A Guide to Growth Hacking for Ecommerce Merchants

Growth hacking is one of those terms that will sort of bug you after a while.  For a number of reasons, it is definitely the buzzword in the marketing world at the moment.  Even more so if you are anywhere near the tech startup world where it originated.

I’ve been consuming as much as I can find on this concept.  I hear it so much in the local Toronto scene that I may as well try and understand where it came from and how it applies to my particular vertical right? So what about growth hacking in eCommerce?  After all, growth hacking is about acquiring and engaging users, something eCommerce businesses have great incentive to master.

How do you take the fundamentals from this approach to driving sales in software product companies and apply them to driving growth in physical product companies?  To do this we need to break “growth hacking” up in to digestible bits. Once you see all these pieces broken down you’ll be able to see which of them you are currently doing, need to get better at, or just plain need to do!

What is a Growth Hacker?


Growth-Hacking-Cartoon1

A really common misconception is that a growth hacker needs to also be a programmer / developer.  While it would most certainly help to have this unicorn-esque person that can both come up with strategy and do the technical / creative implementation, don’t hold your breath.  Chances are you are going to need a team of people to pull off all aspects of growth hacking.  To start you need the growth hacker / strategy / idea / analytics person.

Related: Why you need a Dedicated eCommerce Team to be Successful

1. Real growth hackers are analytics nerds

They crave data because their entire purpose in life is to use real data to create action.  You want someone who knows which events they want to track on which pages on your site.  Someone who knows which funnels to create (more on that later).  Someone who can create cohorts of customers based on acquisition source, time of acquisition, products purchased, categories of products purchased, products viewed but not purchased and on and on.

2. someone who can look at data and make sense of it

This does not need to be a “data scientist”.  This is someone who can pick the right tools that will give them the views of all these data points, not someone who can write the algorithms that crunch all of this data. Not only will a growth hacker be able to list out all of the data points she wants to track, but they will have the ability to cut that list down to the most important metrics and focus on those only, ignoring everything else until the appropriate time. Remember:

Growth-Hackers-Job

3. Growth hackers will create a hypothesis and the tests to prove or disprove it

They aren’t driven by what “feels” right. They are driven by what will drive more growth and that is mostly scientific to them.   Let me clarify a bit further before you traditional marketing types roast me!  The more traditional marketing types can very much become growth hackers.  I think eCommerce companies are the ideal place for this to happen since there are many pre-determined funnels and processes already in place that can be “hacked”.    If you think about the skills of traditional marketers, they quite possibly lend themselves quite well to this type of marketing.  Things like copywriting and psychology are great tools of growth hackers and traditional marketers alike.

In addition to being data nerds, growth hackers are also usually good at a lot of things and great at a few.  They understand all aspects of marketing enough to be dangerous but not enough to do the job entirely themselves.  For all the things they understand well, they will most likely be extremely deep in one or two.  For me, I prefer to have someone that is super deep in analytics and merely good at everything else.

4. You want someone who is very creative

Like-Digging-for-Gold
This might sound counter-point to the analytics requirement, but it isn’t and these people do exist.  The creative juices required to come up with all of the strategies to test and measure isn’t to be underestimated. You want someone who identifies themselves as a creative. Curiosity is something that keeps them up at night.  They want to know why people behave the way they do and how things work.  If this sounds a bit obsessive compulsive then perhaps that isn’t a bad thing in this particular person?

The eCommerce Growth Hacking Process


what-is-a-growth-hacker

Let’s say you find that growth hacker type marketer you’ve been dreaming of?  Now what?  What should this person ideally be doing on a daily, weekly and monthly basis?  Chances are if you’ve found the right person, they will be able to give you this answer, but in any event you should already have some ideas on what growth hacking will look like at your particular eCommerce business.

Start by defining goals:  

  • What are the key things you want to improve upon?  
  • How do you go about measuring, learning and then actioning towards these goals?  

For eCommerce businesses this is most likely going to be things like conversion rate, lifetime value of a customer, average order value, number of items per order and a host of other secondary metrics that have a meaningful impact on any eCommerce business.

If you are an established eCommerce business…

Chances are you have a lot of analytics data already at your fingertips.  This is more than likely the place to start. I’ve sat down with many of our merchants and pointed out a half dozen problems just by looking through Google Analytics data that they already have. It’s amazing how much gold is just sitting there waiting for someone to find it!

Related: Top eCommerce Metrics: Turn Customer Data Into Actionable Insight

If you are fairly new…

If you don’t have a ton of data, then step 1.1 is going to be getting analytics setup correctly and tagging all elements of the site you want measured.  Which events are most important and which acquisition channels.  Start collecting as much as you can as early as you can because this will be the foundation for everything going forward.  Remember, the foundation of growth hacking is learning!

Once you have your analytics setup…

Start on creating action from them.  This means setting up experiments that allow you to test, test and test again until you find what works.  I like to write down my hypothesis before trying to execute.  Take an educated guess as to what the outcomes of your experiments will be before you try them.  Why are you thinking like this?  Why do you think that particular outcome will be the winner?

Once you begin your experiments, don’t get discouraged by results, no matter how wrong you might have been.  It’s all about learning! What you want to do is continue to optimize the experiment, each time getting closer to your goal.  If you’ve ever done any amount of A/B testing then this sounds vaguely familiar.  It is so important to always be comparing Experiment 1 (control group) against Experiment 2, and then 3, 4, 5 and on and on…

That’s it. Seriously that’s the process.  It’s a rinse and repeat kind of thing.

Understanding Funnels

The highest level funnel any business has is to simply attract visitors/traffic, convert them into buyers, and ultimately get them to come back and buy more at another time.  Most businesses chasing growth, eCommerce or otherwise, will likely need to create several funnels against many different goals that will ultimately roll up to a higher level “grow the business” goal. Funnels are actually quite easy to understand.  There is tons of learning on funnels available, especially in reference to eCommerce funnels.

The Primary Conversion Funnel for an eCommerce business looks like this:

Primary-Conversion-Funnel-for-eCommerce4

This is where most merchants spend all of their time and energy.  Don’t get me wrong, this is about as important as it gets in the world of eCommerce and funnels.  I just think that any analytics nerd worth their salt is going to want to break this down much further.   How did the visitor get to your site?  How many pages did they have to look at before finding the product?  How long were they on a product page before adding it to their cart?  How many steps are in your checkout?  Could they be stumbling somewhere during cart and checkout?

Look at the first question I just asked?  Where did the visitor come from?  Did you pay for this visitor through Google Adwords, and if so, did you send them to a highly relevant page or a generic landing page?  If your eCommerce site has thousands of products then it is in your best interest to understand multi-channel funnels as it pertains to traffic source and how users behave based on where they come from.  Your experiments might actually involve optimizing parts of your funnel entirely for a single traffic source!

Related: 6 Types of eCommerce Traffic

What about lead generation funnels for eCommerce businesses?  Given the amount of value we merchants put on our email subscriber lists, it could be argued that we might want to set some goals around acquiring emails as a primary growth driver instead of trying to acquire a sale, especially if we start targeting first time visitors to our site.

Contrast this funnel for acquiring an email subscriber to the Purchase Conversion Funnel:

Purchase-Conversion--Funn4

Having such fewer steps means optimizing this type of funnel is much less complicated than the purchase funnel.  There are simply fewer points for someone to fall out of the funnel.

Using the examples above, you can see that funnels are, at their most basic level, just a path for people to walk.  Your job as a growth hacker is to keep them on the path as in exactly the right manner that would result in business growth.

Traffic Acquisition

Push-and-Pull

This tends to be the sole focus of most eCommerce merchants in my first conversation with them.  Usually they are right in that they do need to acquire traffic.  Many actually already have a solid traffic base with which to build a growth hacking practice around.  I think the reason many merchants focus the majority of their brain power on traffic acquisition is because they’ve been told to do this for years.  They know their conversion rate and AOV and in their minds they just need more eyeballs!

Great growth hackers know this is a pretty critical piece to the puzzle.  An important part of running experiments and optimizing funnels is having enough data for those experiments to be meaningful.  Usually this means having enough traffic that any tests you run will actually produce results you can learn from.  While most merchants do focus purely on traffic acquisition, I have seen those that think A/B testing will be the silver bullet of sales growth.

There are several types of traffic acquisition strategies.  The two big ones you should spend the bulk of your time on are Pull Tactics and Push Tactics.  The third and more resource intensive would be enabling your existing customers to refer others to your brand.

Pull Tactics

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The most talked about version of pull tactics in todays digital world is content marketing.  This is a perfect example because it highlights that the cost of most pull tactics is simply time.  You spend people time to create value for users that they will find and thus be drawn to your brand.

If you want some basic “buckets” or examples of pull tactics, try conducting interviews of influential people in your space or guest blogging on popular blogs relevant to your target audience. But you can also take advantage of these:

  1. Ebooks
  2. White Papers
  3. Video Tutorials (any type of tutorial actually)
  4. Infographics
  5. Pod Casts / Internet Radio Shows
  6. Workshops & Webinars
  7. Contests
  8. Social Media
  9. SEO
  10. Deal Sites

Now, all of these aren’t to be taken as magic traffic generation solutions.  They each require a lot of work to even produce, let alone produce to a quality that reflects the brand you are trying to build.  

How do you decide which to do first, second, third etc…?

For eCommerce businesses, things like white papers may not be the best use of your resources.  It all depends on the kind of product you sell and to whom you are trying to sell it.  I’ve found that workshops & tutorials for more complex products (i.e. – how do install a car seat) are great.  Contests are usually a no-brainer for merchants since you have a lot of product to use as your hook.

Almost every eCommerce business is doing something within the realm of SEO, but probably not nearly enough content creation.  The only way to see which types of content are going to work best for your business is to run more experiments.

Push Tactics

Push-Tactics
This is the kind of stuff that advertisers are going to be quite familiar with.  Push tactics generally involve interrupting your target customer in whatever they are doing and trying to lure them in.  This usually means spending some dollars to acquire that click or impression and, if you understand your analytics well, spending less to acquire a customer than the revenue they bring over their lifetime (LTV – lifetime value).

So what are common push tactics?

Most merchants will be familiar with Google Adwords (CPC).  This is pretty much where many multi-brand merchants start their push strategies.   It’s the one with the lowest barrier to entry and the most proven to work in the realm of eCommerce.  Cost Per Click ads don’t stop with Google though.  You should be entertaining networks like Bing and Facebook amongst many others.

For eCommerce merchants, I’d also strongly recommend you look at Product Listing Ads instead of normal text ads or banner ads.  In our experience PLA’s have performed incredibly well compared to the other ad types.

Retargeting is usually the next step once you are happy with your straight up CPC.  There are a number of technologies and solution providers that can assist you with retargeting not only on Google but on other publisher networks that may reach your target audience.

A strong growth hacker will be testing many variations of these ads just like they would test pages on your site.  By testing the copy, offer, and network where an ad is visible a growth hacker will optimize your ad spend over time, getting the most top line growth for the best dollar.

Have you tried doing a promotion swap with other merchants that don’t have competing product but perhaps share a significant cross-section of your ideal customer?  Many of Demac Media’s merchants have deployed this tactic in the past, especially merchants that are in similar geographies and more than likely already share actual customers.  This doesn’t mean you need to give away your email list (you shouldn’t do that), but think about swapping Facebook Posts, Tweets, Ad Space, or even sending out offers to your email list in exchange for the merchant to send an offer to theirs.

Affiliate Marketing shouldn’t be ignored when it comes to push tactics.  I caution merchants to never start with affiliate marketing when looking to build traffic.  It’s something you add on when you’ve really nailed down the other, easier traffic sources to manage.  It’s also something you should only approach when you are really confident in your on-site funnel experiments.  Why pay out incentives to drive traffic when your funnels aren’t optimized?

Referral & Loyalty Tactics


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The reason this group of strategies is more resource intensive to deploy is that it generally requires design and development work to pull off properly.  I think some examples are in order for this particular type of traffic generation strategy…

1. Refer a friend and get Y in return

Dropbox is a perfect non-eCommerce example of this particular strategy.  They give you more storage for every new user you send their way.   For eCommerce merchants, refer a friend programs can be extremely effective as well.   If your offer is compelling enough, people will usually refer their friends that are most likely to find the offer relevant.  This means you’ll be getting a more qualified visitor and thus more likely to sign-up or purchase something from you.

2. Share Your Purchase

This is another popular one that’s cropped up in the last 12+ months.  Depending on the product, we’ve found that people are more likely to share their purchase with others than they are to share/like a particular product while on the product detail page.  This means you’ll need to be able to customize the order confirmation page to add in the necessary user interactions for sharing, but could be worthwhile to test.

3. Tiered incentive or loyalty programs

These programs are becoming more common place as well.  When I speak to merchants about this type of strategy they usually reference Fab.com and their effective use of their existing customers to refer as many of their friends as possible to move up “tiers” in their loyalty world.  I’ve seen several higher end fashion / apparel retailers also use this tactic in their stores, creating buckets or tiers that each customer falls into and with each tier there are additional rewards or incentives to the customer.

Let’s not forget the simple idea of customer referrals because they loved your product or service so much they couldn’t help but tell a friend!  There is no better kind of traffic acquisition than this one.  People inherently love to tell stories, good or bad.  Your focus as a merchant should be to provide such an outstanding experience that your customers can’t help but share with others.  A famous example of this in the eCommerce world was the net-a-porter unboxing videos that customers would post to YouTube.

Related: 7 Ways To Increase Sales With Existing Customers

Completing the Cycle with Customer Retention


retention-marketing

My favourite part of growth hacking is retention marketing.  How do you get your customers to keep coming back to you, and if you are an Ecommerce merchant, coming back to spend more money?  There are so many tactics / strategies to deploy in this area that I get excited just thinking about it!

Before you go crazy, let’s make sure you have the basics covered.  Email is definitely the #1 channel for any kind of retention driven outreach, so having the most basic of automated reach-out email campaigns going is your starting point.  These are:

1. Abandoned Cart Marketing

When your customers leave things in their cart, remind them.  If your technology can allow for an intelligent abandoned cart series, I recommend that approach over the single email.

2. Welcome Series

When you have a visitor first create an account, you have an opportunity to activate them if they haven’t already made a purchase.  Again, I recommend a series instead of a single welcome email.

3. Happy Birthday

Does this need an explanation?

4. Haven’t Seen You in A While

For those customers that buy once but don’t return for a period of time, you can look to try and pull them back to the site with offers or gentle reminders that you still exist!

There are so many strategies for email marketing it would be next to impossible to list them all out on one page.  Partly because the space is ever evolving and partly because each business is so unique.  There are endless options.  With that said, you will ultimately be looking for what works for your business.  The above campaigns are just basic examples…starters really.

Related: 8 Email Marketing Tips for Beginners

5. Product drip Campaign

I’m a big fan of product purchase drip campaigns.  For example, if you know customers have purchased an infant car seat in the last 6 months, then you can create a drip campaign around the time where they should be purchasing a new seat as their child grows up.  Perhaps you sell products that have consumable aspects to them.  Like coffee machines and coffee, or filters for your furnace.  You can easily create drip email campaigns that can offer your customers a relevant, repeatable reason to come back and buy from you.

6. Customer Segmentation

Assuming you are doing the basics, next up is Customer Segmentation.  This usually requires some more advanced technology platforms, which also come with higher price tags, but customer segmentation can make those investments extremely worthwhile.

Segmentation has quickly become the cornerstone to retention marketing.  The best retention marketing is driven by tailoring messages to the smallest subset of customers you can.  You may hear the term “1 to 1 marketing” in reference to this kind of segmentation driven messaging.  This is retention marketing at it’s best.  If a customer receives a message that is so personal it feels like you are speaking directly to them, they are likely to respond in a positive way to this message.

Most people start to segment their customers by looking at products they’ve purchased, products viewed, categories of interest, frequency of purchase and channel of acquisition among many others.    My advise is keep it simple to start.   There are so many great resources available on customer segmentation.  It is a giant topic but such a critical one to have a strong understanding of.

Email Marketing and Segmentation

Email marketing and segmentation two strategies in customer retention for eCommerce businesses.  There are other non-growth hacker type strategies available to merchants wanting to improve customer retention.  For example, customer service is a monster opportunity that I see under utilized by merchants far too often.  What better way to show a customer that you appreciate them than when on the phone or in a live chat window where they are engaging with you in conversation?

Related: How to Make an Impression with Email Marketing

Really, retention marketing comes down to showing customers you want them.  Growth hackers have a tremendous opportunity in this particular area of responsibility because it is a lot easier to sell something to a customer you already have than to acquire a net-new customer.