How Ecommerce Businesses Should Approach Digital Marketing
Digital marketing is a prerequisite for any business that has an online presence, but how does it apply for ecommerce in particular? Digital marketing for ecommerce businesses should have a strategy oriented towards customer acquisition, sales conversions and growing a customer’s lifetime value. However, there is no fixed formula for digital marketing success. Merchants in Hong Kong and Asia need to discover digital marketing strategies and tactics that work for their specific products, target market, and customer segments that are consistent with their brand identity.
Through working with local Hong Kong and global clients with ecommerce businesses, our belief is that successful brands are defined by their ability to quickly test and iterate on digital marketing to find effective marketing channels that can scale customer acquisition. Mapping a digital marketing strategy and execution that can systematically test, learn, and iterate in a relevant way to drive a company’s sales is the key to growth.
Below, we will outline key factors that ecommerce businesses should consider for approaching their online marketing.
Clarifying Metrics and KPIs from Day One
Image courtesy of Lukas Blazek via Unsplash
Since digital marketing for ecommerce is intended to drive sales, companies should first ensure that they can track performance before diving into brainstorming for campaigns and execution. Below are some critical ecommerce business KPIs that onlines businesses should set up to track if they have not already:
- Sales Conversion Rate (% of site visitors who make purchases / total site traffic)
- Pages Viewed per Session or Session Duration
- Bounce Rate (% of people who leave after visiting the first page on your site)
- Abandoned Cart Rate
The KPIs mentioned are industry baseline standards to give a proxy measurement of the quality of traffic coming to your online store and can be tracked by Google Analytics, Mixpanel, or other integrated marketing analytics tools. These metrics can be measured by channel to give merchants a sense of which referral channels bring more relevant site visitors who engage with the site’s content.
However for ecommerce businesses, we recommend measuring beyond the standard web analytics site metrics, and in addition, measure KPIs that are critical for understanding the economics of your ecommerce business. Ideally merchants want to understand the below metrics for each individual marketing channel:
- New Customer Acquisition Cost
- Average Order Value
- Average Customer Lifetime Value
The above metrics are important for companies to find cost-effective referral channels that have higher customer lifetime value. These metrics not only determine the quality of site visitors, but also successful sales for the short and long-term referred by a channel.
After identifying how channels perform in absolute and relative conversions, companies can scale their growth strategy through specific channels. Merchants can also systematically refine content for these channels to optimize their conversion funnel.
Once a business can track visitor referral traffic and engagement with their online store, they can implement data-driven testing and iterations across marketing channels.
Channels can be tested sequentially for a fixed period of time before focusing resources on the most relevant ones or they can be used in combination. Cross-border companies also need to identify channels that are relevant to local shoppers, such as WeChat for China or Facebook for Hong Kong. The goal of testing channels is to find one or more acquisition channels that can be scaled for the medium and long-term. Companies should be aware that a low cost acquisition channel that cannot scale, such as optimizing conversion for keywords with low traffic, are helpful, but likely not impactful for business growth.
Marketing channels need to be assessed holistically for their sales conversion and cost per new user acquisition. Below are some common digital marketing channels ecommerce businesses in Hong Kong should consider testing.
Search Engine Marketing (SEM and SEO)
Search Engine Marketing (SEM) and Search Engine Optimization (SEO) can be highly effective for reaching audiences actively looking for your types of products or services, but the key question is can your keywords be scaled? Merchants need to choose strategic keywords that are medium-volume. Niche keywords may have high sales conversion, but low overall traffic. In contrast, relying on a few high volume keywords means stiff competition (often with established brands). Targeting popular keywords may work if your business has a large product portfolio to utilize a wide set of long-tail keywords that will refer traffic.
SEM ads such as Google AdWords or Shopping Campaigns are relatively easy to get started with and can be useful for merchants who have just set up a new online store. SEM can be effective for getting initial customers to learn about their shopping experience, demographics, behaviours, and tastes. Gathering this initial data on customers is invaluable for optimizing your customer shopping experience on your online store to help conversions.
Setting up accounts on social media platforms such as Facebook, Instagram, and WeChat for China may be low-hanging fruit, but merchants should also measure the amount of resource investment against the return on new customer acquisitions. Social media is often a great channel if a brand has a clear target demographic group with established brand awareness and a highly differentiated product. Social media is where brands can engage existing fan bases by creating frequent content, such as promotional updates or videos, to drive sales. However, if you are just starting to grow your brand online, then social media may serve more strategically as a distribution channel for content marketing instead. Hong Kong merchants looking to test a single channel first may want to try Facebook, which Shopify found comprised 85% of social media-referred orders.
KOL / Influencer Marketing
Key opinion leader (KOL) or influencer marketing has served many global brands to engage target demographics on their preferred media platforms. According to Starngage, 70% of teenagers in Hong Kong trust Youtube influencers over celebrities. By engaging influencers to test products, join events or contribute to campaigns, brands have a way of reaching strategic target demographics for products. However, if your brand is not yet established, first ask yourself what your product story is and why a KOL would want to talk it. Ultimately, a KOL’s goal is to bring value and a consistent image to their followers. Engaging influencers can be a scalable channel, but should resources will be needed to continuously research, engage, and manage them each to deliver a consistent brand image rather than conflicting marketing messages.
Content marketing refers to a range of activities, but can be broadly defined as creating and disseminating valuable content such as your own company blog, creating videos or any other digital format that delivers value to your target customer base. Content marketing is not restricted to any type of content, as long as what is created is valuable to your customers, even if they do not directly purchase your products. Examples may be cooking recipes with the ingredients you sell, pet grooming techniques if you run an online pet product store, or Instagram photos of climbing destinations if you sell climbing and mountain equipment.
Multichannel Selling and Marketplace Listings
According to BigCommerce, 48% of product searches begin in marketplaces. Marketplaces can help draw target shoppers, such as Etsy for handicrafts, Zalora for fashion, and Houzz for home and interior products. At the same time, they are highly competitive spaces and your products need to show up in the first page of search results through strategic titles, high quality photos, detailed product descriptions, and competitive pricing amongst other things. If you test marketplace listings, ensure that your team has the capacity to do order fulfilment and manage orders from both the marketplaces and your independent online store for consistent customer service quality.
Using Offline Events to Drive Online Sales
While online marketing is now indispensable, ecommerce stores should also leverage offline opportunities to promote their brand. For example, online brands without offline retail locations can join popup events to engage a local community, pitch products, get valuable consumer feedback and create content for social media.
Additional Channels and Final Thoughts
In addition to the above marketing channels to reach and engage new customers, merchants should also use e-mail and storefront displays to retarget and re-engage store visitors to drive conversions.
But don’t think about digital marketing only in terms of first-time conversion. Businesses that have established a content pipeline and digital marketing strategy can work on optimizing the customer lifetime value to grow. Businesses that can re-engage customers who have made purchases and boost customer retention by 5% can boost their profits by 25-95%, according to Bain & Co.
By thinking about a holistic marketing message towards your target customers, businesses can learn how channels can help reach the ultimate goals of driving customer acquisition and retention. Begin by identifying strategic channels to reach target audiences and generate brand awareness, then channels to engage customers with promotions to drive conversion, and finally rapidly testing and iterating content and marketing approaches to deliver value to your brand’s customers and wider community.
Please get in touch if you would like to discuss ecommerce growth opportunities for your brand.
Based in Hong Kong, Wave Commerce specializes in serving the unique technology and marketing needs of clients with strategic ecommerce businesses. Our team has worked with emerging brands as well as enterprise clients and built technology used by thousands of online shops worldwide. Also try out our product, S Loyalty, one of Shopify’s most popular loyalty programs.