The increasing number of online retailers on one side and slowing growth of online user population on the other side are the driving forces of change in e-commerce. Number of returning customers is in decline as new competitors are entering the market. Cost of advertising is rising. One-time customers are not profitable anymore so online retailers need to shift focus to retention. In this talk we'll walk you through the process of building the new framework. We'll deep-dive into data-driven digital marketing framework, explain how to use CRM data to enhance your segments and finish up with case studies expaining how to use the new metrics to identify top customers and maximize your profits.

1. SHIFTING YOUR FOCUS TO
RETENTION
#ecommercial18

2. I LOVE SEARCH

3. Where else could you find things like these…

4. And these…

5. And these…

6. It fulfills our lives

7. 25 % increase in retail e-commerce sales in 2017
RECORD NUMBER OF TRANSACTIONS & REVENUE
Statista 2018

8. €-
€50,000.00
€100,000.00
€150,000.00
€200,000.00
€250,000.00
€300,000.00
€350,000.00
€400,000.00
€450,000.00
€500,000.00
Revenue
You achieve great results for your client (or company)

9. BUT THEN SOMETIMES ALL THIS RESULTS IN
TOTALLY UNEXPECTED RESULTS

10. We’ve seen a decrease in Paid Search revenues of up to 80 %!
GENERIC SEARCH IS IN RAPID DECLINE

11. Search is behaving strangely
FREE FALL
Decrease in generic
Branded steady
BRAND TAKING
OVER
Decrease in generic
Increase in branded
GENERICS RULE
Increase in generic

12. BRANDS AGE. INDUSTRIES CHANGE. MARKETS GET
MATURE. EVEN ON SEARCH.

13. Market maturity stages and Search
https://www.red-orbit.com/blog/the-decline-of-generic-search-and-how-to-save-your-brand

14. THE ONLY WAY OUT OF IT IS TO INVEST IN BRAND

15. BRANDED VISITS ARE DRIVEN BY RETURNING USERS

16. Ecommerce performance by User Transactions
0%
20%
40%
60%
80%
100%
Users w/ 1 transaction Users w/ 2 transactions Users w/ 3 transactions Users w/ 3+ transactions
Transactions Revenue per user

17. Reteined vs One-time users
6,77x HIGHER REVENUE PER USER

20. IMPORT COST OF GOODS SOLD

23. Profitable campaigns before and after COGS import
87%
7%
without COGS with COGS

24. SHIFT IN ONLINE USER BEHAVIOR

25. Entry barriers offline are
much higher than online
Entry barriers
Number of competitors
Number of competitors is rapidly
increasing
Growth of online user
population is slowing down
Number of users
Returning customers
Number of returning customers
is in decline as new competitors
are entering the market
Cost of advertising is rising and
one-time customers are not
profitable anymore
One-time customers

26. One-time customer revenue stream
CPA
GM CPA <= GM
The only way your business could be profitable is achieving CPA
much lower then your Gross Margin.

27. One-time customer revenue stream
CPA
GM CPA > GM
Due to increased competition CPCs are increasing and CRs are
decreasing.

28. Shift to retention model
CAC
GM
CLV <= CLC
Sum of GM from all customer transactions should be higher then
sum of all costs connected to the customer
GM GM
GM
GM
GM
MRC MRC MRC MRC MRC MRC MRC MRC MRC MRC MRC
CLV
CLC

29. THE SAAS ECOMMERCE CONSUMER JOURNEY

30. The SaaS Ecommerce Consumer Journey
Addressed
Audience
Visitors
One-time
customers
Active
customers
Churned
customers
LAQA

31. CLVP = (P × AOV) × AGM) × ALT
The tricky part is calculating your CLV

32. The SaaS Ecommerce Funnel
Acquire Activate Retain Grow Referrals
2nd purchase1st purchase

33. Retention in FMCG
Weekly transactions
User churned

34. Retention for other ecommerce sites
3 months 6 months

35. The SaaS Ecommerce Funnel
Acquire Activate Retain Grow Referrals
1st purchase 2nd purchase Customer
Engagement
Score

36. Customer Engagement Score
01
02
03
043%
35%
10%
50% 05
10%
Days since last
session
Sessions with
product views
Interest-based
browsing
Adds to cart Email engagement
rate

37. WITH NEW FOCUS NEW KPIs ARISE

38. Top Ecommerce metrics
2 31 4 5 6 7
CLV CAC Customer
profitability
score
Repeat rate Retention rate AOV CES

39. Data Enrichment & Remarketing

40. Data Enrichment & Remarketing

41. USE NEW DIMENSIONS TO
CREATE ADVANCED USER SEGMENTS

42. Segmentation base
02
Geographic
country, city,…
01
Demographic
age, gender,
education,…
03
Product
TVs, laptops,... 04
Psychographics
Lifestyle or personality
characteristics
05
Behavioral
Purchasing or
usage behaviour

43. Behavioral
USER STATUS
First-time user, Regular
user
LOYALTY STATUS
Loyal, switcher, lapsed
BENEFIT SOUGHT
economy, quality, service
level, convenience,
access MARKET MATURITY
Early adopter, late adopter,
laggard

44. 12 types of users
https://www.red-orbit.com/blog/12-types-of-google-search-users

45. Cost per Transaction by month
- 24,24%
- 42,43%
- 64,31%
- 68,48%
September October November December January

46. Number of transactions by month
+ 31,88%
+ 51,45%
+ 106,52%
+ 164,49%
September October November December January

47. FOR EVERY $92 SPENT ON USER ACQUISITION,
ONLY $1 IS SPENT ON CONVERSION & RETENTION.

48. BUSINESSES LOSE $1.6 TRILLION PER YEAR WHEN
CUSTOMERS MOVE AWAY FROM THEM

49. Customer clusters
segmented by purchase
behavior, CES & LTV Size of clusters
How are your customers
segmented?
How to use new metrics and segments?
Prevent churn
and re-engage users
based on deviation
in their behavior
Predict LTV
of newly acquired users and
bid accordingly
Customer
transitions
Between clusters
SaaS Ecomm metrics
like churn, retention, ALT, CES

50. LET‘S GO AND DELIVER SUCCESS

51. Thank you
01 02 03 04
Email
andraz@red-orbit.com
Twitter
@andrazstalec
LinkedIn
Andraz Stalec
Web
www.red-orbit.com