So far, we are 4 emails deep in the Ecom Profit Engine Masterclass Series.
A quick recap. You now know:
~ the easiest way to sell anything (repeatedly) is to become famous
~ to become famous, you focus on the 5 pillars –
Frequency. Familiarity. Personality. Controversial. Authority.
Today, we’ll dive into the “how to” starting with…
To create “brand awareness,” most e-commerce focus immensely on paid traffic (rightfully so). Advertising platforms allow us to put our brand in front of millions of potential prospects worldwide.
It’s an excellent strategy.
But why are there so many brands that are successfully turning traffic into customers… struggling to take home profit?
Here’s why advertising works… and fails.
In my experience –
While advertising is great in bringing new customers into your world, yet…
Advertising generates revenue, not profit.
Here’s why…
According to Shopify, the average net profit margin for e-commerce is around 10% (with 20% considered high).
Now…
This varies significantly across industries, niches, and business models.
But it’s safe to say –
An e-commerce selling “physical product” with production and distribution costs has a much (much) lower margin than an “info product” selling PDFs and videos.
So, when a marketing course teaches you that “all you need to do is have an AOV greater than your CAC,” it overlooks a lot of hidden costs.
This is when you realize…
You are LOSING moolah at the front end and start panicking.
“We need to lower the acquisition cost.”
“Let’s test more creatives.”
“Try VSL.”
Nothing works.
Because this is the current state of advertising.
Attention is scarce. Algorithms are a black box. Traffic is expensive.
(and will get more expensive every day, week, month, year)
BUT
Most brands forget…
To scale profitably, you have 2 options:
1) Try to lower the customer acquisition cost
(which is getting harder and harder these days)
2) Try to maximize customer lifetime value
(in other words, maximize your EARNINGS)
Because if you can turn customers into repeat customers—week after week, month after month—then you have the foundation to scale.
And…
Email marketing is your ultimate weapon to maximize customer lifetime value without increasing your advertising budget.
I’ll explain why in the coming emails.
To be continued…
– WYH