Ecommerce Acquisition: Where do customers come from?

I talk a lot to B2C ecommerce folks, both small and big. And one of the most frequent questions I hear is something along the lines of “where should I be getting customers?” Sometimes this is asked about a specific channel (should they be xx percent of acquisition?) and sometimes about the whole (how do I get more free customers?). But it’s asked a lot.

There are guidelines around B2C customer acquisition that are reasonable across most industries and most target markets. However, I would preface the discussion by saying these are averages. And like the average human, they don’t really exist. Virtually no one will fit comfortably into this breakdown, since everyone does something a little better/worse than others. However, how you fit (or don’t) will tell you a lot about your business.

Here’s what I’ve seen:

Tactic % of sales Comments
Paid Search 20 – 30%  
Organic Search 15 – 25%  
Email 15 – 20%  
Display 8 – 15% Can be higher for high margin businesses. Includes retargeting.
Direct Traffic 8 – 15% Wide variability based on offline marketing & brand strength
Affiliate 3 – 11% Trending down as affiliate loses its luster
Marketplaces 4 – 9%  
Referral Traffic 3 – 7%  
Social Media 0 – 2% Can be slightly higher, but rare

 

Almost everyone has at least one exception to this. First, Display, Affiliate and Marketplaces don’t exist for all ecommerce folks, but you can remove them and disperse their percentage over the rest. Second, retailers with strong offline marketing (commercial TV, direct mail, etc) are likely to have higher Direct Traffic and search numbers.

Other thoughts:

“FREE” Marketing: One of the biggest problems is when Free Programs aren’t making up enough of your sales. I use parenthesis around “FREE” because these all require effort and costs, but you don’t pay by the customer typically. Organic Search, Email and Direct Traffic need to push close to 50% of sales in order to help pay for some of the other programs (particularly if you’re doing Display). This is probably the number one issue I see with struggling retailers: they are paying too many tolls on their customers.

The Paid/Organic ratio: A related problem is around Paid Search versus Organic Search. Logically, these programs are in competition with each other. They are very tied together, but almost never make up the same amount of sales. I’ll commonly see a Paid Search program that makes up 30% of sales connected with an organic program that makes up 6% of sales. This means you need to work on organic. They should be closer to one another, however they rarely are very close. Google now takes up 90% of the above-the-fold space on the search page with paid ads, so Paid typically dominates by about 500 basis points.

Content marketing: Content drives the free programs, so good content can pay for itself fast (and keep giving over time). The move for ecommerce guys towards content is really a move to capture more sales through Organic, Email, Direct, Referral and Social traffic. If those five are all hurting, it’s likely more a content problem than a technical issue.

Social Media marketing: Social will not be a huge part of your sales. Yes, there are stories of ecommerce plays that do very well through social media marketing. Typically these are targeted at very young people and are very small businesses. For a medium-sized business, social is a customer service arm and an awareness play. Note that the one exception to this tends to be Pinterest. Pinterest doesn’t consider itself a social media website; they believe they are a search and shopping site. This is much more accurate. Good, helpful content on Pinterest can drive your social numbers up. But they are still unlikely to get to 5% of sales. Very unlikely.

Hopefully this is helpful. If you’re willing to share how you differ from the above, I’m glad to give you my two cents as to why you likely differ. Reach me at jay [.] m [.] allen [at] gmail. Leave out the brackets.

Facebook as a Customer Service App

What value does your company get from your Facebook presence?

It’s not sales. Rarely does anyone exceed 1% of sales through their entire social presence. Facebook isn’t consistently the biggest producer of those small dollars despite its size. And the elephant of social media sites continues to lower the value of a fan to almost nothing by minimizing your organic exposure. We’ve been busting our tail for years to gather fans or followers or likes believing that they would ultimately turn into sales – like email addresses do. Unfortunately, it’s just not working that way.

When someone is on Facebook, they aren’t shopping. Let me say that again. *When someone is on a Facebook, they aren’t shopping*. They are pretending to be important to impress their friends from high school. Oh, and playing mind-numbing games.

I actually see a divide coming in terms of how marketers, particularly ecommerce marketers, approach social media. Paid Facebook advertising is becoming more like targeted branding. It’s very tough to measure the value accurately. And it’s very hard to get a positive ROI on these ads (unless you inflate the value of engagement or a “like”). On top of that, you may be getting fake or foreign “engagement” on your targeted US Facebook banner ads. https://www.youtube.com/watch?v=oVfHeWTKjag

The non-paid piece of our social media work is essentially disappearing from feeds. Your presence really only matters when a customer decides to seek you out on Facebook. And customers are typically only doing that for one reason: they are pissed.

Facebook is becoming more of a customer service or support tool where you try to save customers who had a bad experience. Getting this correct is a key part of utilizing Facebook well. Yes, there are still a handful of fervent missionary customers who like every post you stick up there and comment on a handful. So we’ll always have to post content on a regular basis (seems like most are just pulling email and blog content into Facebook), but I think it’s wrong to think of your Facebook presence as a strategic opportunity. Or a growth play. Facebook is a required customer service tool that you can choose to advertise on or not.

Other social media sites, like Pinterest for example, are different and may work long term as a top-of-the-funnel advertising presence that actually drives new customers to you. Facebook will not.