A general rule of business is that it’s more expensive to acquire a customer than it is to keep one. Companies have to plan, organize, analyze, and advertise in order to attract a shopper to their site. And, once they’re there, they might not even convert into a buyer.
How does this impact an eCommerce retailer’s marketing budget?
Of course, attracting new customers is important. It’s how you grow your business. But, spending your valuable time and money to acquire customers without thinking about how to keep them is a shortsighted strategy. What will give you the biggest bang for your buck? Consider this: Research shows that almost three-quarters of responding companies (70%) agree with the statement that, “it is cheaper to retain than acquire a customer”, and just under half (49%) agree that, “pound for pound, we achieve better ROI by investing in relationship over acquisition marketing” (Source: eConsultancy).
Most marketing budgets are spread over a variety of channels such as SEO optimization, Google AdWords, web advertising, social media advertising, and a host of other acquisition techniques. But, one area that often goes overlooked is enhancing the shopping experience through improving site search and navigation functionality. Why spend time and resources on acquisition alone, when your site search and navigation doesn’t allow your potential customers to find the products they’re looking for?
By reducing search-to-exit rates and increasing the effectiveness of your search and navigation, you can keep your customers from leaving and convert them at higher rates than with a poorly functioning site. And, most importantly, they’ll come back to buy again. To illustrate this, let’s propose two scenarios:
$1000 marketing spend per month
5000 visitors acquired
5% conversion rate = 250 sales
$700 marketing spend per month, $300 site search & navigation spend per month
3500 visitors acquired
10% conversion rate = 350 sales
Both spend the same amount per month, but Scenario B is a smarter way to spend as it generates more sales. Site search and navigation provides superior ROI to advertising alone when added to your marketing mix. And, it won’t increase your budget if you simply allocate a part of your existing budget towards it. A quick look at some of Nextopia’s case studies will show just how drastic the changes are when you upgrade your site’s functionality. Decreasing your search-to-exit rate increases conversions, revenue from search, and sales across the board.
You don’t have to spend more to get a higher ROI from your marketing budget. You just have to spend smarter.