Customer development for eCommerce

or when does Conversion Rate Optimization make sense?

Every eCommerce marketer knows about need for better conversions. However, sometimes marketers think that all visitors to the site are equal and should convert to buyers. Many times they look for the shiny object (Conversion Rate Optimization) that will get them there. The shiny objects I refer here are different for different people, but are generally what the marketer has read about recently. This would include running analytics to find what pages are not “converting” or running heat maps on not so well converting pages or running A/B tests to find better converting pages.

Putting customer development ahead of optimization.

While these are important tests to run, they make better sense if an earlier step of customer development has been done. Indeed running analytics to understand customers is more important. If paying for ads, for example, are they targeted to an audience that will be willing to make a purchasing decision? Is the target known and willing to buy?

This is called as customer development. Steve Blank, consider the guru of customer development, says “you need to leave the guesswork behind and get outside the building”. The guesses or assumptions have to be converted to reality by getting in touch with customers and talking to them. The talk could be in terms of surveys, secondary research, etc. The attempt is to find the market to which the assumptions hold true.

Steve defines a four-step framework for Customer Development – Customer Discovery, Customer Validation, Customer Creation and Company Building. Even if you have money, spending money before Validation is a waste, perhaps disastrous. Instead money has to be used to grow the business.

Customer Development Model : The Four Steps to the Epiphany

While applied to software / SaaS businesses, this applies to eCommerce as well. Infact, Steve uses an eCommerce example. The beauty of the model is that it is iterative as Steve says “… finding the right customers and market is unpredictable, and we will screw it up several times before we get it right”. As new product categories are introduced, the same steps can be used to build a market.


Let us take an example – if you are a diamond jewellery store online your market is NOT every woman wanting a diamond – instead it is that subset that is interested in buying the diamond now. If you run a nationwide TV ad, you will get a lot of hits to the site – women are generally interested in jewellery. If this data is used for conversion optimization, incorrect conclusions could be drawn. Instead if this data is used to study the customers who actually purchased, you can get some useful information.
For example, the success page could be a short survey of their purchase experience. Better, if the purchaser’s journey can be accurately mapped – to the products they saw, the products they added / removed from cart and the length of their visit. If this was then time mapped to the ad that was playing at the time, you could map the actual ads that converted better. A geo map could help in the exact location of the purchase.

Using Data for Customer Development

So let us say we get the following data from a nationwide campaign

Metric : Geography

Customer Development Analytics -Geography

Metric: Age Group

Customer Development Analytics - Age

This can be analysed to indicate that Geo2 is possibly an affluent neighbourhood but is converting very well. Geo3 is not an affluent neighbourhood but people like to look at expensive jewellery and not checkout.

We also learn that most women do not like to give their age which indicates not a good metric to use.

Without being in the customer validation mode, we would try to optimize the site based on overall cart abandonment data. Perhaps displeasing the Geo2 users, leading to a decline in sales from a well converting segment.

From Search to Execution

During customer creation we may decide that a good model is to identify the Geo2 customers and to drive demand in this geography for the type of products that they like. Perhaps one might want to even personalize the site so it offers the kind of products that this segment likes.

If you need help with eCommerce data including Customer Development, you can reach us at

Customer Referral Program in eCommerce

Customer Referral Program in eCommerce

Sales gurus have always taught us that as a business you need to focus on

  • first getting a customer,
  • then getting them to buy again,
  • and then getting them to refer others.

Each one of these steps helps in reduction of cost of sales per revenue metric. Since customer referrals are so important, they have to be thought through strategically.
eCommerce store owners sometimes tend to concentrate on the tactic of a referral. There is also a confusion between customer referrals and affiliates. This blog post lists some ideas on how to structure your referral program and try to link the tactic back to a strategy.

Why are customer referrals important?

  • Customers that come through referrals are generally prequalified and ready to buy.
  • Referral customers motivation to buy often times is not the discount and hence also offer a higher lifetime value.
  • If you have not paid for the referral they are free to acquire.
  • The referring customer has a reason to be pleased with what you have to offer.

How would a referral look like – or how do I ask my customer to refer?

  • Social share
  • Email
  • Review and rating on your site

It is not always a pure financial reward

Most sales people feel that what motivates them will motivate others. They offer a financial advantage to a customer to buy their referral. This probably works for selling at the low end or to people whose primary motivation for purchase was financial. Jon Jantsch the Duct Tape Marketing guru and a huge referral advocate says : “The problem with this approach (offering financial benefit for customer referral) is that it forces the customer into making a financial decision when referrals are fundamentally social. It forces the customer to think ‘what can I get’ rather than ‘what can I give'”

But thank the referrer

Even though it may not be financial, learn to thank the referrer.
Editors Note : A future blog post will cover this topic.

Get innovative

customer referral example
Example referral program : B Dancewear’s “Dancer of the month”.
Travis Marziani reports that this tactic has generated huge referrals. Imagine you are featured on a article – you are obviously motivated to share it. The blog is on the home page of the eCommerce site. Great free advertisement for the dance clothes store.

Customer referral as a sole sale strategy

OnePlus gives exclusivity to a referred customer. You can buy a new model before it opens to the public, only if you have a referral key from a previous buyer.

Gamify your referral program

Gamification is a good way to get a customer referral program working. Promote the game among your customers as well as on the site.

Games could be as simple as take a selfie with your product and upload to your fb page. The picture that gets the most likes or shares gets a prize.

Reward can be a charitable donation

While a financial reward may not be the right motivator for a customer referral, try using a charitable donation to reward your customer for a referral. Select a charity that may be right for your audience.

Email customer referral program a few days after the purchase

Not a one size fits all email campaign but focused on the product that was purchased. Find out how they would refer you on email and make it easy from the email to act. For example, if you are selling fashion a pinterest page you create for that line of fashion or a blog. Or a link to write a review.

Segment your customers (even for referral)

Segment based on first time vs repeat customer, no of items purchased, type/price of items purchased, etc. Based on this information, set up referral campaigns. For example, if you feature a customer on the site, you might want to start with someone who is a regular buyer on your site. If you are looking at gamification, a younger audience may be a better target.

Track the success rate of each customer referral tactic – right down to the conversion

There is no magic formula that applies to all – you need to find what works for your store and audience. Hence it is necessary to track each tactic tried. Put your social share on different pages and see which one works via google analytics. Run a best liked photo campaign on your fb page and then run an ad campaign on fb targeting the likers and measure their conversion.

References – some of the ideas in this blog were influenced by :