Running an e-commerce business today isn’t what it used to be. The general trend for Swedish retailers is that the profit margin on average is as low as three percent. The fast-growing e-commerce segment makes it even harder to keep the margins up. That’s why it’s becoming really important to focus on ROI by improving the digital marketing strategy of e-businesses. Here we present you with three top strategies you can use.

1 Business Intelligence

The BIG change today is that 60% of all clicks for US e-commerce are derived from Google shopping. Many customers have seen even bigger challenges. The challenge comes in working on your product feed and how you use your data. Based on brand/category/product, find your top and bottom 20% and understand what customer behavior you see in each segment and why. Product titles are key here. Structure them based on brand, category, and attributes, and use different structures for different product titles.

You also need to evaluate pricing, ROAS, margins, and ROI on a continuous basis and take data-driven decision to drive your targets. When setting your ROAS target, you should include logistic, warehouse, sales and return costs. If you have a buying frequency of 0.5+ per month, also make sure to evaluate the lifetime value setting. You need to look at how your price affects the outcome of your advertising, how you are pricing compared to the competition and how that affects ROAS. You also need to change your ROAS targets based on your product margins. You need to make a data-driven decision for each product/brand/category level depending on your pricing strategy.

Read more about pricing strategies here: Pricing strategies for e-commerce and retail companies.

2 Buyer Personas

Since it’s more important than ever to know your buyers, you must invest in target and personalized advertising campaigns based on data at scale. Typical for e-commerce companies are geographic location, age, gender, device and day of the week.

You then see how those factors relate to ROI, and steer your budget to where your ROI is the highest. This is best perceived in a data-driven way, as it will provide you with great insights for future actions. 

3 Social Proof

Social proof has shifted. Let’s look at a practical example of a restaurant. In the age before world wide web, it could be hard to find a good restaurant. You would look for places that were busy, and look to see if the customers looked satisfied. Back then you built a business solidly over many years, and it was commonly based on word of mouth.

Offline it was a bit more subtle, but online we need to be a little more obvious. Social proof today is fast-paced. Social proof indicates that many people have bought something, or that they've gotten good reviews. Today people do their research and look for validation.

Good reviews = Proof of success

By using product ratings, you can stand out in the crowd, increase click-through rates and attract high-quality traffic to your website.

Another way is through rich snippet stars, which means that you collect reviews and then display them through an ad snippet code. It’s a quick and effective way to increase traffic to your page.

In this example with LensDirect.com, they increased the traffic to their website by the use of rich snippet stars. By leveraging reviews socially and on paid acquisition channels, they were able to measure performance against their companies KPI's which include social engagement, the click-through rate on search results, and conversions.