Just a quick few words I wanted to share with you today when it comes to advertising your products online.
I talk with many ecommerce brands each month about marketing their business. I tend to notice a recurring theme. They are advertising their top 5-10 top performing products on the likes of Google, Facebook, Instagram etc.
But here’s the thing…
You only want to spend your ad budget on your top performing product.
Why might you be asking?
The reason for this is because it’s best to use this top performing product as a customer acquisition driver since it is the most scalable. Then you can offer other products on the back end to grow revenue and profits.
An Example Of This Is As Follows
Let’s pretend you are marketing your top three performing products on your website.
Product A, B and C’s profit after all expenses besides marketing is 30 (Dollars/Pounds/Euros) each.
Product A’s average cost per acquisition (CPA) is $10 so you make $20 profit per sale.
Product B’s average cost per acquisition (CPA) is $15 so you make $15 profit per sale.
Product C’s average cost per acquisition (CPA) is $18 so you make $12 profit per sale.
As you can see, all of these products are returning a profit after their acquisition costs and all other expenses needed to manufacture the product, stock it etc. So it looks like it’s ok to market all of these products continuously right?
Well not exactly… and here’s why.
For every dollar/pound/euro you invest into marketing that is not invested into Product A, is losing you money. You make a profit from Product B and C, but you would have made more from Product A.
We can see that Product A has the highest return. It also offers the best potential to scale and acquire customers at a cheaper cost to your business.
Your marketing should be viewed as a customer acquisition tool and not a profit generating one.
The more customers you acquire the more money you can make from them on the back end through upsells, email, SMS, retention campaigns etc. Profit’s are made with your customers as the months pass and you remarket to them.
It’s harder to sell to a new prospect than it is to a customer who has gone through your customer journey (AD -> Product Page -> Shopping Cart -> Thank you page) and purchased from you before.
If your goal is to maximise profit on the front end of a product sale, you’ll find it quite the challenge to scale. This approach puts a handbrake on how big your business can grow.
On the flip side…
If you look at it like a customer acquisition tool you will be able to scale your brand aggressively, acquire a lot more customers and make more money on the back end.
To Conclude
- Market your best performing product. Focus your budget on your best customer acquisition driver.
- View your marketing as a customer acquisition tool and not a profit generating tool. Profits happen with remarketing campaigns like email, customer retargeting lists, SMS, Chatbots etc
- Once you shift your budget to focus on your best performing product, use this to scale your brand
Need help with running profitable advertisements for your ecommerce brand? Let’s connect over here.
