in.
If anyone is reading this, please don’t get confused by the “store selling price” metric. In my head, the store has already been sold, and this experiment is hinged on working my way backwards from the point of sale to meet my sales targets. So these are just projections.
Back to reality, to get $278 each day in sales at my current (and very dismal, I’d like to admit!) conversion rate of 0.92%, I would need to get 9 orders a day on my store. Hopefully, they spend more than the estimated $30 per order on each visit, but we’re being very conservative here.
To get 9 orders a day at 0.92% conversion rate, I would need daily traffic of 978 visitors to my store. Obviously, I can increase the conversion rate, then I can spend less on inbound store traffic but this is my current starting point.
So we have some realistic numbers going and I realise that this would be very expensive to achieve with Facebook ads alone. In the past, I spent $30/day to get 100 visitors to my store, so to achieve my goal of nearly 1000 visitors, I would have to be spending $300 daily. This exceeds what I aim to earn ($278 daily).
So here are my current options:
- To keep my profit margin at 20%, I need to make sure that my ad costs are within 30% of the selling price of each product based on the diagram below.
- Somehow increase my conversion rate and achieve my $278 daily sales goal with less traffic.
So I had to get creative about finding ways to get traffic to my store because it turns out that 30% of my daily sales ($83.40) would not get me the required 978 visitors I need to reach my goal.
Looking at other parts of my store for clues on how to get the traffic/sales I needed I noticed that my returning customer rate was quite impressive.
I’m not sure about how other stores do, but this means that when I finally get customers into my store, there is almost 10% chance of them returning to make more purchases. Perhaps I should focus on this and try to focus on marketing to repeat customers.
1. E-mail marketing: Send out regular e-mail with offers, discounts and tips to help previous customers.
2. Lead-generating site (Failed as this was event-based and hit badly by the coronavirus outbreak)
3. Instagram: Post regularly, use influencers to push new products and giveaways
4. Pinterest: Post regularly
5. Facebook groups: Regular, helpful posts
In future posts, I will highlight exactly how I implement these, and what results I get.