Summary: Ecommerce Evolved - Chapter 1: Funnel-Based Ecommerce (7)
Summary: Ecommerce Evolved - Chapter 1: Funnel-Based Ecommerce
This post is the 2nd of a series of posts I'm writing to summarize the book Ecommerce Evolved by Tanner Larsson, available on Amazon:
https://www.amazon.com/Ecommerce-Evo...9352160&sr=8-1
Here are links to the other posts:
Introduction
Chapter 1: Funnel-Based Ecommerce (this post)
Chapter 2: Recurring Income Core
Chapter 3: Think Before You Sell
Chapter 4: Conversion Tricks, Sales Boosts, and Profit Maximizers
(Disclaimer: These are my personal notes so I've paraphrased quite heavily in some places. If you like what you read, please buy the book to get the complete information in its original glory.)
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Chapter 1: Funnel-Based Ecommerce
You should never spend any customer acquisition marketing efforts or dollars on sending visitors to your online store. (Yes, you heard right! Keep reading to find out why.)
2 Worlds of Ecommerce:
1)Online stores that sold physical products using shopping carts. Customers would find their product -> view product details page -> check out button.
2)Direct-response info marketers who sold information via courses/ebooks, through online sales funnels.
For ecommerce, a combination of these 2 approaches yields better results than using either approach exclusively.
Ecom shopping carts convert on average at around 1% on the front end - pathetic. Whereas even a basic sales funnel has conversions rates that are 3-5% higher.
Sales funnels also massively increase average order value. (By comparison, suggested items at checkout is better than nothing, but won't dramatically increase growth for your company.)
A basic ecommerce sales funnel boosts average order value by 20%. An advanced multi-step ecommerce funnel can boost average order value by over 60%, and that's just on the initial purchase. Add repeat purchases and lifetime value to the equation, and your revenues go through the roof!
Why sales funnels work: They capitalize on the buyer's high - a dopamine rush customers get when they buy something. This is your best chance to get them to buy addition items.
Components of a Sales Funnel:
Front end -> Landing pages for traffic, often configued as a sales letter or review page, designed to sell ONE core product without other links or product recommendations to distract the customer. Use a best-selling product.
Order bump -> Special offer designed to increase average order value before the customer checks out - e.g. upsells or one-time offers related to core product (e.g. bundle of digital products such as vids and guides, lifetime warranty, physical product that complements main purchase). Appears on the checkout page, right above the payment section or below the cart details section, with a checkbox (can be selected by default but always tell the customer they can uncheck it if they wish).
Upsell -> "Would you like fries with that?" Complementary product offered after customer has checked out, while payment is processing, but before the confirmation page. Can have more than one upsell in a sequence. Can offer a discount on the upsell product. Shouldn't require customer to re-enter payment details - should be a "click to add to order" button. Example: Front end product is flashlight, upsells can be rechargeable batteries or battery charger.
Downsell -> Simpler/Cheaper offer than the upsell, shown to customers that said "no" to the upsell. Can be the same upsell product but at reduced pricing. Can be a different product that's cheaper than the upsell. Can offer free shipping to sweeten the deal.
(2-3 upsells + 1 downsell would be plenty - having too many may discourage customers from coming back.)
Recurring Income Offer -> Subscription/Recurring revenue program (details to come) offered as an upsell, that customers can join with one click.
2 Types of Ecom Funnels:
1)Stand-Alone Funnel -> Bypasses your store completely. Landing page selling front-end product -> checkout page asking for payment details -> upsells & downsells. You should always direct all of your external marketing efforts into a stand-alone sales funnel to achieve higher CR, larger cart size, more money, and far more customers. After funnel completion, you can send customers to your storefront via email for repeat purchases.
2)Upsell Funnel Path -> Automatically activated when a customer goes to your store, adds products to cart, and checks out. Starts with the first upsell and ends with the last upsell or downsell (see "Components of a sales funnel" above). Easier to implement than stand-alone funnel but less effective - because the store's front-end conversion rates are so much lower than those of a stand-alone funnel. But still works wonders for average cart value. There are 3 types of upsell funnel paths.
3 Types of Upsell Funnel Paths:
1)Default Upsell Funnel Paths -> Automatically activated after every single purchase made (except for products you've designed the 2 other types of upsell paths for, that are listed below). Use best-selling products.
2)Product-Specific Upsell Funnel Paths -> Designed for a specific product. Activated after the product has been purchased. Example: Front-end product being a pocket knife, upsell can be a knife sharpener.
3)Behavioral-Based Upsell Funnel Paths -> More complicated setups that customize their responses to customer's purchasing behavior using if-then tagging. Example 1: Customer bought flashlight AND pocket knife, funnel would know to use the rechargeable batteries + charger as one upsell and the knife sharpener as another upsell. Example 2: Funnel is programmed to remember purchase history to avoid offering upsells of products the customer has already purchased. Worth the effort if you have lots of repeat customers.
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Next: Chapter 2: Recurring Income Core
Great post on funnels - many thanks Vortex
Thank you Amy. I am amazed at how you continue to deliver quality and am thankful you take the time and effort to do that.
Amy,
thx for writing the summary. I was thinking about buying this book on amazon last month, but ultimately chose a different book.
A few questions/thoughts on funnels.
1) upsell after the purchase sounds great in theory but it's a paint o setup in
here is a list of my issues that i can think of.
. most of these solution needs extra workaround with paypal - need referrence id, open account with brian tree etc.
. shopify refund no longer works. need to workaround, also if customer pays via paypal, upselled and ask for a refund, you might need to issue refund in multiple places & manually keep track of them, and i have no idea how these refunds shows up in reports.
. shopify shipping rate no longer works need to manually sync
. shopify discount codes no longer works, need to manually sync.
. Existing Cart Abandonment Recovery no longer works, upsell software usually come with something that's similar, but it's not as robust.
. reliability - heard the load speed & up time are not as good as shopify's checkout page.
I'd love to hear someone made them work, learn more from what kind of issue they ran into and how they overcome them.
I haven't looking into clickfunnel yet, probably the next thing to try.
I'd love to hear someone made them work, learn more from what kind of issue they ran into and how they overcome them.
2) upsell before user checkout sounds great as well, i m curious if anyone knows if doing so increase the Cart Abandonment rate though? (e.g. at the checkout, user sees a higher amount than they initially thought and left). I don't have enough data to draw conclusion myself, so i m curious what's other's experience.
3) qq,
just reading your summary, i m actually not clear the need to distinguish 2 types of e-com funnel and 3 types of upsell funnel. maybe i missed something, but seems like they all seems to say - when user buy one product, ask them to buy a related product. did i miss anything?
Again, thx for taking the time to summarize it for us.
Hey cawovt lovely to see you here!
Regarding the actual implementation of funnels - I'll be in a better position to answer that in a few weeks. When I do I'll share some insight and experience to start a discussion - and hopefully more-experienced store owners can chime in.
Stand-Alone Funnel vs. Upsell Funnel - The stand-alone funnel is more effective in selling, because it's NOT a part of your store front. It's more like a funnel dedicated to a SINGLE product (typically one of your best-sellers), starting with a sales letter (think Clickbank). Basically the only 3 options your visitor will have are either buy, bookmark, or leave - because there are no other links on the page that will distract the customer (like your store front does - which makes it less effective). It's a big pitch for a best-selling product, and is designed as such to maximize conversion rate, in order to 1)get the customer into your sales funnel for as cheaply as possible, and 2)maximize profits from that order. This is why preferably you would send paid traffic ONLY to stand-alone funnels, to get the most bang for your buck. This is one of the most valuable tips in the book IMHO, and makes complete sense.
Upsell Funnel Paths on the other hand happens at your store, where there are lots of distractions (other products and site links etc.) and a lot less "selling" of individual products. It basically involves adding upsells and downsells to the checkout process. This type of funnels is easier to implement (or not, based on the technical difficulties you've pointed out
), but don't convert nearly as well as stand-alone funnels. And the 3 types of Upsell Funnel Paths are default, product-specific, and behavioral.Hope that cleared things up at least a little bit! Whatever technical difficulties you're experiencing while implementing funnels, I hope you'd keep on testing to overcome them, because the benefits can be HUGE! Please feel free to start a separate thread just on that to get feedback.
All those products you've been testing: Imagine if you could create standalone funnels for the best-sellers and run FB traffic ONLY to them and not to your other products (btw you can try google as well, in addition to FB!) Then find complementary products for those best-sellers to act as upsells and downsells in those standalone funnels. Test different products in different orders to maximize profits. Then use email etc. in the backend to encourage customers to check out all the other stuff at your store, and to also push related products (including related digital goods such as ebooks if applicable). Also start thinking how you can implement RICs because those are what will increase revenues in leaps and bounds and result in a guaranteed and growing paycheck every month.
Using this model, you wouldn't need to test a ton of products and only keep the ones that are bringing in profits on the initial sale to at least cover FB ad spend. You'd only be running traffic to best-sellers, and to a sales letter + upsell + downsell funnel that is designed to maximize conversion rate and profits. And because you know you'll be able to make more money from the customers in the backend, you'll be able to spend more on FB to acquire them. Even if you're bidding so high that you're only breaking even on that initial sale, you may still be making profits overall from the backend. Of course this will take testing and collecting data over time in order to know what your customer LTV is, but the sooner you start the sooner you'll reap the benefits.
And those products you've tested that weren't profitable for the initial sale? The ones that still got some sales and didn't suck too badly, can still stay in the store where your customers will find them - after you've made your best shot which is one of your standalone funnels.
And let's not forget that funnels can be so much more effective when you niche down. Conversion rates are higher because you can target niche audience, more readily find relevant products, and craft sales copy to the liking of your audience using niche-lingo. So now may be a good time to look through your best-selling products to figure out which niche/niches you want to focus on going forward.
Looking for a fulfillment house would be another things that has the potential of drastically improving delivery time, to increase conversion rate and customer satisfaction (leading to repeat orders). We've discussed that a bit in your amazing follow-along thread, and chapter 3 of Ecom Evolved also covers this topic in some detail:
https://stmforum.com/forum/showthrea...238#post347238
Implementing some of what's taught in this book may just help you to break through that plateau you've been in, where although you're doing nice revenues, profit margins are not as high as you had hoped. Have fun!
Amy
Originally Posted by johner911
Amy
How irrelevant has this book gotten by 2020?
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