Acquiring new customers is not always a way to increase your revenue. I agree that more customers can increase your revenue but it is not the only source to increase your revenue. It is just one of the many things that any eCommerce business owners have to do to further grow their businesses. Things that help in increase of Revenue:
Increasing a customer’s Average Order Value and customer Average Purchase Frequency is a very cheap process. It is cheaper and can be done through Email marketing. It is several times more profitable than acquiring new customers because the current customers are more likely to reorder compared to the new customers.
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To maximize your revenue your business’s primary goal should be building retention. The acquisition can come much later. You have to set up Average order Value and Average Purchase Frequency email. By increasing your AOV and APF by just 40%, I can show you simply by increasing your revenue. I can show you that it can have a great impact on your revenue and earn greater profits.
For example, I will show you the revenue calculation increased by 40%:
As you can see above just the increase of 40 percent in your Average order value and Average Purchase Frequency can become an increase of 96% of your revenue.
Before you start the increase in your AOV, calculate and keep your current AOV and your benchmark to effectively increase the value.
For example, if your Revenue per year is 50000 dollars your total orders are 268 orders per year therefore your AOV will be:
(50,000/268) i.e. 186.56 dollars
You can say this as the most basic way to calculate the AOV of a business. All in all, you can also add your marginal costs to calculate your net AOV value and find out how much actual profit you are earning.
Do many people have questions like how to calculate profit? Calculation of APF is just as easy as calculating AOV. You just need to know two things to calculate your APF: your total orders and unique customers.
For example, if you receive 268 orders per year and have 42 customers, your average purchase frequency will be 6.3 orders per year.
The reason to know your actual purchase frequency is important because if you don’t know that frequency you will not be able to determine the right time to send emails to your customers. And if you don’t know the correct answer either you will bombard the customer with mails or you can send very few mails at a particular time.
So now that you have calculated the two metrics you can use these few metrics and mails to increase your store’s revenue and increase your profit through normal email marketing without the need to acquire new customers.
Cross-sells and upsells are like bread and butter for a business. These emails are the main source of increasing the AOV and APF of your business.
For an Up-sell, it is an upgrade to the current item a customer is viewing. For example, if you always order a regular meal in McDonald’s, you shifted that meal to a large meal that can be considered an up-sell.
The cross-sell happens when a customer is shown complimentary items that he can get with their core product. It is a very classic way of increasing cross-sells and thus increasing revenue. To increase your Revenue and Profit you need to apply cross-sells and upsells to your e-commerce store through email marketing based on a customer’s purchase history.
Product recommendation emails help your customers know about the other products you have that may interest your customers. The main goal of these e-mails is to make your customers aware of the other products that you can provide. Thus, if they also buy the other products from you, you will easily increase the revenue. These can increase your AOV and APF eventually.
You can set these emails in two ways the first way is to set them in your transactional emails and the second is to keep sending these emails from time to time.
Sending a refill email can also be best suited for some products. If you see a regularly ordered product, you can send refill e-mails to your customers reminding them of their purchase time. You should send these emails a week or 5 days before they run out of materials.
Send emails of Win back and Reactivation for the inactive customers. A study shows that 70% of people in an email list are inactive. You need to remove all your inactive customers from your mail list and place them into your win-back campaign. You cannot send them product recommendations but you can broadcast emails due to their order history.
The three types of emails mentioned above are easy to send and can be automated so you don’t need to remember to send them from time to time.
If you are not able to calculate all your profits and revenues on your own you can download the Shopify profit calculator app. This app is a profit tracking app and one of the most well-known e-commerce platforms for Small Businesses. This app can work as your profit calculator and you can also create professional reports with Shopify.
Customer acquisition is an important goal for every businessman but if you don’t follow up with your customers with emails and methods that are mentioned above you can never increase your Revenue. All your acquisition efforts can go in vain if you don’t follow these methods as the new customers will come from one side and leave from the other.