Whenever an ecommerce team wants to spark intentional, targeted revenue growth, they must choose between two distinct paths: broadening their target audience or deepening their investment in their current customers.
Each of these has its pros and cons, and often circumstantial factors can help a team decide which one to pursue. If your company is debating between investing in breadth versus depth with your ecommerce brand, here are a few thoughts to help guide your decision.
Focusing on a niche
The first way to grow your ecommerce revenue streams is by doubling down on what you already do well. If a company has found an eager audience that is loyal to its vision, message, and products, the simplest way to grow is to continue working with that same consumer base.
Remember, customer retention is five to seven times more expensive than customer acquisition. If there are simple or obvious ways to meet existing customers’ needs, this can often be the quickest way to revenue growth.
How to deepen offerings for existing customers
How do you cater to the same audience in ways that can grow revenue? If you answered “more products and services,” you’re part way there. But you can’t just create more things to sell in your online store. You need to make sure your new offerings provide more value for your customers.
This requires an open mind, an innovative mindset, and plenty of research. For instance, you can discover new ways to generate value for existing customers by:
- Studying your competitors: This is one of the best ways to grow a business. Consider your competitor’s offerings and services. Look for key features and benefits. Read reviews, too, and consider which unique value propositions resonate with their customers.
- Ask for feedback: Your own customers are an excellent source of inspiration, too. They can provide insights not just on how to improve existing offerings. They can also shed light on how you can meet other needs.
- Engage with customers: Along with asking for direct feedback, you can also interact with customers in their own environments. Creating branded online communities, like a social media group, can help you learn about customers in an organic setting.
As you discover more needs from your existing customer base, you can begin to develop solutions. This requires more investment in R&D. It can also take time.
If you’re addressing a stubborn problem, you may have to come up with a never-seen-before solution. If you’re catering to a common issue, chances are there will be well-established competition.
When that’s the case, you need to go beyond mere solutions and ensure your product or service has a unique element that makes it superior to alternative options. You might offer a higher-quality version of a product or include a never-seen-before feature. You could also ensure a better customer experience or utilize bulk prices if your existing customers lump new offerings in with pre-existing purchases.
Case study: Dungarees hones in on its customers
Dungarees is a good example of this “depth” approach to revenue growth. The online and brick-and-mortar retailer sells work gear and operates with a single-minded mission: to exceed customer expectations at every point of the customer journey through impeccable service and genuine expertise.
Two entrepreneurial brothers built the Dungarees brand after working as contractors and realizing the limited selection of quality work gear. In response, the young men launched their own retail brand, beginning by reselling their favorite work apparel: Carhartt.
Being the first company to take the Carhartt brand to ecommerce, the Dungarees team emphasized the digital customer experience. They hired employees with hands-on knowledge of wearing and comparing work gear. This gave its customer service team targeted insights that could help customers make informed purchase decisions. The company also maintained competitive pricing and timely delivery.
To spark growth, the Dungarees team pushed deeper into their service to existing customers by expanding their brand selection. Over time, they added more high-quality household names to their ecommerce portfolio, including Timberland PRO, CAT, Ariat, and Wolverine Boots & Gear. The brand has added each of these products to its catalog with existing customer needs in mind.
Since its founding in 1999, Dungarees has become a brand that knows its target market inside and out. It specializes in meeting the needs of a very specific audience (those in need of premier workwear) and has focused every revenue expansion effort on improving its value with pre-established customers. The result is a base of loyal patrons that remain happy well past the point of sale and continue returning for more.
Expanding your audience
The other way to grow your ecommerce revenue streams is by finding more customers. In this case, you need to put less effort into expanding your product selection and more emphasis on market research and customer acquisition strategies.
As already mentioned above, acquiring more customers can be more expensive up-front. But cost isn’t the only deciding factor. If you’ve optimized current customer value, the best path to viable growth is through new customers. When that’s the case, investing in new markets and defining a larger target audience can pay off — if done well.
How to broaden revenue through new customers
Finding new customers starts with introspection. Consider your current product offerings. What are their features and benefits? Which problems do they address? What consumer pain points do they answer?
Now, consider what groups have these same or similar concerns or problems outside of your current customer base. You can do this in a few different ways, such as:
- Using competitor research: Once again, look to your competitors. This time, don’t focus on their offerings so much as their audience. Who are they catering to? How are they different from your existing customers?
- Working with influencers: Influencers come with a loyal crowd of followers. If they don’t overlap with your existing customer base, influencers can help you discover and reach new audiences that don’t yet realize you have a solution to their problems.
Expanding your audience doesn’t necessarily mean you won’t need to grow your offerings. On the contrary, as your customer demographics expand, you may find complementary products or entirely new services that you can offer.
However, if you want to expand the breadth of your customer base, you need to start with, well, the customer.
Case study: Amazon broadens from books to everything
The best example of the concept of expanding an ecommerce store via broadening the target market comes from the top of the online retailer pyramid. When Amazon started way back in July of 1994, the company only sold books. It even sported the slogan “Earth’s biggest bookstore” right on its logo.
At that early stage, the company was an unusual entity in a brick-and-mortar world with an owner that dreamed bigger. When it came to growing revenue, it didn’t take long before the future mega-ecommerce brand opted to look beyond its core audience.
By the late 1990s, the company was selling hundreds of millions of dollars every year in books. It had clearly maxed out its original audience, and owner Jeff Bezos began looking for other consumer needs that he could meet through his innovative online company. The company began using its book-selling infrastructure to ship everything from shoes to kitchen items to electronics and much more.
The company didn’t stop its revenue expansions with diversifying physical product offerings, either. In the early 2000s, the development team realized they could cash in on the technology it had built over the past half-decade by turning it into a web service, as well.
The rest of the story is common knowledge. Amazon remains the most diversified ecommerce seller to this day, with incredible revenue streams coming from Amazon sales as well as those selling on the platform or using its web services.
Breadth versus depth: which is right for your brand?
Both focusing on a niche and increasing the size of an audience can lead to impressive revenue growth. In either case, the essential element is choosing which one makes sense for your company at the moment and then implementing it with a strategy in place.
Take a look at your brand’s current offerings. Then consider your customer base. Does it make more sense to push into your area of expertise by expanding your products or services for your existing loyal customers? Or have you maximized the low-hanging fruit with your existing target market and aiming to expand makes more sense?
Invest in making that first decision wisely. It will dictate where your time, energy, and resources go for a long time to come as you seek to build on your existing success by growing your ecommerce revenue streams.
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