Profitability is an extremely difficult thing for almost any online business to attain. It’s especially frustrating to look at your business’s bottom line after you’ve begun to earn significant revenue, only to find that you’re actually spending more money than you’re earning. Making any revenue at all is hard enough for many online businesses. For some, becoming profitable is even harder.
There are plenty of things that you can do to make your online business more profitable, but one of the strategies that has the highest probability of fast results is optimising your operation to earn a greater average revenue per customer. Gaining a new customer, after all, is a difficult and expensive process. Between expenses like advertising, SEO, product samples and coupons, it can often cost more to gain a new customer than what you’ll actually earn from the initial sale.
So, how do you change that? You try to earn more from the initial sale. You also do everything possible to retain the customers you have and to keep your company at the forefront of their minds. In doing those things, you’ll earn more from each customer. That will put your business on the fast track toward profitability. Here’s how to do it.
Use a Mailing List to Maintain Engagement and Keep Customers Coming Back
One of the most effective things that you can do to keep your existing customers engaged with your brand and thinking about their next purchase is email marketing. You’ve probably seen plenty of email marketing as a consumer; companies use newsletters to announce sales, launch new products and more. Maybe you’ve even considered email marketing yourself but have written it off as not worth the effort because you rarely open the commercial messages that you receive.
Some people, however, definitely do open commercial messages if they’re compelling enough. Once you’ve built a large enough mailing list, you’ll have some people opening your messages – and buying products – every time you send a newsletter. The best part is that email marketing is incredibly inexpensive. Marketing experts estimate that the return on your investment with email can be as high as 4,200 percent. That’s exactly the kind of return that you need when you’re trying to guide your business toward profitability.
The other reason why email marketing can be such an important source of traffic is because it’s the only traffic source that you can control to a certain extent. If your site ranks well on Google for a wide variety of keywords, you can expect to see traffic every day, which is great – until a change to Google’s ranking algorithm takes that traffic away someday. Search engine rankings are always in flux. When your rankings are good, you should use that opportunity to add as many people to your mailing list as possible. That way, you can use email marketing to perk your numbers up at some point in the future when your organic traffic isn’t as strong as it is now. As long as you don’t overdo it, mailing list traffic is the only form of traffic that you can almost generate on command.
Publish Evergreen Blog Content That Maximises Your Website’s Organic Traffic
If your site is getting traffic and generating consistent revenue, you’re well aware of the value of maintaining a blog because you’re probably doing it already. Since your blog will be your website’s primary home for informational content, your blog posts will rank on Google for different types of keywords than the ones for which your commercial content will rank. Top-tier e-commerce sites like V2 Cigs UK have known about this for years and have built their blogs into extensive libraries of informational content.
If you’re new to content marketing, though, you may not realise the greatest value of your site’s blog. If you can publish articles about truly evergreen topics – topics that people will still be searching for several years from now – then those articles have a chance to continue generating new customers for you long after publication. After the initial cost of producing the content, it can earn money for you for years without incurring any further expenses.
Market Your Products Creatively with Upsells, Cross-Sells and Bundles
So far in this article, we’ve discussed how to increase your revenue per customer by decreasing your cost to earn new customers and by keeping your existing customers engaged. Another way to increase your revenue per customer is by encouraging people to order additional products when they buy from you.
You’ve most likely noticed that when you view a product page on a large e-commerce site like Amazon.com, you see recommendations for related products that you might want to buy at the same time. Cross-sell and upsell recommendations are both great ways of encouraging customers to spend more when they shop on your site. Some content management systems like Magento can even add product recommendations to pages automatically. If you’re working with a free e-commerce solution like WooCommerce, though, it’s probably best not to use automatic cross-sell and upsell recommendations because they can sometimes be very inaccurate. Instead, try adding product recommendations manually.
Another way to get customers to spend more when shopping on your site is by encouraging them to buy products they might not otherwise have bought. People love product bundles and samplers, for instance, because they’re low-cost opportunities for trying new things. Can you think of any creative ways to repackage the products that you sell?
Optimise Your Supply Chain and Reduce Your Shipping Expenses
The final way to increase your revenue per customer is by making each order less expensive for you to produce and ship. Start by searching for potential ways to optimise your supply chain. Do you buy products or materials that are also available from other vendors? Try to negotiate with your existing vendor to secure a better price. If your current vendor won’t budge, look for other options. It’s very common for product distributors and vendors to negotiate on pricing with customers who are willing to buy in bulk.
Order fulfilment also eats into your profits – and shipping rates have gone up drastically over the past couple of years. If you can find a way to reduce your shipping expenses, you’ll automatically earn more from each order even though the customer’s cost is the same. Search for lightweight packaging options and find ways to reduce the amount of empty space in your shipping boxes.