As more businesses are forced online to advertise, the ‘Facebook’ channel, the ‘Google’ Channel, is going to be flooded with other competitors.
Competitors are ok, they are a sign that there is money in the market, but it also means that it gets increasingly harder to differentiate from other businesses.
Imagine paying for a click on google, and when the search results show up, the customer is presented with 60 different options all offering the same thing…
With so many other options out in the marketplace, that ‘click’ you are paying for becomes a commodity, as shoppers can click the backspace button, seek other alternatives and move on with life.
What most eCommerce entrepreneurs don’t understand is that they are competing with other eCom businesses, you are not the only one in the space.
Customers have a limited $100 to spend and they will choose whether they are going to spend it with competitor A or with you.
If you are already spending so much money on ads, you should try to maximize every website visitor that comes to your store.
Imagine you had a conversion rate of 3% for example, that means for every 100 people who come to your site, 97 of them are saying NO to you.
That’s 97 people whom you are paying for who have come to your website, have not transacted with you, and left without giving you any money.
If you could just follow up with these people overtime…and in the next 1,3,6 months for example they would give you $25 for example…would that change the economics of your business?
In the paid advertising channels like facebook, the billion dollar companies who are advertising in the same ad space as you are willing to go in the red to acquire a customer.
Which means they don’t need a 3-4x ROAS on their campaigns in order to survive.
They are more than willing to do a 0.2x ROAS, lose money, acquire the customer and wait for 6-12 months for that money to be recouped.
Are you…ready for that?
Can your business economics afford that?
99% of businesses and SMBs cannot.
That is why most of them do not survive.
That is why most of them will never see the next stage of growth.
So how do you combat that?
You’d have to find more efficient ways to extract more LTV from your customers over a long period of time in order to stay profitable.
Email and retention based marketing strategies are the only way to extract more value from your customers, and you don’t even have to pay ad spend to get in front of the customer, unlike retargeting ads.
When done well and consistently, email as a marketing channel can generate you an additional 30-50% of your entire store revenue.
Imagine doing $1m per month and $300k of that amount is generated purely with email marketing alone.
Once again — keep in mind there is no ad spend here.
You build a solid and long term relationship with your customers here and you do it profitably.
The online businesses that will now survive are the ones who only do frontend acquisition, they only care about the 1st sale and 1st transaction, but they fail to realise the 1st purchase is only the start of the relationship, the real money is made on the backend.
Now you understand why emails are so important.
Lastly, email is the ONLY channel where you truly own the customer and the asset.
If you do a business like amazon FBA, you don’t own the customer. You’re building Amazon’s business. Because you don’t own the customer list.
But if you run your own eCom store, you own the relationship with the customer 100%. You have their contact information, and it’s in your email.
If you run FB, FB can shut down your ad account. If you have a youtube channel, google can ban you whenever they like.
When you have an email list, this is something you own outright – 100%. It’s yours and nobody can ‘shut you down’. The CHANNEL and relationship to the customer is completely YOURS.
The email list is the ONLY asset that you truly own as a business owner.
If, at any point in time you were thinking about selling your company to an external investor, the investor is going to price and VALUE your business based on the size and health of your email list.
Why do so many companies like Twitter, worth a multi-billion valuation, when their net profit stinks?
Because they OWN the customer base.
They own the list.
When an investor buys your company, they want to see how much $ can be generated from the email list.
They want to see a healthy, engaged list of prospects ready and excited to buy your products.
And a healthy email list with good open and engaged rates producing revenue will increase your valuation multiple as well.
A $6m valuation looks very different from a $9m valuation if the difference is the quality of your email list.
Take care of email marketing — it’s the backbone of your business.