- Hey guys, Sam here from KeyCommerce.com.
In this video I really wanna show you something so important
about building a brand store
or any E-commerce store for that matter.
In this video, I'm gonna go through these big four systems,
these big four parts of a successful store
and hopefully this video is gonna absolutely blow your mind
and it's gonna totally change
the way you approach your store
and scaling it up and being profitable.
(upbeat music)
So let me first illustrate what most people do
and why this is the bad approach.
Most people start like this.
They build their E-commerce store.
Let's just imagine that this is a terrible E-commerce store
with like a vet menu bar, that bar,
then all the products there.
And what they do is they then,
start sending traffic to this store.
So this is the basic approach.
You know, you build a store, you find your products,
you design your store, you build on Shopify
and then you start throwing traffic at it.
You throw some Facebook ads, maybe some Google Shopping,
to really, really basic store, basic idea
and you might convert your traffic
at 2-3%, if you're lucky.
So let's just be optimistic and say 3%.
So what a lot of people do,
this is how they start their store.
And maybe you're in this state right now.
You start sending this traffic,
you're running Google ads, for example,
or Facebook ads,
you send it to this store
and you're trying to convert this traffic.
The problem with just doing this by itself
is that you need to be profitable on this traffic
and that's it.
So say if someone buys something from you
and they buy a $20 product.
Well, your profit margin is say 30%.
So if your profit margin is 30%
then you're probably making about $6,
or $7 say let's be generous, $7 in profit.
So that means that every customer that you acquire
from your traffic, you can pay at most $7
and that's it.
And even if you spend $7 to acquire that traffic,
you're breaking even, you're not making any profits,
you're just churning through all these customers.
And especially if you don't have good products
and you don't have a good buying experience,
then you're gonna get some problems.
You're gonna get people with asking for a refund,
getting charged backs and all these problems.
So even as $7, that's even too optimistic
and really the max you could pay is maybe five, four or $5.
Now, this is where I see a lot of stores
and a lot of people that are doing courses,
Dropshipping courses,
and they learn this strategy
and they're obsessed with their traffic.
And I teach a lot of videos on my channel
about Google Shopping, Google ads, about traffic generation
because it is a big problem that a lot of people have
but really there's so much you can do so easily
to make your life so much easier
and to grow your E-commerce store much, much better.
And here it is.
So first you've got this traffic coming in,
it's going into your store.
The first thing you need to do
is start improving what's called your average order value.
So when someone, they go to your checkout page
and then you have that one product $20 that they're buying,
well, do you have upsells?
Do you have other products that they can add in,
that add more value to their experience?
There are a bunch of apps you can use
but even just having more products
that are not substitutes necessarily,
but as products that add on to that experience
that maybe some sort of cleaning product
or some sort of product
that depends on your product of course
but some product that adds to that experience
and it does depending on your niche
and what you're already selling.
And what you wanna do here
is improve the average order value.
Average order value is the amount of money
that someone spends on average when they go to your store.
And if you don't have anything in place
to improve the average order value,
any optimizations on your website
then you're still gonna get $20
and your profit amount is gonna be $7 per order.
Or, if you can say, get this up to $30,
so you're increasing that by 50%
or suddenly with that profit margin,
you only have a profit of $10 if you're 30%,
about $10 in profit.
So suddenly you've got a bit more room
and you're still paying the same amount over here
for your traffic.
So that's the beauty there, you know,
largely you're conventional is gonna stay the same,
you're gonna increase your average order value,
and you're gonna pay the same amount per customer
but now suddenly you're making an extra $3.
Now the most of the stores I work with
they don't have products that are just $20 or $30.
Their average order value is usually about 60, 70, $80,
often even out between 100 to $200.
And often they do that,
some of them do have smaller products
but here's the other thing guys,
the next thing you want to worry about.
You have your average order value,
you have your conversion rate and you have your traffic.
The fourth big thing you want to worry about
it's called the customer lifetime value.
What this means is, let me just draw like an infinite sign.
So basically the idea here is that,
someone comes you pay for them,
they go to your website,
they convert at 3% or whatever it is,
you increase their average order value to $30.
You then wanna have systems in place,
marketing in place to get them to come back
and purchase again.
Because if this person buys two more times, at $30,
their customer lifetime value,
the value that they generate for your store
over their whole lifetime is $90.
So say if you still spent $7 over here for that traffic,
instead of just breaking even first, barely breaking,
you then get $3 in profit,
but now at that 30% profit margin,
say I'm doing estimate $30 in profit here,
minus your $7 acquisition cost.
You're now making $23 in profit
over the lifetime of this customer.
And maybe that takes three months
to get those extra two orders,
maybe it takes six months, maybe 12 months, you know
and that's gonna affect your cashflow.
But what you can do is implement strategies
marketing campaigns, especially email marketing
to get people to come back and purchase again.
And this is absolutely huge guys
'cause once you change that mindset
away from just thinking about over here,
which so many people do
and they just get so stressed
because they can't make their ads profitable
or you can see how easy,
you know, it's easier said than done
but once you apply strategies
to increase the average order value
and increase the customer lifetime value,
suddenly you're not making $23 per customer over there
and your competition, there's a good chance
they're all struggling just like you
or suddenly you can pay 20, $30 actually,
$30 to acquire each customer.
And you can outbid them,
you can just dominate the market and implement strategies
that are much, you know, costs more to implement,
but still acquire customers
and just throw your brand all over the web
because you know it's gonna be profitable,
because you know that you have these strategies in place
and you can see, you know,
over time with your customers
that they come back and purchase again and again
and this is the beauty of building a brand store.
You can't just pick something off AliExpress
and it's really hard to do that with a brand store
and do it this way, because you know,
you need to really have USPs.
You need to have unique selling propositions
for your store, build a brand, sell quality products,
get reviews for those products to build social proof
and then get these people to buy more
and come back later to purchase again and again.
A lot of people do that through subscription products,
you can do it through creating a community
like a Facebook group.
You basically wanna create this affiliation with your brand
where people want to come back
because you have such a great experience,
maybe a good unboxing experience,
shipping is fantastic and fast,
the product works great, it doesn't break.
And even if it did,
you have a great refunds and returns policy.
This stuff all plays together
to create this brand store
you can see generates so much more.
And you know, this is on such a small amount of,
you know, revenue like $20 per product to start with,
you're starting off much as 60 to a hundred dollars
and you increase the average order value
and increase the customer lifetime value.
You can see
that it's like on steroids,
it's gonna have such a bigger impact all these adjustments.
And so when you're looking at your store
and you should have Google analytics installed
and you should be watching all your metrics
watching your average order value, customer lifetime value,
your conversion rate,
your return on ad spent, all these metrics,
and I've got views on these.
I put a video on how to calculate your average order value,
how to calculate your customer lifetime value.
I've got videos on these guys,
and I also provide tips on improving these
and increasing those values
'cause that's beneficial.
Once you have your eyes on these metrics,
you can track how you improve these.
And suddenly traffic is no longer the one thing
between you and being successful,
but it's just one part of it.
And you can imagine how beneficial this is
in the current age, where Facebook is so volatile.
There's more people going
into Google ads and Google shopping,
there's more competition.
Suddenly this is what you need to do
to set up your store for success in the long run.
And this is what I've seen time and time
and time and time and time again
with the stores that I'm working with my team
that we're working with,
'cause we can see inside the Shopify dashboard,
we get access to all their analytics, all that Google ads.
So we see what's working,
we see that and we go,
okay, these stores are all doing
six, seven, eight figures, why?
Oh, because 30% of their revenue
comes from email marketing
and these are return customers
or people sign up for their, you know, a coupon code
and they just keep selling to these people
and getting them to come back
and purchase again and again.
Oh, they've got upsells,
they're improving the average order value,
they're testing out the pricing on their products
to increase that profitability per order.
And that's leading to them
being able to spend all that money back on their ads.
And so they say to us,
hey, oh yep, our break-even ROAS is now, you know,
is this now.
Or, you know, maximum cost per acquisition is now this
because they've been looking at the metrics and knowing
exactly how much revenue and profit
each new customer brings them
on average over the next six to 12 months.
And that is so powerful guys.
And you can see
you're coming up against these sort of stores,
it's impossible to compete,
you're playing in a different game.
They just gonna shoot off ahead of you
and you're gonna be still there stuck
testing different creatives.
and just like, just focusing on your ads
when, you know your needs important to improve your ads
and I teach that a lot in my channel,
but guys, it just makes it so much easier
when you've got all this stuff sorted,
because that new conversion, that new customer,
you know, that just pays off so much more in the long run.
Anyway guys that's it for this video, I hope that helps.
If that was helpful,
let me know in the comments below,
I really appreciate it
and please give it a thumbs up
and check out my other videos.
I'll put some links in the description
to some other videos that have really helpful,
like about your average order value,
customer lifetime value.
Watch those improve these metrics.
So, so important for your store guys.
I wanna see you guys succeed.
I want to see you guys scale up
and get the freedom
that you get from financial freedom.
I think that'd be amazing
for many more people to have.
Anyway guys, thanks for watching,
and I'll see you the next video.
Bye for now.
(upbeat music)