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Using Marketing Potential Effectively: Growth Through Data-driven Channel Control

Newsletter, SEO, SEA, price comparison: Every marketing channel is characterized by specific features and potentials. Accordingly, every channel requires individual management to achieve maximum results. Where do high returns, cancellations or sales costs occur, which assortment is selling well in which channel, where can margins be increased significantly by promoting certain product groups intensively? Searching for the answers, simple contribution margin accounting can reveal essential insights. A minubo customer happened to experience this just recently.*

*assortment and numbers edited

First analytical steps

Order values indicated that SEA was highly successful as a marketing channel – so why not invest more budget in the keyword portfolio? By using minubo, the shop was able to calculate the actual profits before making further decisions on investment. The result was surprising.

gross order value ecommerce onlineshops
eComemrce contribution margin

Going deeper: Contribution margin accounting

Contrary to expectations, SEA performed much worse than the quite low-selling channel Direct: Despite order values being 1.5 times higher, SEA (as well as Newsletter) recorded a lower net sales margin due to higher return rates and cancellations.

Drill-down return rates

On the basis of these insights, it is crucial to  actively reduce the high return rates in the problematic channels. Therefore, they are drilled-down to single product groups. Evidentially, the high return rates actually originate from specific product groups for the most part.

eCommerce return rates per channel and product category

After the analysis: Make better decisions – pull the right strings

Online marketing eCommerce

Direct: the targeted channel for marketing to existing customers

Those who visit a shop via Direct typically know what they want. This leads to low return rates and high margins.

– The goal: convert expensively acquired new customers to Direct purchasers – that will increase margins rapidly. A proper method is intensive brand marketing: popular brands are visited directly by customers.
eCommerce increase channel profits

Newsletter: promote sales of selected products

Newsletters are a great opportunity to intensively support sales of selected products. The right product portfolio enables the avoidance of high return rates and sales cost as well as allowing for the exploitation of profit potentials.

– Drill-down return and sales cost rates in the Jeans segment to product level and exclusively include high-margin products in your newsletter.
– Accessories are rarely returned – a clear case for trying newsletter marketing with them!
eCommerce higher profits through budgetoptimization

SEA: Create a high-margin keyword portfolio

SEA records high costs of sales as well as high return rates in Jackets and Jeans. Great unexploited profit potentials are hidden here!

– Drill-down return rates of critical product groups to keyword level and deduct budgets of keywords with high return rates as appropriate.
– Minimize sales cost rates: enhanced promotion of keywords with low rates and high margins.
eCommerce solution minubo higher magins

Price comparison: beware of high sales costs

A customer who compares prices is located in quite an advanced state of the conversion process – this reduces returns. The one who keeps an eye on his sales costs now has a good shot at high margins.

– Sales costs should absolutely be looked at on a per article level here. Recording an average rate of 61%, it remains uncertain if every article placed in the price comparison is profitable at all.
minubo higher SEO revenues keywords

SEO: Stop optimizing ranking results blindfolded

SEO is time-consuming. Therefore, it is important to focus on keywords that actually flush money into the coffers.

-Accessories sold via SEO perform very well in return rates. Their return rates being significantly low as compared to channel’s average also indicates minor revenue, though – hiding high profit potential!

*based on anonymized customer data

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