Revenue and Profit Growth is a constant challenge for any business. In the digital space, the bottom-line growth, aka profit, is achieved by investing in technology to reduce the cost or simply by increasing the price of the products or services.
Profit & Revenue - The Ultimate Goals
For any business, let it be eCommerce store or a brick & mortar store the ultimate goals for either of them are
Increase in Profit
Increase in Revenue
The common-sense solution to achieve the top line, aka revenue growth and to increase the profit, has been to find more new customers or making existing customers buy more or to increase the price of the product or even decrease the cost of production.
The question you need to ask yourself as an entrepreneur is:
“How practical is the common-sense solution? Is it really as simple as varying the price of the products or the cost of production? OR is there more to the story?”
The Reality Behind Increasing Profit & Revenue
Even though increasing the product prices may look like the easiest of all to implement in order to achieve a fast revenue lift, there are other elements such as competition that may make price increase harder to implement. And in competitive verticals, with less unique selling positions or values, the businesses must gain a thorough understanding of their market positioning and the degree of customer loyalty before deciding to increase the prices.
“Increasing the prices without doing this homework can often backfire, causing an exodus.”
Increase purchases per customer (ARPU) is another solution to increase revenue. Tactics to do this include increasing Customer Lifetime Value (CLV) or increasing average order value (AOV) at the time of checkout OR increasing Revenue Per Visit (RPV). In eCommerce, there are several techniques you could apply to CLV or AOV or RPV.
CLV is increased using techniques for making the customer loyal to your brand or site primarily through creating a consistent, memorable experience through every customer touchpoint in all phases: Awareness, Consideration, Purchase, and even establishing a post-purchase relationship with the customer.
As the brands amp up their competition to grab ever diminishing consumer attention, the race to win customer loyalty and hence CLV is going to be tougher, and therefore the investment needed to gain brand loyalty will continue to increase.
AOV is increased through offering discounts, and implementing cross-sells and upsells. The problem with just focusing on AOV alone is that it is very short-lived since it only focuses on just one purchase at a time. And RPV is increased through focusing on Conversion Rates. The effect of Conversion Rate on RPV will be discussed in detail as you read along.
Even though it may seem that attracting new customers is the most practical and easiest way to increase revenue, it can be the slowest and relatively low cost OR the fastest and most expensive depending on your strategy and the immediacy of the need for revenue. The tactics used to attract new customers through digital channels primarily fall into two categories: Organic and Paid.
Organic: Widely used tactic for organic traffic is Content Marketing. One of the most important goals of content marketing is to get on the first page in the internet search results, especially Google. The benefits of being the top position for a keyword is illustrated by this chart showing Click Through Rate (CTR) vs. positioning on both desktop and mobile.
(Source: Advanced Web Ranking.com)
However, getting on the first page is certainly a slow game and one of the most competitive ones, even though the costs may be relatively lower than the other alternative depending on the content channels used. Even if you get on the first page having great problem-solving content or any other tactics, it does not guarantee that position forever. So staying on the first page is going to be another challenge that you’ll have to fight continuously. Add the effect of ever-changing google algorithms and the effort to need this challenge.
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Paid Campaigns: If you are looking to attract customers fast, the paid advertisements on various channels such as Google, Facebook, Instagram and other relevant channels where your audience is concentrated is the way to go.
Even though this can be an effective solution for fast customer acquisition, there are at least two concerns with this approach:
“The Ultimate Solution is to Invest in a Holistic Data-Driven, Commerce Revenue Optimization (CRO-HD) Before Investing in Ad spend.”
Even after a well implementation, traditional CRO (Conversion Rate Optimization) often fail to deliver the desired results. What you need is a CRO process that boosts your eCommerce Revenue without adding another $0.01 to your marketing spend.
With this goal in mind, Virtina set out to find the ultimate solution for eCommerce revenue lift and came up with the most comprehensive, Data-Driven CRO approach tailored for eCommerce sites. We call this CRO-HD or Holistic, Data-Driven Commerce Revenue Optimization. We have expanded the very definition of CRO to Commerce Revenue Optimization. A Holistic, Data-Driven Approach that achieves the Maximum Revenue & Profits while providing a memorable User Experience!
One sure-shot way of knowing the efficiency of an investment (like CRO-HD) you’ve made in your business is by calculating its Return of Investment or ROI. ROI helps you find out the efficiency of an investment and help you understand if your investment is worth it.
Wondering how Efficient is our CRO-HD?
Calculate the Return of Investment of Your Website After Investing in CRO-HD
A well-implemented eCommerce CRO-HD process would have positive effect on all visitor/customer types irrespective of the type of acquisition (Organic or Paid) OR degree of customer affinity (One time, Repeat or Loyal) OR method of acquisition (Content or Paid media) or sources (Search Engines or Social Media Channels)
As you can see, spending resources (money, time, people) in digital advertising campaigns is wasted without CRO-HD. A well thought out CRO-HD program will figure out ways to not only optimize the buyer experiences but also make the buying a memorable experience by ensuring the following points:
Objectives of CRO-HD
Understanding The Objectives of CRO-HD:
Our process goes beyond the conventional CRO and expands the definition of CRO to Commerce Rate Optimization. The result is a CRO-HD process that focuses not just on increasing the no: of orders per visit (conversion) but on achieving the Maximum Revenue & Profits while providing a Memorable User Experience.
Many eCommerce Stores fail to reach their maximum revenue potential even after implementing CRO. The reason for this is that conventional CRO focuses only on Conversion (No: of orders/Visit) and does not focus on the revenue of the eCommerce Store. With Virtinas CRO-HD (Holistic Data-Driven Commerce Revenue Optimization) you can make sure your eCommerce Website is one that does not fail to reach its true revenue potential.