How to run an online store during the recession?
How to run an online store during the recession?
The online store is a business model that increasingly more entrepreneurs are reaching for. Annually, more than 10,000 of these are created in Poland (data from Dun & Bradstreet). Unfortunately, the majority, approx. 6,300 and so go bankrupt in the next few months. The causes can be sought successively in pandemic, crisis and war. But are these the direct causes? Unfortunately, no. The main factor for the decline of the stores is poor management and the lack of proper use of data for decision-making. So how to run an online store during the recession? How to save it from decreasing revenues and therefore bankruptcy? This is what you will find out in this article.
What you will find out:
In this article you will learn that the key to overcoming the recession may lie in three solutions:
1. Data-driven decision making is the key - What are the methods for automated data capture? How to gather them into one location and organise them into one comprehensive report, regardless of the number of markets in which you operate. Reliable market, customer, competition data is something that allows you to build predictable and scalable businesses.
2. From data to effective budget management - i.e. how to make effective use of the data collected by setting targets and monitoring them on an ongoing basis. - How to organise data to optimise marketing costs and increase revenue effectively. To summarise - from this section you will learn how not to waste your budget on ineffective activities.
3. Knowledge base - how to analyse your customer? Find out how to earn more with existing customers and without incurring additional costs
Who are you acquiring and who do you already have? How to analyse data on your customers and put the findings into action. Increase the value of your customer,
What does the market research say about the situation?
According to a study by the International Conference on Eurasian Economies, companies that manage their development budgets inefficiently, they suffer a loss in market share (and what does this look like in your case, huh?)
In contrast, those that use reliable data are able to maintain their position and even use the recession to their advantage as they take on the customers of their competitors. (Are you taking on the customers of your competitors? How many new customers do you acquire?)
In short, sometimes a careful analysis of the available information can indicate that forgoing promotion and advertising will be the so called nail in the coffin. (apparently during the crisis you need to spend more on marketing, you just need to know where!)
Data-driven decision-making is fundamental
Growth and economic downturn are interchangeable phenomena that afflict every branch of the economy. It is impossible for a particular industry to grow all the time and not experience even a moment of stagnation. When running your own business, it is worth bearing this in mind and reacting to changes in advance. However, observing most companies, we see a lot of rash decisions that are harmful, not helpful.
How do most stores operate during the crisis?
The first action most companies take is to cut the costs associated with media planning and advertising budgets, or to optimise operations through intensified monitoring of spending efficiency.
But do they do this after a thorough data analysis or perhaps under the fear of losing out?
Unfortunately, it is often the latter option. And yet it is logical that without reliably collected, compiled and summarised data, we do not really know how sales, demand are going and whether the marketing budget is paying off.
Reporting is comprehensive, difficult and time-consuming, but it is the only way for you to make the right strategic decisions.
How to run an online store based on financial analysis?
Thorough analysis of all expenditure is the key. However, in order for it to make sense, it is necessary to have reliable data. They are essential for making the right decisions at the time, whether at the end of the day, month or quarter.
With reliable data, you can manage your budget effectively. By analysing your customers, you can have full control over the condition of your own company or online store.
Google Analytics data - Is it sufficient for analysis?
Many companies mainly look at the data from Google Analytics for their analysis which is not optimal as it does not contain complete transaction data and order payment status information.
Example:
According to GetResponse data, more than 65% of companies base their revenue on loyal customers. In practice, this means that most of the marketing budget does NOT go to attracting new customers, BUT TO 'keeping' the old ones. It is not difficult to see that the cost of keeping 1 regular customer is much lower than acquiring a new one.
This is why it is so important for online stores during the crisis to carefully monitor the purchasing process in its entirety, and this includes:
- Awareness of marketing, controlling departments and the management board - how much we spend on advertising in real time e.g. data refreshed every hour.
- Response time of marketers
- Goal setting and quick information on whether you are above or below target
- Planning budgets and overseeing completion
- Attracting new customers
This approach makes it easier for companies to retain key customers by creating personalised offers or entire sales routes.
Data – a way to control costs in the company
Complete data on the performance of your online store is an invaluable weapon in the fight against the recession, as it helps to get a complete overview of how the business is performing.
It can be perfectly seen in marketing activities in which data enables you:
- Analysis of return on advertising costs (ROAS, ERS, COS, ROI)
- Determination of customer acquisition cost (CAC)
- Customer Life Value (CLV) assessment
Analysing these figures is mandatory for the business owner. This is because they are crucial in making strategical, well-considered marketing decisions.
Data must be reliable
Is data acquisition alone enough for good business management? Of course not. Doing so may lead to a mistake that can cause the data collected to be misrepresented. In order to maintain the quality of the data, it needs to be constantly monitored.
“Flawed information means flawed conclusions that lead to flawed decisions”.
An important point in this sequence is the inefficient use of the marketing budget commonly referred to as burn-through which is most often the result of a failure to optimise data collection and conclusions.
What does a typical data collection process look like?
The data analysis process and its dark sides
As you can see, lots of data sources, lots of Excel sheets may result in chaos. And such things must go on automatically. Especially if you are operating in several markets.
Searching for key information, copying it into the right boxes and making sure everything matches up is a real chore. Therefore, the key to maintaining clarity of operations, automating data collection and drawing conclusions is a dedicated tool that will do this for us.
One of these tools is WitCloud
And what are the risks of bad data analysis?
If you analyse all the data separately, you are exposed to several negative factors. By making even a small mistake, all the work can go to waste.
What difficulties are waiting for you during such data collection?
- Significant dispersion of business data and thus a distorted system of company processes;
- Information chaos that consumes a lot of the time and energy of your employees to sort out;
- A risk of errors due to improper data compilation or just a plain human mistake.
How to create a report based on the extracted data?
If you are interested in how to create your first professional report, we invite you to watch a short tutorial video. In this free 30-minute video, we demonstrate you how to use three tools: Google BigQuery, Witcloud, Google Data Studio to create a comprehensive report based on automated integration.
How to simplify the data acquisition method?
The best solution is to use cloud-based technologies and ready-to-use software that will do most of the work for humans.
An excellent example of this is WitCloud which:
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Connects to marketing systems: Facebook Ads, Google Analytics, etc.
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Automatically loads all the data into Google BigQuery
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Prepares and generates report visualisations using Google DataStudio
These modern solutions are a great way to save your time and keep your nerve. They are available immediately and do not require much investment. They save you time and resources by gaining a solid basis for analysis, in the way that large stores investing in technical resources operate. This leads to the precision of the actions taken and the development of the company.
Click and book a free 30-minute consultation meeting which you can find out what your business will gain from WitCloud.
From data to budget management
As you can see, doing everything 'by hand' is a tedious and inefficient process. In addition, it may generate an opportunity for error. Creating reports for analysis in this manner is simply an unnecessary waste of time for business owners.
Fortunately, the world as well as technology is not standing still and is giving more and more new solutions to improve work. Some are used not only to process data, but also to support the budget management process.
In our company, we do it like this:
Step 1 - We plan and work on budget data for marketing channels
In Spreadsheet, we complement the information on the budget for the month, the marketing channel and, if we are advertising multiple countries, we also break this down by country.
Step 2 - We automatically link our objectives to actual execution
We then implement this data with the WitCloud tool and link it to the real results of your e-commerce. We drag in all the information there which automatically refreshes and tells you how you are doing and whether you are spending your budget evenly. This will ensure that you do not waste an opportunity, when it is possible to make money, and avoid a situation where you could be overpaying badly for days.
Would you like to hear more about it? Watch the video with our specialist Gosia Kaczyńska on the Marketing Masters YouTube channel
Click and book a free 30-minute consultation meeting in which you can find out how to manage your budget optimally
It is also important to analyse the customer
Because who exactly is the customer? We can define a customer as a user who has made a purchase from you in the past and is willing to make such a purchase again (otherwise we could no longer call him a 'customer', but rather a 'former', 'lost' customer).
In that case, I would like to ask you a few questions
- How many users do you have, who have placed any order with your store, over the course of its existence?
- How many of these users placed an order with you just once and did not return?
- And those who placed more orders, how often did they do so? And how much money did they leave at your store in total?
- Which customers are most valuable to you? Do you have such knowledge? Or do you treat all your customers exactly the same - same emails, same promotional campaigns, same marketing activities?
- How much do you pay to acquire a customer? How much do you pay for its maintenance? Is it profitable for you?
This data is significant for a must-have strategic approach to increasing profits.
You can use them for your emailing activities or upload them into marketing systems, i.e. Facebook Ads, Google Ads.
More on this topic is discussed by Krzysztof Modrzewski on his Youtube channel
How to run an online store during the recession - Summary
Running an online store during the recession is quite a challenge. But with knowledge, you are able to simplify this and maintain financial liquidity. It all comes down to 3 steps:
- Automate data collection and monitor revenue and marketing spend
- Set targets and budgets for activities and match them with real performance
- Analyse the customer and put this data into action
Would you like to learn more about the WitCloud tool and RFM analysis?
We would be happy to talk with you during a free consultation on your data and on how you could prepare your business for tougher times!
And for you, which image of the company is closer?
Click and book A FREE 30-MINUTE CONSULTATION MEETING in which you can find out how to make your e-commerce business crisis-proof quickly.