When an e-commerce team wants to push with purpose and focus sales growththey must choose between two different paths: broadening their target audience or deepening their investment in their current customers.
Each of these has its advantages and disadvantages, and often indirect factors can help a team decide which one to follow. If your business is hesitating between investing in breadth versus depth with your ecommerce brand, here are a few thoughts to help you make your decision.
Focused on a niche
The first way to grow your ecommerce revenue streams is to double down on what you already do well. Once a company has found an eager audience loyal to its vision, message and products, the easiest way to grow is to continue working with that same customer base.
Remember that customer retention is five to seven times more expensive than customer acquisition. If there are simple or obvious ways to meet the needs of existing customers, this can often be the fastest way to grow sales.
How to deepen the offer for existing customers
How do you target the same audience in a way that can increase sales? If you answered “more products and services,” you’re well on your way. But you can’t just make more things to sell on your online store. You need to ensure that your new offering offers more value to your customers.
This requires an open mind, an innovative mindset and a lot of research. For example, you can discover new ways to generate value for existing customers by:
- Study your competitors: This is one of the best ways to grow a business. Consider your competitor’s offerings and services. Look for the main features and benefits. Also read reviews and consider which ones unique value propositions resonate with their customers.
- Ask for feedback: Your own customers are also an excellent source of inspiration. They can not only provide insight into how existing offers can be improved. They can also shed light on how to meet other needs.
- Engage customers: In addition to asking for direct feedback, you can also communicate with customers in their own environment. Creating branded online communities such as a social media groupcan help you learn more about customers in an organic environment.
As you discover more needs from your existing customer base, you can start developing solutions. This requires more investment in R&D. It can also take time.
When tackling a stubborn problem, you may need to come up with a solution never seen before. If you’re targeting a common problem, chances are there’s some well-established competition.
When that is the case, you need to go beyond mere solutions and ensure that your product or service has a unique element that makes it superior to alternative options. You can offer a higher quality version of a product or add a feature never seen before. You can also provide a better customer experience or use bulk pricing if your existing customers are lumping new offers with existing purchases.
Case Study: Dungarees cater to its customers
Dungarees is a good example of this “depth” approach to sales growth. The online and physical retailer sells workwear and operates with a purposeful mission: to exceed customer expectations at every point of the customer journey through impeccable service and genuine expertise.
Two enterprising brothers built the Dungarees brand after working as contractors and realizing the selection of quality work equipment was limited. In response, the young men launched their own retail brand, starting with reselling their favorite workwear: Carhartt.
As the first company to bring the Carhartt brand to e-commerce, the Dungarees team focused on the digital customer experience. They hired employees with practical knowledge of how to wear and compare workwear. This gave the customer service team targeted insights that could help customers make informed purchasing decisions. The company also maintained competitive pricing and on-time delivery.
To drive growth, the Dungarees team expanded on their service to existing customers by expanding their brand selection. Over time, they added more well-known, high-quality names to their e-commerce 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 foundation in 1999, Dungarees has become a brand that knows its target audience through and through. It specializes in meeting the needs of a very specific audience (those who require premium workwear) and has focused every effort to increase sales on improving its value with pre-established customers. The result is a base of loyal customers who remain satisfied well beyond the point of sale and keep coming back for more.
Expand your audience
The other way to grow your ecommerce revenue streams is to find more customers. In this case, you need to put less effort into expanding your product selection and put more emphasis on market research and customer acquisition strategies.
As mentioned above, acquiring more customers can be more expensive upfront. But cost is not the only deciding factor. Once you’ve optimized current customer value, the best path to viable growth is through new customers. If that’s the case, investing in new markets and defining a larger audience can be worthwhile, if done right.
How to broaden your sales through new customers
Finding new customers starts with introspection. Consider your current product offering. What are their features and benefits? What problems do they address? What consumer pain points do they answer?
Now consider which groups have the same or similar concerns or issues outside of your current customer base. You can do this in several ways, such as:
- Using competitor research: Again, look at your competitors. This time, focus not so much on their offerings as on their audience. Who do they serve for? How do they differ from your existing customers?
- Working with influencers: Influencers come with a loyal following. If they don’t overlap with your existing customer base, influencers can help you discover and reach new audiences who don’t yet realize that you have a solution to their problems.
Expanding your audience doesn’t necessarily mean you don’t need to expand your offerings. On the contrary, as your customer demographics expand, you may find additional products or entirely new services to offer.
However, if you want to expand the breadth of your customer base, you need to start with, well, the customer.
Case Study: Amazon expands from books to everything
The best example of the concept of expanding an e-commerce store via broadening the target market comes from the top of the online shopping pyramid. When Amazon started as early as July 1994, the company only sold books. It even carried the slogan “The largest bookstore in the world” on its logo.
At that early stage, the company was an unusual entity in a physical world with an owner who dreamed bigger. When it came to growing revenue, it wasn’t long before the future mega-ecommerce brand chose to look beyond its core audience.
In the late 1990s, the company sold hundreds of millions of dollars worth of books each year. It had clearly reached its original audience and owner Jeff Bezos started looking for other consumer needs to meet through his innovative online business. The company started using its bookselling infrastructure to ship everything from shoes to kitchen items to electronics and much more.
The company didn’t stop its revenue expansion from diversifying its physical product offerings, either. In the early 2000s, the development team realized they could capitalize on the technology it had built up over the past five years by turning it into a web service as well.
The rest of the story is well known. Amazon remains the most diversified e-commerce seller to this day, with incredible revenue streams coming both from Amazon sales those who sell on the platform or use of its web services.
Breadth vs Depth: Which Fits 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 business right now and then implementing it with an existing strategy.
View the current offer of your brand. Then take a look at your customer base. Does it make more sense to break into your field 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 it makes more sense to aim for expansion?
Invest in making that first decision wisely. It will dictate where your time, energy and resources go for a long time as you try to build on your existing success by growing your ecommerce revenue streams.
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