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.

Digital Marketing for B2B: Where to Start?

Trends tend to move from consumer to B2B over time and digital is no exception. B2B customers are, after all, consumers at home and now enjoy the luxury of knowing or ordering or managing anything, anytime, anywhere. And, as Kevin Hillstrom points out, digital hates inefficiency. So B2B marketing is seeing inefficiencies in sales generation driven out using digital techniques.

These changes have been weaving their way into the B2B world. First, B2B buyers began doing a lot of research before they ever called a sales guy. Who wants an hour long conversation if the tool won’t work anyway? So more and more content was added to B2B websites – including pricing information – that was not contemplated just five years ago. And once the buyer informed themselves before ever contacting a sales rep, sales became all about closing the deal. Sales salaries moved over to website content and marketing funding. You started seeing more power in the marketing departments, particularly in digital marketing, alongside a slippage of power in the B2B Sales departments. And I think that trend is increasing.

Along those lines, B2C marketers have had more opportunities to grow into B2B arenas over the past two years especially. But where to start in a B2B environment? Is it much different than B2C marketing? The answer is yes and no. Yes, it’s definitely different and some things just won’t work. But it is getting more and more similar to B2C than it was years ago. Here are the tactics that work:

Content. B2B requires even more content than B2C marketing. White papers, conference sessions, webex, etc. A lot of this is taking what works in B2B sales and making digital versions of it. A webex after all is simply a sales call that reaches hundreds of potential candidates rather than one at a time. One benefit to B2B content is that it typically lives a lot longer than content on the B2C side. This helps to justify the expense and makes it easier to tie back sales over a cycle.

Lead gen. B2B marketing is not about closing the sale. It’s about generating leads and pushing those leads down a funnel that ends with a sales call. Lead gen fills the top of that funnel and generally starts with paid search followed by sponsorships on other websites or email programs. Organic traffic is key to keeping your costs down and also helps justify the content expense. But paid search is just as important in B2B as it is to B2C marketers.

Email. This is the big gorilla of B2B online marketing. Although it contains a component of batch-and-blast or seasonal marketing strategies, what really works is marketing automation through email. Something Salesforce + Pardot has done extremely well in recent years. Your site should be geared toward lead gen and once a lead is collected, it should be segmented and fed a continuous stream of targeted email content that moves them down the funnel. This is true online sales programming and it widens your sales funnel.

Tracking and data analysis are also just as important in B2B as B2C. And, in my experience, B2B marketers don’t yet have all their leads tied back as cleanly as they do in B2C, so there’s an opportunity to be better than the competition here.

In terms of online marketing, here’s what doesn’t work (and the exceptions to the rule):

Banner ads (not including retargeting). Banner ads continue to get a bad rap for good reasons. Sales practices around them are questionable and their efficacy is as well. It takes a huge marketing budget to really use these effectively and they are hard to justify in a true B2B sales environment. The one exception is retargeting ads, which are focused on known prospects. Note that this does not include sponsored ads in targeted emails, which can work well for B2B marketers. This is specifically around doing large banner buys through an agency targeted at a specific demographic group.

Social media (except LinkedIn). When folks interact with social media, they typically do it as a consumer. It’s about interacting with friends, not shopping for brands. Unless you are targeting a very young demographic, it’s difficult to find value in paid social advertising. The one exception is LinkedIn because it’s unique status as a professional forum. I have seen good, effective advertising that is very, very targeted here. Don’t do this without someone who knows what they are doing.

Affiliate. Affiliate is always attractive to sales folks because of the nature of the offering: you only pay when you get a sale. It really doesn’t work well for B2B (and I would argue that it’s questionable for B2C as well). Don’t spend time here.

That’s my high level list of what works and what doesn’t. If you need to start fast, start with Paid Search and email. If you need it cheap, start with email and written content, then kick on Paid Search once the funnel is working. Email tends to make all other marketing activities look more profitable and more effective, so I always recommend it early in the process. A lot of B2B strategy is figuring out how to lead a prospect through the sales cycle without a sales person. And then keeping them informed into the future.

Good luck!