Use Post-Purchase Systems to Increase Profitability in Your eCommerce Business, Ep #68

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The missing piece to profitability in most brands is the use of post-purchase systems. There are some have-to’s to effectively grow a brand. You have to build an audience, nurture the audience to convert them into sales, and maximize average order value (AOV). But the post-purchase system is where the profit lies. Listen to this episode and learn how to capitalize on your most valuable prospects - your current customers. I’ll tell you about a company who creatively used post-purchase systems to exponentially increase sales.

The five core functions of business

In previous episodes, I’ve talked about the eCommerce vital few - audience, conversions, AOV, and frequency of purchase. My friend and mentor, Alex Charfen, shared similar core functions of a business. The five he talks about are:

  • Leads
  • Nurture
  • Conversions
  • Delivery
  • Retention

There is an optional sixth function and I see this as a lead generation pillar. It’s your referral program. Spend time focusing on this - as we know, if you give attention to something, it grows.

How the fastest-growing company ThirdLove skyrockets sales

One of the best referral programs I’ve seen implemented has been done by a company called ThirdLove. They have a unique challenge in selling undergarments, which means they don’t have the leverage of a lot of purchases from the same customer in a short period of time. Instead, they’ve leveraged their referral program. As a customer, when you refer a friend you receive a $25 credit on your next purchase. The friend you referred also receives a $25 coupon toward their purchase. This setup gives the incentive to share it because you’re essentially giving money to your friends. This makes you feel good which in turn creates an increase in status. It pushes people to take action.

Learn from the most effective post-purchase systems

ThirdLove set up a tiered referral program. They saw a 400 percent increase in account creations. This was phenomenal growth because these people were not checking out just as guests. They were creating new accounts, which gave ThirdLove a higher level of permission to market to them. In this episode, find out how this company achieved a 22.3 percent conversion rate by using this referral program.

Get the most out of what you’ve already got

Jay Abraham’s book Getting Everything You Can Out of All You’ve Got relates to ThirdLove’s referral program. He talks about how to maximize what you already have, using your customers as your best sales force. As an eCommerce seller, acquiring new customers is a must. But equally important is focusing on the backend process. It’s much easier to continue to convert customers than to try to get new ones. Getting the most out of what you already have is one of the most overlooked profit centers in any business.

A lesson learned from venture capital investors

I learned an important lesson from VC investors. Follow their example of using post-purchase systems. They’re making a business out of these systems. They increase profitability by implementing the systems into businesses, then turn them around for resale. You can also use these systems to increase profit. Focus on what you already have - retention, resale, upsale. Make referral partners and programs a core part of your business. Study what ThirdLove has done and let the results speak for themselves.

Outline of This Episode
  • [0:73] Post-purchase followup - the missing link to eCommerce profitability
  • [2:24] Learn the five core functions of business my mentor taught me
  • [5:42] Follow the example of the successful business ThirdLove
  • [9:37] Get the most out of what you’ve already got
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