Things We Believe About Ecommerce

I’ve been lucky enough to work in ecommerce marketing for over 20 years. Over that time I have developed some opinions that are now central to what we are building at Machine Labs.

  1. I believe that setting clear targets is very important. When I go for a run, I find that if I commit to a target time I do much better than if I simply go for a jog. The same is true for business.

    Every dashboard I have ever been involved in designing has always had targets on it. I’m not going to claim this is a unique idea; companies like Facebook have a rule that all dashboards should have targets.

    So, be like Mark Zuckerberg and when you first use Machine Labs click the button to set your monthly targets for the next year.
Machine Labs monthly targets dashboard
  1. It is almost impossible to create a fast growing ecommerce business and be profitable on the first order. This is because your competitors are after the same customers so marketing costs will tend to eat all of order #1’s profit.

    This means that the repeat order rate is going to be one of your most important metrics. For your business to be a success you will want at least 60% of your customers to order again.

    You should behave as if you are running two different businesses: a loss making new customer business and a profitable repeat customer business. All of our reporting in Machine Labs is based on this idea.
Machine Labs sales report with new order & repeat order breakdown
  1. It is very important that you know what you can spend to recruit a new customer. Surprisingly, most of the ecommerce businesses I spoke to during our market research where unable to say what they could spend on customer acquisition.

    The way to do this is to look at the lifetime value of a customer which would normally be limited to about the first two or three years. The cohort and LTV reports will help you to understand this and if you take account of your margin will let you work out what you can spend to get a customer and be profitable.
Machine Labs cohort report
  1. “It’s the product, stupid,” says Kevin Dorren, the President of Machine Labs. This is very true. Having the right product (at the right price) is by far the most important thing for your business to succeed.

    It’s very important that you don’t simply look at what product sells the most or the least. The best products will lead to happy customers who repeatedly order from you whilst the worst products will lead to customers going else where. We can help you work this out with the Magnet Products report and the Terminal Products report.
Machine Labs product report
  1. I believe in the three R’s of e-commerce marketing which are recruitment, retention and reactivation. It is important to work hard on all three, not just the first one. You will see these three R’s throughout the Machine Labs app.
Machine Labs pre-made automations
  1. It’s great that your customers have given you permission to email them but don’t abuse that by over mailing. There’ve been studies involving billions of emails which show that the overall optimum mailing rate is about once every two weeks.

    Of course in reality it is much more complicated. It is appropriate to send daily emails at certain points to very engaged customers while an email every three months would be appropriate for disengaged customers who’ve not bought for years.

    A standard plan at Machine Labs allows you to send an average of 15 emails per contact per month which should be more than enough for anyone doing database marketing properly.
  1. If you have ever ran a brick-and-mortar shop you will have been able to speak to your customers and gauge their views. In ecommerce you will need to use surveys.

    The absolute basics are to ask about product, shipping, customer service and Net Promoter Score (NPS) which is a general measure of satisfaction and then benchmark against others in your industry.

    You’ll notice that when you signup for Machine Labs we ask for your industry and that is so we can provide you with relevant benchmarks so you know what you’re doing well and the areas for improvement.
Net Promoter Scoring

  1. Once you are running a bigger business you will have lots of ideas for improvement (and no doubt lots of people will be giving you more or less helpful advice!)

It’s really not easy to test things but over the coming year we will be offering an easy to use way to test your ideas to find out what really works.

Jim Barksdale famously said:

These are the big ideas behind Machine Labs but there’s hundreds more tips and hints built into our app and in our Help Center to get you doing your e-commerce marketing better.

I really wish Machine Labs had been around when I was starting out!


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