Changing Minds
For a long time, establishing deep, meaningful relationships with existing customers was seen as a herculean task. While branding efforts did manage to pull back some customers to websites and apps for transactions, it always remained an expensive line item, frustratingly nebulous and hard to quantify. Push messages, the only other hope to bring customers to the brand’s properties for transactions, are easily ignored and becoming less effective. This predicament left eCommerce companies with minimal choices but to employ adtech to retarget their own customers.
Once caught in the adtech web, brands and marketplaces find themselves embroiled in a fierce bidding war. The object of contention? Not just the shiny, new prospects, but also their own “one and done” customers. This battle inevitably propels marketing costs upwards, often outpacing sales, leaving profits battered and bruised in its wake.
However, a revolution is brewing. Fresh innovations and transformative ideas are poised to pull eCommerce businesses out of this quagmire. But the transition is far from smooth. In numerous conversations with managers across the industry, I’ve encountered an alarming reluctance to embrace these game-changers. The reasons are many: inertia to try out new methods (“I am simply too busy to try out these unproven ideas), flawed KPIs (“I am measured by website and app traffic so Inbox Commerce could actually hurt my performance”), lack of internal resources (“If it requires any IT integration, I will not be able to get it done”), a short-term mindset (“I cannot take any risk because I have weekly targets I need to deliver on”), and so on. The comfort of targeting new and existing customers through familiar adtech platforms often trumps the unfamiliar territory of experiments with martech initiatives. As one CMO candidly admitted, “Profitability is not my concern; I only need to deliver topline growth, and it’s much easier to do that via spending on Google and Meta.”
However, I observe flickers of hope. A growing number of marketers are demanding a better return on investment, which is a very good first step. But they seem to be missing the bigger picture, concentrating on optimising unit-level spending (“Improve the return-to-spend ratio on email”). Their tunnel vision blinds them to the larger issue – the eFolly of failing to see their existing customers as growth engines and profit drivers, and its detrimental impact on their businesses.
This should arguably be the most important agenda for marketers and CEOs. Unfortunately, beyond the chorus of “Help! Our CAC is rising”, I see no concrete steps to address the core of the problem. Marketers need to shift their thinking towards profitability. To achieve this, they need to navigate through the five funnel fractions I’ve outlined in my previous trilogy [ProfitXL to Profipoly: Solving the Four Funnel Frictions, Solving eCommerce’s Fifth Funnel Friction: Identifying Unknown Shoppers, and Email 2.0: The Fulcrum for Fixing Five Funnel Frictions]. But crucially, they first need to acknowledge and comprehend their eFolly.
Starting this journey of transformation requires examining the funnel elements that marketers know well – ToFu, MoFu, and BoFu (top, middle, and bottom of funnel). In addition, there is a need to scrutinise what lies above the funnel (ATF) and below the funnel (BTF). Only then can marketers truly begin to change their minds and turn the tide from eFolly to Profipoly. At stake is the very future of eCommerce: $200 billion of AdWaste which can be converted to brand profits.
