Welcome to our third installment of the series Speak eCommerce and Enter, a basic glossary of key eCommerce terms and acronyms that can make you go OMG WTF. We've put together this guide to help you understand the most important terms and definitions in eCommerce along with some practical tips. Brace those little elves of yours. Here we go.
Upselling and cross-selling are words that go together well. They share the same goal -to increase a customer’s overall purchase value by offering them additional products or services- but through different approaches.
Ecommerce Buzzwords
My Michelle, the duet
The key differences between upselling and cross-selling are the timing and focus of the offer. Cross-selling occurs after the initial purchase decision, whereas upselling happens during the buying process. And while upselling involves presenting higher-priced or upgraded options of an item, cross-selling suggests other -complementary- products.
Cross selling: Would you like fries with that?
Cross-selling is a sales tactic that involves suggesting complementary or related products to customers based on their purchase history or current selection. The aim is to increase the overall value of the order placed. One of the best-known examples of cross-selling is the ‘frequently bought together’ section on product pages, which highlights additional items to make a completed set. This has been a very commonly used tactic in all forms of sales, including B2B eCommerce. B2B companies can analyze their customers' buying patterns and preferences to identify relevant cross-selling opportunities. That means maximizing customer value, enhancing the customer's overall experience, and selling more.
Upselling: Would you like to super-size that?
Upselling, on the other hand, is a sales technique used by businesses to persuade customers to purchase a higher-end, more advanced or more expensive product than the one they originally intended to buy. The goal is to increase the average order value and maximize revenue by highlighting additional features, benefits, or value of the advanced or upgraded version.
By understanding the specific needs and goals of their B2B clients, businesses can suggest additional features or upgraded solutions that provide greater value. Effective upselling not only increases the average order value but also helps businesses establish themselves as trusted advisors.
Using both upselling and cross-selling together can be particularly effective in generating higher revenue per sale than either strategy alone. The key to success with this approach is understanding and perhaps also anticipating customer's needs to recommend relevant upgrades and add-ons that meet those needs without being too pushy or intrusive.
Abandoned Cart: Pull them back in
Everytime a customer adds products to their online shopping cart but leaves without completing the purchase, an abandoned cart is born.
Unexpected distractions, high shipping costs, a complicated, frustrating checkout process, customers hesitant to provide personal information such as personal address or credit card details, and combinations thereof, this can happen for many reasons. Abandoned carts happen. It doesn’t even necessarily mean something went wrong. For example, B2B companies often have complex buying processes that involve multiple decision-makers. Sometimes, a potential buyer adds products to their cart but doesn't complete the purchase. To address this, companies can implement remarketing strategies by sending targeted emails or personalized follow-ups to remind customers about their abandoned carts.
Businesses can use abandoned cart emails to re-engage customers and recover lost sales. Such emails should include clear calls-to-action, incentives such as discounts or free shipping offers, and links back to the customers' original shopping cart to maximize effectiveness. When used -and tracked- correctly, these emails can increase customer engagement and boost overall e-commerce success.
But apart from offering incentives for customers to complete their purchase, businesses should also streamline their checkout process to reduce abandonment rates in the first place. This could involve making sure all prices are clearly displayed and ensuring customers aren't asked for unnecessary information at checkout. Another way to reduce customer friction and thus, abandonment rates, is automating payment processes.
CLV: Not a one night stand
Customer lifetime value is a critical metric in ecommerce that reveals the long-term financial viability of a business. Not just individual transactions in a brief period, but the total revenue earned from a customer over their entire relationship with your brand. CLV tells you how valuable your customers are, quite literally.
Increasing CLV boosts your bottom line and delivers a better return on investment. Nurturing long-term relationships with customers and encouraging repeat purchases help establish a reliable source of revenue, not bad at all in times of change and uncertainty.
CLV also helps you target the right customers. Understanding the value of each customer enables you to identify and attract high-value individuals more likely to contribute to your long-term success. Quality over quantity.
Ultimately, a high CLV indicates customer satisfaction and loyalty. When customers keep coming back, it reflects they trust a brand and the quality of its products or services.
To calculate CLV, you can use the accumulated data method, considering all customer orders, or the average estimate method, using average order value and frequency. Both provide insights into customer value.
CPA: The price tag
Remember when we talked about conversion rate and said it was an indicator of success? Well, Cost per Acquisition is a metric that also measures the impact of a campaign, but it’s a financial metric. It calculates the cost a business incurs to acquire a new customer or subscriber to take an action. In other words, it’s the waiter that brings you the bill for those conversion meals.
Calculating CPA involves considering factors like advertising expenses, sales team costs, and lead generation efforts, the total expenses, divided by the number of conversions during a specific period.
Cost per acquisition is crucial in ecommerce as it helps companies evaluate the effectiveness of their marketing campaigns and allocate resources efficiently. This knowledge allows companies to optimize their marketing efforts and focus on targeted strategies.
But CPA alone is not enough. Hardly any metric is. CPA must be compared against customer lifetime value (CLV) to gauge profitability. As long as CPA remains lower than CLV, things are fine. A positive ROI and the promise of a potentially prosperous campaign await. However, if the CPA exceeds the CLV, it's time to go back to the drawing board and reevaluate strategies
BOPIS: Born to be an acronym
It would take quite long to say Buy Online Pick Up In Store, so we go with BOPIS. This is a retail strategy that allows customers to make online purchases but collect their items from a physical store. It combines the benefits of online shopping with the immediacy of in-store pickup, offering customers flexibility and saving them shipping costs. BOPIS also provides an opportunity for while-we’re-at-it, additional in-store purchases when customers visit to collect their orders.
While BOPIS is more commonly associated with B2C ecommerce, it can also be relevant for B2B companies that have physical stores or pickup locations. B2B customers may prefer the convenience of ordering online and picking up their products when it suits their schedule. To leverage BOPIS effectively, companies must provide clear communication about available pickup locations and streamline the ordering and pickup processes.
After booming during the COVID-19 pandemic, BOPIS continues to grow and has become an important tool for merchants with online and physical stores. In the United States, BOPIS is projected to surpass $131 billion in 2026, according to eMarketer. In the UK, Click & Collect (another name for BOPIS) is expected to exceed $40 billion in 2026.
“To stay competitive and grow, brands need to meet their customers where they are and make it easy for them to purchase and pick up their items,”
Meghan Stabler, senior VP of Marketing at BigCommerce.
Accordingly, the latest evolution of BigCommerce’s omnichannel offering makes it easy for merchants to offer BOPIS to their customers and coordinate orders and inventories across branded sites, social, search, marketplace and brick-and-mortar channels. And we can help you take advantage of all that.
Stay tuned for our next installment in our Speak eCommerce and Enter glossary series, with more definitions and examples of key eCommerce terms to improve your online presence and feel more confident about those confusing acronyms. Contact us if you have any questions or comments. We like ideas. They make us click.
