Category: Business

Why Emotional Motivators Are Key For CRO
The process of conversion rate optimisation (henceforth abbreviated as CRO) is of paramount importance in the world of online business. So much effort goes into the extended process of lead generation, after all: being found in the first place can be difficult enough given the level of competition on offer, and then there’s everything that must be done to find relevant leads.

If you succeed in that endeavour and bring in a significant number of decent prospects only to drop the ball by failing to convince them to convert, all that effort will go to waste. CRO is all about critically examining the conversion funnel and finding ways to make it better. Do it well, and the result will be significant: even a slight uplift in conversion rate can have a big impact.

There are many facets to good CRO, but in this piece we’re going to look specifically at emotional motivators. If you’re consistently failing to convert even highly-relevant leads, this could well be the offending area. What are they, and why are they so important? Let’s get to it.

What are emotional motivators?

When we shop online, we can fool ourselves into thinking we’re making entirely-rational choices. There’s certainly a rational thought process involved, of course: we line up products, read reviews, consider costs, and do what we can to make our resulting actions justifiable. But it isn’t the only process affecting the outcome, because we’re heavily driven by how we feel.

And though I’ve opted for a featured image depicting some common emotional states (worry, anger, happiness, and sadness), it isn’t as simple as charting the desired emotion at any given time. Every online business tries to make its customers happy in a broad sense through working on customer experience, hoping to minimise issues that can bring them to anger. If you want to do CRO properly, you need to go deeper.

That means digging into more complicated emotional motivators: the impulses, drives and often-unspoken desires that influence our actions. Here’s an example: the desire to be part of something. Humans naturally group up and look to their peers for guidance and inspiration, and it’s often possible to draw upon this to construct compelling marketing materials and push referral marketing efforts.

Notably, some emotional motivators are in clear opposition. While everyone wants to be part of something, they also want to be different from their peers. They want the benefits of going with the crowd and the benefits of taking their own path. You can’t often target such contrasting motivators simultaneously, but you can target them separately in distinct cases.

Why are they important for CRO?

This follows straightforwardly from what we’ve already covered. Because our emotional motivators work in the background to sway our decisions, often without our conscious awareness, they can prove significantly more influential than our efforts to make rational decisions. We can’t control them anywhere near as effectively — and when they come to the forefront, they ensure that we take action somehow.

A CRO strategy that concentrates entirely on making practical and logical marketing arguments will inevitably prove inadequate. If you can build your core points around key emotional motivators — while ensuring that the practical points are taken care of — then you can hold attention more effectively and markedly increase the likelihood of earning conversions.

How can you take advantage of them?

So, having been through what emotional motivators are and why they’re so important for CRO, how can you effectively draw upon them for your ecommerce store? Here are some core tips:
- Work to understand your target audience. If you’re going to play upon the emotional motivators of your prospective customers, you need to understand them. Take note of where they spend their time online. Do they discuss things on Twitter, or Facebook, or Reddit? Follow their conversations and glean what you can about their lives. What are their most prominent emotional drives? Do they want to stand out or fit in? Are they looking for excitement or security? The more you can learn, the easier you’ll find it to target the right emotional motivators in ways that will prove compelling.
- Consider all viable types of media. Depending on what point you’re trying to get across, you might benefit from different types of media. Text is obviously the default, but imagery can be extremely powerful for emotive cases. The desire to stand out, for instance, can be catered to with bold and vibrant images. Alternatively, the desire for security could be accommodated with reassuring trust signals (or guide videos).
- Embrace a more informal tone. When you’re trying to play upon someone’s emotions, it isn’t the best idea to take a professional tone that can’t effectively carry emotion. If your copy comes across as bland and unfeeling, it’ll diminish the impact of emotional points. The more you can relax your tone and inject some more personality, the more easily you’ll be able to influence people’s actions.
Wrapping up, emotional motivators are essential considerations for CRO because they’re immensely important in the decision-making process (regardless of what products are being considered). Your marketing — whether on or off your site — needs to take them into account. If you’re not already doing that, make the change now.
November 24, 2020
Understanding Your Google PageSpeed Score

You’ve got a shiny new website all ready to showcase your store’s products. You’ve invested in great product photos. You’re ready to slip the switch and make some money.

So, you launch, investing your first few hundred dollars or so into some targeted Facebook ads.

Crickets. No conversions. No sales.

You look at your stats and, while the ad got good engagement, most of those clicks didn’t translate into full-fledged page views.

Especially on mobile.

“What happened?” you ask yourself.

We explain what happened.

PageSpeed matters

Have you ever clicked on an ad, interested to learn some information about a cool new product, service, or company, only for the website to take forever to load?

What do you do?

Easy, bounce.

You have better things to do than wait several seconds for a page you were only nominally interested in to load.

So, you leave.

The same thing happens to you, when your website is slow. And slow websites are expensive — especially for ecommerce companies — because conversion rates drop by xx as page load time increases by 1 second.

For an ecommerce company, conversion rates and revenue are closely linked to one another.

Testing your website’s PageSpeed

Before optimizing your website for speed, you have to get a baseline.

First, head over to Google’s free PageSpeed Insights Tool. Enter in your website’s name (ex. www.mywebsite.com) and click “Analyze”.

You should get something back that looks like this:

Credit: PageSpeed Insights

Right away, you’ll see a score for this page, based on several factors, discussed in more detail below. As you can tell from the legend underneath the score, a score of 0-49 means your page speed is poor. A score between 50 and 89 is considered competitive. A score above 89 is considered good.

By default, this test only analyzes one page, on a mobile device. More specifically, a mobile device on a 3G network. The idea is simple: if your page loads fast under those conditions, it should load fast under much better conditions, such as 4G networks, fiber connections, or desktop browsers.

Because the test only scans one page at a time, you should test a few different pages to get a sense for overall performance. Or request a complete site analysis from your website developer.

It’s highly likely that pages like your homepage — which may have product sliders, social media feeds, or the like — will run more slowly than pages like your blog, which are largely text. So, run the test a few times on a few pages.

Understanding your score

Once the test runs, you’ll see a section that looks like this underneath your overall score.

Credit: PageSpeed Insights

These metrics can help you start to get a sense for where/how to start improving page speed scores.

But, first, you should know what they mean.

First Contentful Paint

This refers to what marketers call ‘above the fold’ content — the first thing(s) you see when a website loads. For most people, it’s the banner image & text on your homepage. This metric matters because until this First Contentful Paint occurs, the person on your page doesn’t have anything to look at. During this time, they are left wondering what’s going on on the website and are highly likely to bounce if this exceeds 1-2 seconds.

Time to Interactive

Just because you can see a page, doesn’t mean you can do anything on it. Imagine going to google.com and having to wait 30 seconds before you could use the search bar.

That would be terrible and you probably wouldn’t use Google anymore.

Same thing with your website.

While First Contentful Paint shows how long it takes for a user to see something, Time to Interactive measures how long until the user can do something.

Total Blocking Time

Webpages are made up of a lot of code that the browser deciphers into images and text we can see.

But computers don’t see things like we do.

They parse the code.

Top to bottom, until it’s all parsed.

Except sometimes there are scripts or code snippets that have directions to stop parsing until they finish executing. For example, you might use custom fonts and you (or your developer) set up the website so that it doesn’t load until those fonts are available, so it always ‘looks right’.

When a browser can’t parse the content it wants to parse because it’s waiting for some other code to finish running, this is called blocking. The code that hasn’t finished running is blocking all the code behind it from running.

And it’s not a good look.

Largest Contentful Paint

While First Contentful Paint measures how long it takes for the first few elements to be visible to a user, Largest Contentful Paint measures how long until the lion’s share of the content is visible. Once the Largest Contentful Paint has loaded, the page is generally considered “done loading” and the browser is ‘done’ with most of its work — meaning the user should now be able to consume the contents of the webpage at their leisure.

Speed Index

The Speed Index describes (about) how long it takes for the full page to load.

Cumulative Layout Shift

Have you ever been on a website like Forbes when it shifts up or down, so that an ad can be served?

Super annoying, right?

Cumulative Layout Shift measures the degree to which elements on a page move after it’s loaded. The lower the better because users don’t want their experience interrupted unpredictably or without their express consent (e.,g clicking a button).

How to Improve PageSpeed

Knowing a little bit about how the web works and what the different sections above mean is a great way to start improving your PageSpeed scores, increasing conversion rates, and selling more products.

In general, you’ll see a section on your report that looks like this:

Credit: PageSpeed Insights

Unfortunately, everyone’s report is going to look different, so it’s a bit hard to offer specific advice to you without an assessment of your website, but there are a few culprits we see that, when addressed, can radically help improve PageSpeed.

Manage images properly

People are visual and so it’s natural to want to have images on your websites. Fortunately for us, our hi-def cameras and phones take beautiful images.

Unfortunately, though, these images are often massive and bloated, which means they can take a long time to load. Large images at the top of the page will make both your First Contentful Paint time and Largest Contentful Paint times go up.

Your best bet, when uploading images to your ecommerce store, is to shrink or crop them before uploading them to your store. Generally, you don’t need images wider than 1000px (except maybe for an intro slider), so resize images down small enough to increase speed, but large enough they aren’t grainy.

If possible, use .jpgs for photos and .pngs more sparingly. JPG files are usually smaller file sizes and don’t need to be as ‘crisp’ as .png images (like logos and icons) need to be. If you have the technical skills, use .webp images — which are both small and hi-resolution — but have a plan for supporting browsers that don’t support .webp (like Safari).

Finally, ‘lazy load’ images towards the bottom of the page. Lazy loading refers to the practice of not fully loading a resource (image) until the user gets to that part of the page. That prevents the image from being a “Blocking” resource as the page loads.

Clean up your Javascript

The second thing we see a lot of are code snippets in the ‘head’ tag that increase the First Contentful Paint and Total Blocking Time metrics.

When a browser gets to a 3rd party script, it very often has to go off-site to where that script is stored, process it, and then come back before it goes on to the next line of code.

While this might only be a few hundred milliseconds, those milliseconds add up to real seconds. And can destroy your PageSpeed scores.

If your First Contentful Paint and Total Blocking time are greater than 2 seconds and 1 second respectively, this area merits a look.

Remove/reduce unnecessary code

While being able to add and edit your own website content is really helpful, it can also make getting a fast website really difficult. Page builders and Content Management Systems’ (like WordPress or Shopify) themes can bloat your code.

You can easily end up with stylesheets, javascript, and 3rd party resources being loaded on pages where they are not needed.

The result is a site that is unnecessarily slow, but ‘easy to use’.

Fortunately, there are tools your developer has that can allow them to load scripts on certain pages, while excluding them from others. It might take a few days, but they can probably help you load scripts smarter.

Small tasks, big wins

When working on improving PageSpeed, it’s very common to see poor scores across the board. Part of this is the cascading nature of the report — a long First Contentful Paint will generally cascade to a long Large Contentful Paint (afterall, if the first part hasn’t loaded, how can the largest part load?) and long Speed Index. If code bloat is a problem, Time to Blocking and all the Contentful Paint metrics will be high.

So, start with factors related to your First Contentful Paint, such as reconfiguring (or eliminating) Javascript and code bloat. These small tasks will cascade through the rest of your metrics.

Next, address your images, since it’s manageable without a developer — albeit laborious.

Finally, have your developer review the remaining items and work with you to come up with a plan to handle the rest.

By the time you get there, though, you will probably have realized substantial benefits in PageSpeed and should start seeing your conversion rates and sales increase.

Nobody likes a slow website and, for ecommerce companies, a slow website impacts negatively on sales. Head over to Google’s PageSpeed Insight tool, evaluate your website, and get started trying to optimize for speed today.

October 2, 2020
What Is CX, And Why Is It Important For Your Business?
As Jerry Gregoire, Chief Information Officer at Dell, accurately predicted back in 1999, “The customer experience is the next competitive battleground.” Today, 65% of U.S. customers find a positive experience with a brand to be more influential than advertising. CX is the key to unlock brand loyalty and customer retention. Keep reading to learn how your business can start delivering customer experiences that delight.

What is CX?

Customer experience (CX) is how a customer feels about all of their interactions with your business. CX starts from the moment of discovery and continues after customers have made their purchase. Ideally, customer experience never ends. Even after making a purchase, it’s important to interact with your customers to encourage continuous brand engagement.

Why does CX matter for my business?

Businesses cannot keep up with the competition if they ignore the growing importance of customer experience. Research shows that customer experience is becoming the deciding factor between businesses, beating other metrics like price and design. In 2020, 81% of businesses are expected to compete primarily on the basis of customer experience.

Having the lowest price or the best product isn’t enough to set your business apart. Invest in fantastic CX to come out on top.

How can my business improve its CX?

Understanding the importance of CX is one thing, knowing how to deliver it is another. Here are some best practices your business can follow to start your customer experience journey.

Let customer feedback guide the way

When you embark on your CX journey, it is important to let customer feedback guide the way. Instead of focusing on what you see other companies doing, listen to your customers.

If you do not have a wealth of customer feedback, this should be your first step. Send out a short customer satisfaction survey to see what your customers think about their experience now. Then, use that feedback to guide your steps for improvement.

Do you see similar concerns pop up in your reviews and surveys? Are customers unsatisfied with the service they are getting? Perhaps your website has a poor UX, or maybe it is difficult to contact a representative when there are issues with an order.

Whatever the issue may be, show your customers that you are listening and want to address their concerns.

Keep the communication lines open

In our fast-paced world, it’s essential to be available on multiple platforms like text, chat, and social media. Only being reachable through a phone call just doesn’t cut it anymore. According to a Microsoft study, 66% of customers use at least three different communication channels to contact a business. Here are some of the most common platforms that customers use.
- Facebook Messenger: While Facebook was traditionally used to connect with friends and family, many businesses are now taking advantage of this free resource. Messenger is a great way to easily connect with customers. More than 20 billion messages are exchanged between businesses and users monthly on this platform.
- Text: Texting creates easy two-way communication that can be done from anywhere.
Customers are hesitant to drop what they are doing to make a phone call, and emails can quickly get buried in customers’ inboxes. Texting cuts through the noise to establish a clear line of communication between businesses and their customers.
- Live chat: Having a live chat on your website is a great way to turn website visitors into customers. People appreciate the convenience of a live chat option. Instead of needing to search through the website for contact information, a live chat widget on your website makes it clear where people can go to ask their questions.
Deliver top-notch customer service

Make the customers’ needs your focus. By responding quickly to messages, personalizing your communications, and being polite, you can deliver great customer service that will improve your overall experience.

Respond promptly. While most businesses are unable to respond to customers immediately 24/7, there are tools that can reduce response time. Installing a chatbot on your site is one way to do this. Chatbots can be set up to instantly answer FAQs your customers ask on live chat. By using a chatbot, your employees can focus on answering the more detailed customer queries. Chatbots are also useful if it is after business hours or an employee is unable to respond.

Personalize your communications. Customers want to feel special, and increasing personalizations is one way to do this. Even simple personalizations in your communications can go a long way. Start by addressing every customer by name. If you don’t know their name, just ask! Another effective personalization is to send your customers a fun email on their birthday with a small discount code or a free item. Personalizations boost engagement and make your customers feel valued.

Be polite. Treat your customers with respect and kindness. Remember, if a customer is being rude, they are likely frustrated by a negative experience they had with your business. Keep a level head and assure them that you are here to help. The kinder you are, the more likely you are to turn a negative experience into a positive one.

Engage your customers

It’s important that you don’t have a purely transactional relationship with your customers. Transactional relationships do not build lasting brand loyalty. Instead, find ways to grab your customers’ attention and encourage them to continually engage with your business.

Instagram is a great resource for brand engagement. Posting something like a “question of the week” in your Instagram story can be a fun piece of content that your customers look forward to.

If you’re looking to get more followers, host a giveaway. A giveaway is when customers share your Instagram page for the chance to win a product you are offering. This is a quick way to spread the word about your business and to reward a customer for doing so.

Finding fun ways to engage your customers throughout the year improves your brand awareness and leads to customer delight.

Start delivering better CX today!

Customer experience is not a one-time solution. For your business to reach its customer experience goals, it takes a conscious effort from everyone in your organization.

Start by collecting customer feedback to see what your business is doing well, and where you are missing the mark. Then, prioritize customer communication, customer service, and customer engagement.

With a clear focus and the right tools in your arsenal, your business will quickly become a CX superstar.
June 19, 2020
4 High ROI (But Low Cost) Conversion Optimization Strategies To Boost Ecommerce Sales
As a store owner, boosting ecommerce sales and conversions can be tricky.

Should you refine product copy? Increase site traffic? Or restructure your site’s navigation?

There’s an array of stages in the funnel to choose from and various on-site elements to “test and tweak”.

Implementing these changes can take significant amounts of time or money, so it’s critical to lead your optimization efforts with strategies and tactics that maximize profitability.

In this post, you’ll learn 4 high ROI conversion optimization strategies to increase ecommerce sales. And if you stick around until the end, I’ll also reveal the process we’ve used at Leadfeeder to generate an extra $11,000/month from optimizing a single page.

1. Paint a complete picture with 360° images and videos

After successfully launching the invisibleSHIELD in 2006, ZAGG has matured into a leading online marketplace for mobile device accessories.

On a mission to increase ecommerce sales without burning resources, the company started testing videos and 360° images on their product pages.

After changing their default product image from static images, to video, and then to 360° images, they increased revenue per customer by 39%.

Credit: Zagg

Consumer demands for information have risen. In 2016, a study found that online shoppers expected a minimum of three images of every product they considered.

Repeated in 2019, the same study found that today’s online shoppers expect “5-8 images, 2-5 videos, and even an average of 8-13 questions to be answered by the brand itself.”

Shoppers now expect to meet a detailed variety of content when they browse. To satisfy and exceed rising expectations, it’s important to give consumers accurate visual information in the form of videos and 360 images°.

2. Fix friction on checkout pages

A case study popularized by the New York times tested the influence of choices and options on our buying decisions. Carried out on two different Saturdays, the test had some interesting results…

On one Saturday, 24 different flavours of jam were given. The next Saturday, people were only presented with 6 different flavours. On the day with 24 different flavours, only 3% actually bought anything.

On the day with 6 flavours, however, 30% of people made purchases.

Whether you’re selling online or offline, it’s a fact that the more choices shoppers are forced to make, the more friction they’ll feel, and the higher the probability that they’ll fail to purchase.

While reducing friction across the board is a worthy goal, it’s arguably most important during the checkout process—a stage that 26% of online shoppers admit to abandoning because it is too “long/complicated.”

Fortunately, you can reduce the friction and complexity of your checkout process with some simple changes. Here’s how:

Clarify your checkout microcopy

Make it easier for visitors to purchase by using action-specific microcopy.

The team at an Insound, an online music store, believed that repeatedly using the word “Continue” was causing friction and confusing customers during checkout.

Suspecting that a more specific description would improve conversion rates, they replaced the word “continue” with “review order” and increased checkout conversions by 39.4%.

Credit: PXHere

Remove barriers to purchase

In his article about a $300 million dollar button change, designer Jared Spool shares how removing the login requirement guarding their checkout process increased revenue by $15 million in just one month.

As Jared’s story shows, less is more when it comes to refining the checkout experience. Remove purchase barriers on your checkout page by:
- Reducing required information forms
- Eliminating unnecessary log-ins
- Limiting your checkout process to a single page (unless you’re selling high-ticket items).
3. Improve your micro-copy to massively increase conversions

“Conversion rates suffer when sites fail to drive customer micro-actions and maintain momentum through the sales path.”Bryan Eisenberg.

Writing better product copy is an effective way to increase conversions. But improving product descriptions comes with two caveats:
1. Revisiting and rewriting copy for all your products takes time.
2. Hiring a decent copywriter can be expensive.
To work around this, refine your site’s microcopy instead. Microcopy is short, suggestive text that guides customers along or instructs them to do something—like click a button or type into a search bar.

Take a look at Shopstyle’s search bar for example:

Credit: Shopstyle

By literally asking shoppers what they are looking for, Shopstyle’s microcopy maintains momentum when visitors land on their site.

A single phrase, sentence, or in the case of Veeam, a word can lift conversions. Through their on-page survey, Veeam noticed that most visitors were asking for a price even though their copy instructed visitors to “request a quote.”

After replacing the word “quote” with the word that their customers were using, “price”, they experienced a staggering 161.66% increase in clicks to their pricing page.

Before:

Credit: Veeam

After:

Credit: Veeam

As Veeam’s case study shows, tweaking your microcopy can have a meteoric impact on your ecommerce sales. But, it’s best to avoid randomly testing buttons and microcopy. Instead, look for key parts of the consumer journey where you can continue the conversion in your customer’s head.

4. Use social proof to build trust

Buying a product online poses a certain amount of risk.

“Will this product live up to expectations?” is a constant gnawing concern for your customers, and even more so for first-time visitors. To increase conversions on your ecommerce store, eliminate risk and enable trust with social proof.

In a bid to reinforce their image as a trustworthy watch brand, Express Watches wanted to reduce “visitor anxiety” to encourage shoppers to buy. So on their product page, they replaced their “Why buy from us?” section with a Trust Pilot widget showing third-party reviews. This small change increased sales by 58.39%.

Credit: Express Watches

Shoppers actively seek and trust social proof. On average, they use 2-3 buyer review sites before making a decision to purchase, and 88% trust online reviews as much as personal recommendations.

Customers may doubt what you say about your brand, but they’ll place a heavy amount of trust in the opinions of others. That’s why it’s best to show credibility—in the form of social proof—instead of explaining it. Remember that social proof isn’t limited to third-party reviews, you can also use your brand’s:
- Influencer or celebrity endorsements
- Number of users or customers
- Customer testimonials
- Official awards
Finally, what’s your data telling you?

As shown above, increasing ecommerce conversions doesn’t have to be a complicated and costly process. By focusing on the small, but cumulatively powerful tweaks like reducing friction, providing social proof, and better product images, you can quickly increase sales without sacrificing too much time or money.

Before you run A/B split tests and roll out changes on your site, use the 3-step process we used at Leadfeeder to generate $11,000 in monthly recurring revenue by increasing conversions on our pricing page:
1. Find the leaks (pages with high-drop offs in conversion or high bounce rates) on your website through Google Analytics.
2. Once you’ve identified those leaks, use behavioural tracking tools like heat, click, and scroll maps, as well as user session recordings to identify potential barriers. At Leadfeeder, for example, we discovered that visitors were frustrated because they couldn’t click on our pricing options to learn more.
3. Based on user behaviour, create and test your hypotheses for increasing conversions. At Leadfeeder, we suspected that making it easier for users to get the information they needed to reach a purchase decision would increase sales. Acting on this, we made pricing plans clickable and optimized the entire page. This increased conversions by 33%.
Author bio: This article was written by the team at Leadfeeder.
June 11, 2020
5 Reasons Why You Can’t Do Without A Business Plan

Your project of starting your own full time or side hustle business is now well on its way and you may be thinking about raising financing? You’re feeling enthusiastic about your future business, but you keep wondering whether or not you should write a business plan.

Starting a new venture means a lot of questions will arise, and writing a business plan can be very daunting for a new entrepreneur, but it doesn’t mean you should skip it.

Starting your business without a plan in your pocket could be a huge mistake: one which could definitely set you up for failure.

Let’s look at the 5 reasons why entrepreneurs can’t do without a business plan.

1. You will struggle to raise financing without a business plan

Most businesses need financing and it will be hard for you to convince a bank to lend you money, or for a potential investor to invest if you don’t have a professional-looking document to present.

A business plan will be required whether you’re pitching the project to your bank, to investors, or even if you’re simply applying for a grant.

Your financial partners will ask for a business plan in order to evaluate the risks associated with your business idea and to understand how much potential the project really has.

Putting together a meticulous business plan will give you a chance to convince them to invest.

2. You will need a plan for your business to succeed

Writing a business plan will enable you to gather your thoughts in one place, and create a clear roadmap of what you need to achieve in the next 3-5 years for your business to succeed.

It will force you to evaluate every aspect of your business, from how you are going to sell to how many people you need to help your customers. You will precisely estimate every expense in order to get a clear picture of how much you need to invest to start your business and how much profit it could generate.

Once it’s been laid out in front of you, you will have a full picture of what to expect for your business.

3. You will have to be your own best critic

If you are just starting your first business, it’s easy to get carried away or a little bit over-excited about your idea.

Putting together a business plan will allow you to spot any discrepancies, identify any weaknesses and work on them. You will then understand which steps you need to take, and what are the constructive changes you need to make.

Making a critical decision on your work will allow you to let go of some ideas which seemed brilliant, but perhaps weren’t meant to work in this context.

4. You will keep an eye on your cash flow

Through the process of creating your business plan, you will forecast your business’ cash flow for the next 3 years.

Starting any type of business is challenging and things often don’t go as planned. Having the ability to go back to your business plan and adjust your projection as things develop will enable you to keep a close eye on your cash flow.

This will ensure your business has enough funding to succeed.

5. You will find it easier to write your business plan with the right tool

Writing a thorough business plan takes time. Between the market research, the number crunching, and the actual writing, a complete business plan won’t be done in a day.

Luckily there are online business plan tools which can help you.

A professional business software will do the maths and take care of the formatting for you, but it will also guide you throughout with instructions and examples for each part of the plan.

We now hope you know why you can’t do without a business plan for your project, and that you’ll get cracking on the writing.

Author Bio: This blog post has been written by The Business Plan Shop, which offers an online business plan software you can try for free.

June 2, 2020
Make Customer Communication A Priority For Your Ecommerce Business
When small businesses are just getting started, customer communication is often overlooked in favour of product development. Yet customers are just as important at the beginning of business development as they are when operations are in full swing.

You can, and should, focus on products and customers at the same time. Focusing on products, of course, is necessary for the assurance that your goods and services will work well for anyone who uses them.

After your products have been established, your focus on customer service through education and troubleshooting lets individuals know you care about their interaction with your company.

It’s not difficult to make customer communication a priority. A basic chatbot on your website can offer a quick lifeline for product information and educational content. Then supplementing that online presence with an introductory phone plan will facilitate voice calls for more detailed interactions – all without breaking your budget.

Using a chatbot

At VirtualPBX, we’ve written about the reality that a majority of business-to-customer interactions will take place without a human intermediary. Think about the calls you make to your bank that are completed entirely through an automated system. And consider the online chat services that provide you with information about a product or service.

That latter category makes use of online chatbots. There are a lot of great choices out there, including ManyChat, ChatFuel, MobileMonkey, Engati, and Botsify, that we have reviewed.

What you often find with chatbots is the ability to use them for free or at least at low cost. This lets you try them out without a substantial commitment. What do you get in return as these chat programs run on your website?
- Instant Customer Assistance: These bots are available 24 hours a day with information about your business. You can tell them where to access ‘help’ articles and give them basic information like ‘office hours’ instantly for your customers.
- Customer vs. Visitor Messages: You can customize your messages for different populations. Send promotional greetings to your customers. List product features for visitors.
- Display Multimedia: Some chatbots allow you to play video as an easy way to inform customers. Your detailed and specific multimedia will liven up your interactions.
The biggest benefit of chatbots is that they help you build a base of customer interaction possibilities. You set them up and they work around the clock. Customers can ask them questions about your products and never have to wait on hold. Chatbots work without tiring and are as knowledgeable as the information you supply them with.

Adding a VoIP voice plan

Believe it or not, you can also get started with a phone plan for only a few dollars a month.

This isn’t the place to plug our own voice products. However, we can say from 20 years of experience that the VoIP communications industry has become affordable for any type of business that wants a voice plan.

Setup and features

Picking up a VoIP plan can be completed in just a few minutes. You can complete the order form and pay online – all without having to speak to a person! – and begin making calls through a mobile app or browser-based app in fewer than fifteen minutes.

Calls through VoIP networks can be completed on your home WiFi network or the mobile data you already have on your smartphone. Calls are as clear as native mobile calling, and any interaction you have with customers through your VoIP plan will be shown as taking place with your business phone number.

This can be a great way to establish your business as a professional entity. It looks much more professional to have business cards with your business phone number on them. It sounds professional to inbound callers when they hear your automated attendant or reach your business voicemail.

Benefits for customers

The separation of your personal information from your business is a big step. With a VoIP plan, you gain the benefits of a professional phone system, and perhaps most importantly, you can supplement your website and chatbot with personal interaction for customers.

As an entrepreneur or single owner-operator of a small business, you may want to test the waters by initially using your VoIP plan to speak to investors or high-value contacts.

After getting your feet wet, you can expand by giving customers a number to call when they need technical product assistance. At this point, you may have added a second employee specifically for managing customer issues.

Your continued growth can depend on the VoIP plan to be available no matter your business size. Plans are easily extendable to include a higher number of included calling minutes, or in the case of larger businesses with unlimited-minute plans, extendable through features like Call Recording or CRM Integration.

Start small in customer communication & save money

Those types of enterprise-level features might not be necessary at your organization for months or years. Don’t worry. For now, focus on the level you’re at with your own business.

Take a few minutes today to research a chatbot, and prime it with all the help information your website has to offer. Then think about adding a VoIP plan to your arsenal.

There are numerous benefits in both that will fuel your customer communication in ways you’ll be thankful for when you think back to your humble beginnings.

Author Bio: This guest post was written by VirtualPBX, developer of a VoIP Business Phone System and presence in the telecommunications industry for more than 20 years.
June 1, 2020
3 Reasons Why Customer Loyalty Is Important And How Merchants Can Keep It
The ecommerce landscape becomes more competitive every day. More retailers than ever are focusing their efforts on ecommerce, often with amazing deals, free returns, speedy delivery and one-click shopping. Competing in this market can seem daunting, we know! However, with the right strategies and a focus on customer loyalty, not only can retailers keep up in this ever-growing market, they can find space to thrive.

On average,53% of your revenue comes from the top 20% of your most valuable customers – so it’s clear that harnessing the interest and loyalty of existing shoppers will positively impact your revenue. Implementing a retention strategy is key to achieving long term growth, and improving customer lifetime value.

Rather than striving to always reach new – and increasingly difficult-to-access – audiences, you should value the shoppers you already have and work to keep them on board. Data shows that only 9% of digital ads are viewed for more than one second, meaning that reaching new customers is costing you significant time and money that could instead be invested in an already engaged customer base, with a better return on your investment.

In an ecommerce market that’s growing by 13% every year, stepping up your service with a loyalty program is a great way to differentiate your offering. It offers a practical means of demonstrating to your customers that you value them as a unique individual, not just as a number or statistic on your profit/loss sheet. It puts your money where your mouth is and shows in a tangible way that you’re willing to reward loyalty.

The stats speak for themselves. A first-time buyer who joins a loyalty program spends 40% more than a customer who doesn’t and the likelihood of a loyalty member purchasing from you for a second time is 68% more than a non-member.

This blog post will analyse three key reasons why investing in customer loyalty is so important for long term growth and show you how you can implement a retention strategy of your own.

Customer loyalty increases your bottom line and revenue

Loyal customers tend to have a higher customer lifetime value and larger average order value because they have built up a relationship with your brand – there’s a high level of trust there.

Not only have they come to believe in your authenticity, but they trust in what you have to offer. Customers increase their basket by 36% if they can earn a reward immediately, rather than at some point after a purchase.

These loyal customers can be relied upon to return and repeat purchase, spending more and boosting your revenue. The average basket size of a customer who uses a loyalty reward with their purchase is 39% higher than one who doesn’t.

Women’s fashion store Pulse Boutique is a great example of a brand that has implemented an integrated loyalty program to increase the spend of their members.

Titled “Pulse Perks”, their loyalty landing page immediately motivates customers to sign up through the use of strong imagery, large, vibrant icons and bright colours to give a clear idea of what could be gained by joining. The four main benefits or “perks” of membership are clearly labelled above the fold for clarity: free gifts, VIP access to new collections, product discounts and priority shipping.

The design of Pulse Boutique’s loyalty page closely reflects the visual direction and brand personality of the rest of the site, providing an integrated, smooth customer experience. They use strong imagery and match the landing page colours to the store’s signature pink with rose gold to keep the entire customer journey consistent.

As a result of an easy-to-use, engaging loyalty program, Pulse Boutique has generated a 19% increase in AOV and $200K in earned rewards purchases. The addition of loyalty rewards also delivered a 39% uplift in customers returning to shop again.

Loyal customers help with acquisition

Whether it’s via online reviews or word of mouth recommendations, your customers really value referrals from their fellow shoppers.

Referral marketing – when existing customers tell others about your product or service – is a cost-effective way to acquire new customers who already have a level of trust in your brand.

Overall, it’s a win-win for every party involved. Your business can acquire new customers, while your customers get social validation for recommending something they love.

Referral marketing builds trust in your brand – having a recommendation from a friend or family member who you know and trust is incredibly valuable. In fact, 92% of customers trust recommendations from people they know, while 74% of consumers identify word of mouth as a key influencing factor in their purchasing decisions.

Referrals also create hype around your brand. If people are genuinely excited about your offering, you can feel this in the way your product or service is talked about online, on social media and between friends.

This organic buzz then hooks the interest of others, delivering more custom your way.

You can make referral marketing a key part of your overall marketing strategy by incentivising customers to make active referrals to their friends through a loyalty program.

However, the incentive to refer needs to hit the right note and must be meaningful for both the advocate and the friends they are referring to the scheme. For example, Esquido Lashes gives their advocates 3,000 loyalty points and the referred customer a $5 voucher to spend in-store – so both parties benefit.

Make sure that it’s easy for customers to refer friends by promoting your referral program effectively and making the process as simple as possible.

You can do this by letting existing customers know the benefits of the program through your email marketing and by setting up an automation email for customers who have already left a positive review, encouraging them to refer a friend in return for loyalty points.

You could also try targeting customers at the point when they’re most invested in your business (i.e. directly after they’ve made a purchase) by displaying a pop-up on checkout that prompts them to sign up to your referral program.

Providing an easy way for customers to copy and share their referral URL to earn loyalty points is crucial. Bikini brand Cupshe does this well, sending an email to their loyalty members after they’ve left a review, giving them a unique URL they can simply copy in a single click.

Loyal customers build community

Beyond quality and price, social responsibility and shared values are key to maintaining customer loyalty.

68% of customers have said they are motivated to be loyal when they know that a brand shares the same values as them.

It’s clear that customers now expect the same things from brands as they do from friends and family – a sense that the brand understands them and knows what is important to them.

In fact, 71% of 16-24-year-olds say that they feel strongly or very strongly about corporate social responsibility and 89% of shoppers would switch to a brand that is associated with a good cause, given similar quality and price considerations. It’s no longer enough that the product ticks the right boxes – the customer also wants to know what role the company plays within society at large. Overwhelmingly, they want it to be a positive one.

47% of customers say they are motivated to be loyal when they feel that they are becoming part of a community of like-minded people by doing so. When shopping with a brand, sharing values with other like-minded customers is an important part of the experience. Community platforms make community-building easier than ever and Disciple is a great alternative to Facebook Group.

Customers want their money to go towards supporting something they believe in – 62% of consumers feel that they would join a loyalty program if they knew the rewards had a positive social impact on the causes they care about.

Your loyalty program is an incredibly useful tool to help you build a community with shared values at its heart. Welcome emails are a great way to communicate your shared values to new customers. Use them as a way to educate new members of your community about social causes you care about, charitable donations you make, or even how you do things differently to other businesses.

You can also show your customers how aligned you are with them by letting them earn points for completing thoughtful actions, such as returning packaging to be reused or redeeming rewards against charitable donations.

For example, Pacifica Beauty has visibly incorporated a recycling program into the customer experience to show how much they care about responsible plastic use. Customers can now send their used bottles back to Pacifica Beauty for them to be reused and given new life. To encourage customers to follow through with this action, they include a prepaid shipping label and award customers 100 loyalty points each time they do this.

Pet food brand Edgard Cooper also offers loyalty program rewards that support ethical causes customers care about. As animal welfare is at the heart of their brand values, they donate 10% of their profits to animal care clinics. They encourage their customers to exchange “Belly Rubs” – loyalty points – for donating meals to dog shelters.

A loyalty program is also a social space where you can bring like-minded customers together. Organic and cruelty-free skincare brand, Annmarie Skincare, uses its loyalty program to build a group of kindred spirits with much in common.

They welcome members into an exclusive Facebook group, where community members can share ideas and anecdotes to work towards a less damaging beauty regime. This emotional bond further drives customers to engage on more than a transactional level and helps to establish a strong and lasting customer-brand relationship.

In Summary

The ecommerce landscape is hugely competitive with new businesses launching online offerings every day with ever more tempting discounts and deals. Using a robust loyalty strategy, retailers can not only compete, but find a route to online sales success.

With53% of your revenue coming from the top 20% of your most valuable customers – harnessing the interest and loyalty of existing shoppers is a must. There are three key reasons why investing in customer loyalty is so important for long term growth:
- Customer loyalty increases your bottom line and revenue
- Loyal customers help with the acquisition of new customers
- Loyal customers can build up a community that organically promotes your brand
In terms of strategies to implement right now that can increase customer loyalty, we recommend:
- An integrated, easy-to-use loyalty program that blends seamlessly with your website
- Easy, one-click referral marketing
- An emphasis on shared values using your email marketing to build a greater sense of community
Revisit our Loyalty Up Close and Personal report to find out more about what motivates customers to be loyal in 2020.

Author Bio: This article was written by the great team at LoyaltyLion.

LoyaltyLion is a data-driven loyalty and engagement platform that powers ecommerce growth.

A loyalty program is about more than points and rewards. It is about unlocking real insights to increase customer lifetime value.

With LoyaltyLion, you can build a better understanding of what drives longer-lasting customer relationships, and use those insights to connect and accelerate your existing marketing efforts.

Proven to increase retention and spend, LoyaltyLion is trusted by thousands of fast-growth ecommerce merchants worldwide.
April 28, 2020
Print On Demand: How To Start An Online T-Shirt Business That Makes Money

The t-shirt has the ability to tell the world who we are: what we love, and what we don’t. When starting out your t-shirt business, it needs a brand image and a website that stands out as much as your t-shirts do. So here are some pointers on how you can turn your passion for tees into cash.

A brief history of t-shirts

Your business should be as disruptive as the t-shirt itself. So to stand out from the crowd (that’s online as well as on the streets), first, get to know our dress-down history of the t-shirt.

Late 1800s + early 1900s

During and after the Spanish-American War (1898) the U.S Navy began to issue white cotton undergarments.

1920-1930s

Returning WW1 veterans kept their standard-issue cotton undergarments when they came home. F. Scott Fitzgerald lands the phrase “t-shirt” in the dictionary when he mentions it in his book This Side of Paradise.

1950s

In the film A Streetcar Named Desire, Marlon Brando cemented the t-shirt in popular culture. As did James Dean in 1955’s Rebel Without A Cause, who’s said to be an early example of the first modern teenager.

1970s

By now, there was the message, and there was the merchandise. Printed across t-shirts, bands, products, and slogans defined who we were and who we wanted to be.

Today

The world, culture, and information have diversified. How do you create a product that cuts through in the noise of the 21st century? It’s all down to your brand and strategy.

Business plan

So you’ve got your hands on some t-shirts and you’re looking to start a business. The next step is to start developing your business plan and determining how to develop your website to fit it.

Find your USP

Before you start any business, you should have your unique selling point in mind. I’m sure it will come as no surprise to learn that lots of folks sell t-shirts online. So how are you going to make sure people buy yous? Any new business needs to develop its own recognizable brand ID – so make sure you have one.

Considering how your customer journey feels is just as important as what it feels like to wear one of your t-shirts. Before you sell a single crew neck you need to define what kind of business you want to be and what sets you apart.

Socialize your brand

No new brand, especially a fashion brand, gains any traction without harnessing the power of social media from the word go. Not only is this the platform to show the world who your brand is and what it stands for, but it’s a space to build a following around your product. It may sound cultish, but the most successful brands have managed to develop a loyal brand that follows them across multiple social platforms.

Find the right fit

It doesn’t matter how good your designs are, they’ve got to look good on. So choosing your blank t-shirt is vital. You need to think about the size range, the colors each company can offer and the fabric they use.

Even though you’ll be able to change who you go with whenever you want, think about how this impacts your customers. If they buy one t-shirt that’s printed on Gildan and another on American Apparel, that isn’t going to play well. Here’s a useful blog to help you decide which one to go for.

Pick your platform

You’ve got your designs, brand, and your product. Now you’ve got to decide which e-commerce system you want to use. The one you choose will tie closely to what type of t-shirt business you want to be.

If you want your website to be orientated around your designs and build your business organically, you want the most customizable platform that can be stylized to suit you. Platforms like Wix and Squarespace give you access to easy to use templates. But these are restricted on e-commerce specific features.

If you’re looking to get your name out there quickly, Shopify and BigCommerce offer features that integrate with other online market places such as Amazon and eBay without having to delve into any coding.

Or, to get the best handle on your sales and the traffic coming to your website, a platform like Volusion offers powerful SEO and SaaS tools to bump your site up on search results.

Whichever platform you use, there is always a cost no matter which package you go for. So be sure to factor platform costs into your wider business model before signing up.

Refine your brand image

Image is essential for making an online t-shirt business work. What is the fashion industry if not image? In business terms, this means developing a great looking website that has the right type of product imagery to appeal to the base you’re looking to attract (GraphicSprings is a useful tool to use here).

Product imagery needs to be professionally shot and presented in a way that fits the overall aesthetic of both the brand and the website. Many of the best fashion websites are understated and simple in design with minimal use of text. This lets the product imagery do the talking.

Think about how your product imagery both on your website and social media channels will work in terms of social proof. Social proof is a phenomenon in which people will copy the actions of another person in an attempt to fit in and be accepted. When you’re applying this to your t-shirt website you should look to have imagery of models wearing your products, so customers can imagine themselves wearing them as well. This helps to sell the value of the product.

Social proof also works with influencers on social media. A great early investment for any fashion business can be an influencer to wear and promote the products, telling their impressionable audience how much they like and enjoy wearing them.

Ethical considerations and branding

The fashion industry needs to be at the front of ethical considerations. Many shoppers now consider the ethical considerations of the clothes they buy, with a generation rejecting the folly of fast fashion. Consumers are now concerned with where a t-shirt is made and what materials are used. If you want your business to get off the group and not sink under the weight of angry comments from environmentalists you need to find the most ethical manufacturer you can.

T-shirts have always made a statement. But with so many voices out there and so many other businesses trying to do the same, all we can suggest is be like the T and rewrite the rules. Take your designs, your brand, your product, and your service and just do it differently.

December 22, 2019
What Small Online Retailers Need To Know About Ecommerce Sales Insurance
Whether it’s home insurance, pet cover or travel protection, most of us have at least one type of insurance policy.

However, insurance can feel like an unwanted expenditure for online retailers, particularly new ones that need to use careful cash flow management to make it through their first few years in operation.

But let me ask you this, who foots the bill if any of these things happen?
- Your products get lost in transition
- Your goods harm a customer
- There is a natural disaster and your company’s revenue collapses
You and your business. That’s who. Unless, of course, you have online retailer insurance that covers you during normal Mon-Fri business hours and the weekends too. If you have this protection then your insurer foots the bill.

Thinking about whether you need to insure your ecommerce business? You should be and you don’t need to look any further.

We’ve covered why merchants need online retailer insurance, and what you need to consider when shopping around. Hint — the future of your business may depend on it.

Do small online retailers really need online retailer insurance?

Insurance is about paying to protect yourself in the event that something might happen.

And while none of us wants anything bad to happen to ourselves, our families or our businesses, the reality is that terrible things occur each and every day. This leads to misery and loss, both personally and financially.

Financial loss is something that every business has to deal with, regardless of its size, industry, or product. It can hit without warning at any time, night or day Mon-Fri and on the weekends.

Consequently, every business owner (including online retailers) needs to do their bit to protect themselves against potential financial issues.

Getting insurance is about investing in the future security of your business — and protecting your customers in the process.

It’s why online retailer insurance isn’t just an investment in your company — it’s also an investment in your customers.

What does online retailer insurance protect me against?

Financial loss experienced by goods-based businesses comes in a variety of forms, the most common of which is a loss of items during transit. This can happen anywhere in the supply chain, between dispatch from the warehouse right up to point of delivery to the customer.

Accidents happen, but if your products go missing during transit, they need to be replaced. Insurance cover protects your business against this inevitable financial hit of missing inventory.

But what about service-based businesses? Let’s say your small business sells a service, such as project management software. Even a service-based business like this can suffer a setback that requires them to have insurance.

For example, perhaps an employee failed to outline your service’s features fully during the point of sale. As a result, the customer doesn’t receive the product they asked for, and asks for a refund.

And who gives them this refund? Well, it’s not your employee’s responsibility to cover the cost. It’s the employer’s liability and this means you need to compensate your customer. An insurance policy helps deal with this financial hit.

By taking out insurance, you give your small business a safety net that protects it against any unexpected costs. If the worst happens and your business is subjected to a class-action lawsuit, the right insurance could prevent it from going under.

Every small business owner needs commercial insurance that provides cover Mon-Fri

So what kind of online retailer insurance should your small business buy?

There are a plethora of different types, but for a strong blanket option that covers most potential eventualities, choose commercial insurance. This protects your business, company property, and employees, all in one — Mon-Fri, 24/7.

When you buy commercial insurance, consider what you need the insurance for and ensure you have the right level of cover required for your business, particularly when it comes to the issue of liability and property insurance. These are the main types of commercial insurance that small businesses need:
- Property insurance
- Liability insurance
- Business interruption insurance
You don’t need to be one of the UK’s leading insurance experts to understand how they can benefit your business, either. Why? Because below we explain what each one is and outline what you should consider when buying yours.

Product liability insurance

Do you sell goods that have the potential (however small) to cause injury? You need product liability insurance. Say you’re selling electrical items and there’s a fault with one. If this causes physical or emotional (or both) harm to your customer then they can sue you.

You just need to decide what level of lawsuit you want to protect your business against. For instance, is $100,000 enough or do you need $10,000,000? I’d always err on the larger side, because the long-term cost of the premiums will be lower than making up the shortfall in a lawsuit.

Property insurance

Are you selling items? Then you need insurance to protect you against property damage until these items are in your customer’s hands. Because until your customer has them, it’s your business that’s responsible for covering the cost if they’re damaged.

Picture this: you’ve sent out your biggest ever order and the third party company transporting your goods loses or damages them. That puts a big cost on your business because, of course, you need to replace them.

Like liability insurance, you need to be precise when deciding on the required level of property insurance.

From a small business insurance approach, finding the right shipping provider is crucial. Most reliable third-party logistics (3PL) suppliers include negotiable property insurance as standard. You can decide at what point you want packages insured (while in storage, during transit, and so on) and the maximum value to which they are insured. During negotiations, clarify what you’re paying for — many 3PL suppliers provide a carrier liability, which is different from insurance.

Beyond insurance issues, 3PL suppliers also let you limit your overheads, such as removing (at least some of) the need to pay for storage space and/or the delivery of your goods. It also makes it simpler to upscale your business by giving you a global fulfilment network that enables cross-border selling.

Above all else, it lets you know that professionals are dealing with one of the most essential parts of your business – getting your orders to your customers.

If you’ve decided to adopt such a strategy, you may only want to insure items up to $100 or beyond because you use a third-party logistics provider that offers insurance on your goods below that amount. However, the provider may offer no protection for your goods, or you may still deliver some of your goods (high-value ones) yourself and need full coverage for some/part of your stock.

Business interruption insurance

Business interruption insurance could be considered one of the less pressing concerns for small companies. This is because it provides something you really shouldn’t expect during a normal Mon-Fri: loss of income experienced after a natural disaster.

If your company is unfortunate enough to suffer from a natural disaster (such as a fire) then business interruption cover helps you to keep things afloat until you can get back to normal.

Alongside income replacement, you’re also covered for:
- Operating expenses
- Temporary relocation
- Payroll obligations
- Tax commitments
- Loan repayments
And it’s not only fires, earthquakes and tsunamis that you’re covered against. Business interruption insurance can protect you in the event that a civil authority stops you from trading because another company nearby has been damaged. Due to the rarity of such events, you’ll need to refer to the T&Cs of your policy to establish if you’re covered for this eventuality.

One thing to keep in mind is that most business interruption insurance policies don’t provide cover in the event of a pandemic, such as the coronavirus epidemic that spread throughout the world from the beginning of 2020.

We all need some level of cover, whether it’s home insurance to protect against property damage or business interruption insurance to safeguard against loss of income during a natural disaster.

Online retailers are no different. In fact, they may have even more people (their employees and customers) relying on them to keep them and their products safe. This makes the need for having the appropriate cover even more pressing than it is for private individuals.

So, think long and hard about what needs to be covered and then get the appropriate retailer insurance policies to protect your company!

You can learn more about business insurance by watching the video below:

Embedded video temporarily unavailable. View the original video
November 12, 2019
How To Develop A Pricing Strategy That Is Perfect For Your Products
Pricing your products is a tricky thing. What might seem simple at first — simply identify the wholesale product cost, and then up the price to get a profit — is actually quite complex.

There are several different ways you can develop a pricing strategy. To help you navigate this tricky area, I’ve identified some common pricing strategies that you can use for your own products. Read on to discover how to develop a pricing strategy that suits your products perfectly.

How to price your product

There are many different pricing strategies that you can use as a retailer, each with its own advantages and disadvantages. I’ll dig into a few later, but first, let’s go through the basics of pricing your product.

Calculate your variable costs

The first thing to consider when you’re pricing your product are the costs of goods sold. These involve all the necessary expenses that go into producing, marketing, and shipping your product. These won’t stay the same — they will vary according to the product you’re pricing.

Depending on the product you’re selling, these costs might involve:
- Manufacturing time: how much time is spent making these products, and how much per hour do they cost you in labor?
- Shipping: labor time, courier fees, and so on
- Packaging: more delicate products might require more expensive packaging materials.
- Raw materials: if you produce your products yourself, how much are the raw materials that go in them?
- Marketing materials: whether it’s leaflets or paid ads, consider how much these cost per product.
Once you’ve identified all these variable costs, you can accurately work out the final cost of goods sold per product.

Calculate your profit markup

Now you’ve got your cost per goods sold, it’s time to add a profit markup. This includes your profit into the final price of your product at sale.

When you’re calculating your profit margin, bear in mind that you’re only calculating it based on the variable costs per product. This won’t include the fixed costs that your business incurs, such as hosting costs or business utilities.

You should also consider what prices you’re up against in terms of your competitors. If your profit margin far exceeds that of your business rivals, then your customers won’t be impressed.

With that in mind, take your variable costs and divide them by 1 less your required profit markup as a decimal.

So, let’s say your variable cost per product is $15, and your profit margin is 30%. In this scenario, it would be expressed as:

$15 / (1 – 0.3)

This leaves us with a product price of $21.43.

Once you’ve got this final price, conduct a break-even analysis to calculate how many units you need to sell to cover your fixed costs (or find a useful break-even template here). This will help you make accurate forecasts for the year ahead, and you can determine how to set a product price that works for you.

What pricing strategies are open to you?

There are several different pricing strategies open to retailers. Here are just a few common strategies you should consider.

Keystone pricing

This is the most common strategy used by retailers when pricing their products. In short, it involves doubling the original wholesale price of a product to identify what it should be sold at to the customer.

But it’s not as simple as that. There are several factors that can affect keystone pricing.

For example, if your sales are irregular or require significant handling costs, then your final retail price might not account for the extra work involved. Conversely, if your products are popular or readily sold elsewhere, you might need to reduce the retail cost to increase sales.

While keystone pricing is simple and easy to follow, it can easily get complicated. Depending on your business and the products you sell, you might need to iterate with your prices to find the right one for you.

Manufacturer suggested retail price (MSRP)

Manufacturer suggested retail price (MSRP) refers to the recommended price of a product as stipulated by the original manufacturer. This strategy helps keep product prices the same when sold by different retailers.

Products covered by MSRP are usually those which have to conform to accepted industry standards, for example, home appliances such as ovens or refrigerators. MSRP means that big-ticket items aren’t priced at wildly varying amounts.

MSRP makes it simple for retailers — simply save time and follow the recommended pricing plan. However, this does prevent you from getting competitive with your prices. Your competition likely sells the same product for the same price, so getting ahead can be tricky.

Discount pricing

Discounting is a solid pricing strategy that virtually every business uses, and with great success.

While you might get less money in return for your product, the other gains are considerable: higher traffic to your store, an opportunity to upsell other products (and get rid of unsold stock), and the chance to reach a whole new consumer base who might not usually visit your store.

But be wary: too much discounting can negatively impact your business, especially with big-ticket items. As Jennifer Diepstraten says in Marketing Speak podcast, “if somebody is willing to discount and low ball just to get the business, they just destroyed their perception of value.” Be cautious with your discounts — apply them where necessary, but don’t go overboard just to drive traffic to your store.

Bundle pricing

As the name suggests, bundle pricing refers to the bundling of several items for a single price. This is most commonly seen with products like groceries or clothing, but other industries also employ it too.

Bundling products can actually increase sales. Customers feel as though they’re getting more bang for their buck when the saving they’re actually making is generally less than they perceive. However, this also means that selling those same products individually is trickier. Customers feel as though they’re missing out, and may be less likely to buy them alone.

Pricing your product can be tricky. But with the tips above, it’s easy to find the right pricing structure for your products. Don’t be afraid to update your prices as you go — iteration is key to a successful pricing strategy. Use the knowledge here to find the perfect pricing strategy for your products today.
August 9, 2019