Today’s fastest growing ecommerce companies achieve 79% higher customer lifetime value — how? That was the question Anita Andrews, VP of Client Success and Morgan Jacobson, Hubspot’s Ecommerce Sales Manager set out to answer for our most recent webinar.
Armed with the data from today’s top performing ecommerce companies — provided by Anita — and real-life examples of how fast-growing companies acquire and maintain these customers — provided by Morgan — RJMetrics and Hubspot laid out how ecommerce companies can move into the top performing quartile by increasing customer lifetime value.
If you missed the webinar, you can download the slide deck, watch the video of the entire presentation, or read the recap below to catch the highlights.
We’ve done quite a bit of research at RJMetrics around what is driving performance at top ecommerce companies. Here are the four drivers that we’ve uncovered:
- Top companies acquire more customers
- Top companies acquire better customers
- Top companies have higher Average Order Value (AOV)
- Top companies keep customers coming back
To better understand these points, Anita and Morgan broke them down, providing data as to why they are essential, and examples from real businesses who approach these points exceptionally well.
Acquire more customers
In RJMetrics’ Ecommerce Growth Benchmark, we found that top performing companies acquire customers dramatically faster than their counterparts; 3x the rate of other ecommerce companies.
Hubspot’s recommendation on how to do this is to start a conversation with a customer when they are in the early research phase of their buyer journey. One idea on how to do that is to offer content like guides that will help your customers decide which of your products is right for them.
These pre-transactional interactions help build a relationship with your customers before they are actually ready to buy.
Acquire better customers
According to our Ecommerce Growth Benchmark report, the top 10% of customers is worth 6x more than the average customer, and the top 1% is worth 18x more.
Top ecommerce companies aren’t just acquiring massive amounts of customers, they’re also acquiring better customers. While more customers might sound like it would always be a good thing, that’s not necessarily the case. Here are 4 types of customers that any retailer will want to steer clear of:
Increase average order value
When looking at top performing companies, another common characteristic is higher average order value (AOV). In the Ecommerce Growth Benchmark we found that top companies have an AOV that is 36% higher than the other companies.
One great strategy to increase AOV is to find opportunities to upsell and cross-sell to customers. Top performing companies accomplish this by including recommendations and suggestions on a product page and sending follow-up emails that include opportunities to purchase more of their product.
Below is a great example from US Patriot. This site looks at a customer’s first order, then delivers them a customized homepage based on that order. This homepage is aimed at providing customers more relevant products and information.
Keep customers coming back
The final driver of higher customer lifetime value is keeping customers coming back. By year 3 in their business, top ecommerce companies are generating nearly 60% of their revenue from repeat purchases.
This is particularly impressive when you look at how hard it is to get a customer to return. Only 32% of customers will ever go on to make a second purchase.
When customers do return, however, they return again and again.
Hubspot highlighted three ways retailers can get customers back for that second purchase:
- Abandoned cart nurturing
- Reorder Marketing
- Re-engagement campaigns
One word of warning about abandoned cart offers, be careful about a “discount-only” strategy. Plenty of people have caught on that if they let an item sit in their cart for a few days, a coupon code might just magically show up in their inbox.
Retailers can avoid this type of gaming by offering other incentives to purchase such as featuring cross-sell and upsell opportunities, or letting someone know that an item is nearly out of stock.
Personalized emails improve click-through rates by 14% and clever retention techniques can get the same results, without cutting into profit margins.
We covered an enormous amount of data and best practices in this event. If you’d like to go deeper on any of this, here are some additional resources:
- 5 Clever Ways Ecommerce Companies Can Use Pre-Transactional Offers
- Calculate Your ROI Correctly Using Customer Lifetime Value
- How to Increase Your Average Order Value
- Creating the Perfect Abandoned Cart Workflow with Hubspot
- 7 Creative Content Ideas for Your Ecommerce Site
- RJMetrics’ Ecommerce Research