When it comes to D2C Shopify brands, two core truths almost always exist:
- A very high percentage of revenue is powered by marketing
- Marketing expense is a significant line item on the income statement
In other words, the financial performance of a D2C Shopify brand is highly dependent on both the effectiveness and cost of its marketing strategy.
It’s a very basic equation:
Increased Marketing Effectiveness + More Efficient Marketing Expense = Increased Revenue & Profit
Knowing how this equation works is easy…but getting the most out of it can be, and usually is, highly complicated.
This is primarily due to the layers of complexity involved with a “typical” D2C Shopify brand’s marketing strategy. Due to the vast array of moving parts that comprise the equation above, it’s incredibly easy to quickly get overwhelmed, confused and frustrated!
Contributing factors to marketing strategy complexity includes items such as:
- Ad platforms interpret reality and display results based on their unique attribution model. And guess what, they ALL make every attempt to take FULL credit for a sale even if the campaign only slightly contributed to the end transaction, if at all.
- Lack of visibility into HOW different strategies, tactics, and traffic sources are working TOGETHER to create the desired result. In other words, it’s not all about the conversion.
- Lack of visibility into the customer journey – after the click. To be specific, understanding the behaviors that users are taking on your website.
- Analytics platforms, a key component to solving these complexities, are complicated and confusing. They also have a steep learning curve when it comes to getting the most out of the platform.
When you blend all of these items together, decision makers either end up completely guessing at what they should do next, or making decisions based on limited or disconnected information. We refer to this as “random acts of marketing”, and the net result is that these businesses leave a ton of money on the table.
The bottom line is that whenever “random acts of marketing” are in play, it’s not a question of “if” revenue and profit are negatively affected, it’s “how much”.
One Simple Question…
If you have a desire to free yourself from the shackles of complexity, and stop guessing what adjustments you should make to improve your marketing strategy, you have to be able to confidently answer one simple question:
“What’s Working & What’s Not”
The fact of the matter is that the ability to confidently answer this simple question eludes the vast majority of D2C Shopify brands.
However, the ones who are able to answer this question empower themselves to achieve significantly greater levels of success over the long-term by taking FULL CONTROL of their marketing strategy.
High-level benefits include:
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- Increased revenue via a more effective marketing strategy
- Increased profit margin – by cutting unproductive ad spend, and/or redirecting money toward marketing strategies that generate a higher ROI.
- Less risk due to increased profit margin
- Improved productivity via higher quality decisions & faster decision-making
- Ability to better understand the performance of third-party traffic vendors
- Increased competitive advantage
Getting Started with Marketing Strategy Optimization
For those who have a desire to optimize their marketing strategy by confidently knowing what’s working & what’s not, we recommend focusing on 2 distinct components of your marketing strategy:
- Traffic (before the click)
- Website Experience (after the click)
The interesting thing (and what many people forget), is that the performance of each individual component is very much dependent on the other.
For example, if you have the “best traffic in the world”, but your website experience is lame or broken, you’ll convert less visitors to customers as compared to a website that is well designed, informative, and easy to use.
Conversely, let’s say you have the “best website experience in the world” but your traffic isn’t targeted to the correct demographic. Same deal as the first example – you’ll convert less visitors to customers as compared to traffic that is properly targeted.
Either way, when you improve upon the performance of one component, the performance of the other will also improve. And when you optimize both at the same time…the perfect combination!
Decisions, Decisions…
If you have limited time & resources, and are contemplating which component to optimize first, our recommendation is to start with traffic optimization.
The primary reason for this is that traffic optimization is usually more intuitive, and requires less resources, time, and energy across the company than optimizing website experience – for the average person.
From our perspective, it makes sense to start optimizing the “easier” component first. In addition, learnings from traffic optimization almost always provide insights that can be directly transferred to website experience optimization.
Traffic Optimization Benefits
A few benefits of traffic optimization:
- When you know what types of traffic are producing desired results, you can confidently invest more money into them.
- In many situations, we almost always find that there is some low hanging fruit with most B2C Shopify brands in terms of completely ineffective, unproductive, and costly ad campaigns and/or ad platforms. Simply stated, many companies are lighting money on fire each and every month investing in campaigns or ad platforms that are delivering virtually nothing to the bottom line. If you dig into what’s actually working and what’s not, you’ll likely find some areas to cut completely.
- Money saved from cutting poorly performing campaigns can either be retained, or redirected toward campaigns and platforms that are performing well.
- When you clearly understand the key ingredients of your most profitable campaigns, you can leverage these learnings to generate new campaigns, and/or improve upon campaigns that could be working better.
(Note #1: We’ll be covering various ways in which you can optimize your traffic in future blog posts. Stay tuned…)
Website Experience Optimization Benefits
Commonly referred to as conversion rate optimization (CRO) or A/B testing, website experience optimization requires a variety of analytics, research, design, and development resources that are simply more complex than traffic optimization. The short story is that when properly executed, A/B testing is a complicated endeavor with a lot of moving parts.
Generally speaking, optimizing website experience has the potential to create exponentially greater returns than traffic optimization. This is because any enhancement to website experience positively impacts the performance of ALL traffic sources.
In addition to boosting revenue & profit, benefits of website experience optimization include:
- Capture the most ROI out of the digital assets and marketing initiatives you’ve worked hard to design, develop and deploy
- Reduce customer acquisition costs
- Scale faster
- Increase customer lifetime value
- Reduce financial risk
(Note #2: We’ll be covering various ways in which you can optimize your website experience in future blog posts. Stay tuned…)
Conclusion
The most successful D2C Shopify brands are constantly looking for ways to optimize the performance of their marketing strategy. Full stop.
Every marketing campaign they initiate is tracked and analyzed through the same lens, creating a level of clarity that is completely free from biased and, in many cases, inaccurate ad platform reporting systems.
In addition, these companies can plainly see where their website experience is working well and where the bottlenecks are. They proactively use this information to conduct A/B tests that improve the website experience.
In summary, the key difference between successful D2C Shopify brands and the rest of the pack, is that the successful companies have invested the time, energy and resources to confidently answer the question, “What’s working & what’s not”.
And the payoff is that the process of growing their business not only becomes significantly easier, it becomes a lot more enjoyable!