Vape Retailers Fight to Maintain AOV Revenue
Top online vape retailers, both in US and Europe, are devising new strategies to sustain revenue growth and in particular Average Order Value (AOV) performance. Currently, typical downward pressure on AOV hovers in the 5-7% range over the past year. Vape leaders are looking at ways to bolster orders by going at the problem from all four (4) of the usual suspects – customers, products, orders and marketing. The good news – it’s all activity necessary for day-to-day performance anyway. The secret sauce, as always, is in the know-how and execution.
Everyone in the world knows the special challenges the Vaping industry faces to generate online store traffic. Vape leaders continue to build great businesses with primarily organic, email, and referral based demand generation. Still, the challenge exists to assure continued success with customers. Multiple purchases, preferably with more bundled products than ever. Growing revenue on a solid customer base can make for a comfy lifestyle or perhaps be the next big player in the space.
Dealing with Decline
Great deal if you can get it. The fact is that the fight to continuously build to higher revenue levels faces headwinds if the AOV is in decline. Of course, the immediate questions come to mind like “Why the decline?” or better yet “How to reverse the trend?”
The answers to those questions are not one-liners that roll off the top of the vape retailer’s head. There is good work being done as of this writing in terms of the analysis to understand what’s happening. Not necessarily days but hours to address the drivers of order value. The same amount of time is being spent on both today’s action plan – as well as developing the ongoing systematic ways (ie: alerts, recommendations and automations) to address AOV performance ongoing.
Just as in any other industry – success in the vape industry requires reliability on strong analytics as a business model for a foundation. A sign of a great vaping business model is scalability – meaning delivering quality goods while at same time increasing repeat purchasers, AOV, lifetime value, and gross profit. And not taking a hit on increased cost of goods. Vaping entrepreneurs and marketers rely on automation and do not let that interfere with day-to-day store management.
New Strategies: Fighting on Four (4) Fronts
Thought leading vape retailers are taking on these challenges with automated and innovative strategies that are focused primarily on four (4) key areas and using tools that will enable rapid and repeatable ways to get it done:
Strategy #1: Segment, Segment, Segment
The analysis starts with establishing the basic understanding of orders, products and customers. Which orders are above and below targeted AOV? What products comprise the order? Which customers (profile) is a driver of higher or lower AOV? What are the characteristics of all these segments? Simply put, vape retailers are creating and saving segments of orders, products and customers so they can address the challenge now and in the future – at a glance. Several of the most successful Vape companies in the world are using Glew.io for creating and saving customized segments used for automating email campaigns, pricing, promotions, and in this case, driving AOV performance.
Strategy #2: Product Bundles
It’s the most obvious focal point, but for vape retailers their work is never done. The ability to keenly bundle and promote to the right products, to the right customer, at the right time is one of the capabilities all retailers admit they are never done improving.
Vape business leaders always want to know what gets bundled with what. First the best of the best industry marketers will determine their best performing products by doing some segmentation on top selling products (High Volume, Highest Revenue, Most Profitable, etc.). Once Vape leaders identify their top products (which can also be done by analyzing products with the highest CLTV) – they then determine what products are being bundled the most. The most advanced Vape marketers will then create a customized email campaign to purchasers of those products and promote the bundled products. For example – is Strawberry flavor most often bundled with Vanilla? Or is it bubblegum?
Additionally leaders in the Vape industry will analyze and review the most frequently bundled products. (ie: are the most bundled products simply the battery packs, replacement heads or coils? Leaders of the vaping industry promote those bundled products on their website so more customers purchase replacement coils when replenishing their favorite flavors!)
Strategy #3: Product Lifetime Value (LTV)
Product based Customer LTV in the vaping industry is becoming more and more important to Vape store owners as CLTV is the average lifetime value of all customers who have purchased that product. By recognizing what products have the highest CLTV – that will also help to understand what customers with the highest AOV are purchasing. That alone helps store owners and marketers know what products to put more focus on. Further, having the analytics at their fingertips in order to keep a steady pulse on the CLTV impact of new products and new pricing is critical to moving the needle on declining AOV performance.
Strategy #4: Marketing Channel Performance
This one is the shocker. Analyze Channel Performance to drive AOV, repeat purchasers, LTV and overall revenue? Yep. The three main channels for vape retailers are almost always Organic, Email and Referral. Setting aside a return analysis and top line revenue by channel, a more detailed look at which customers, products and orders being derived by channel offers vape retailers new strategies for evaluating channels.
In this case, as it relates to AOV. For example, if Referrals account for twenty percent (20%) of orders but thirty five (35%) of revenue, then AOV performance (customer, products and orders segments by channel) is worth examining in greater detail.
Since the Vaping industry is considered a tobacco-related sector, many advertising platforms like AdWords don’t allow advertising for vape-related sites. Making Search Engine Optimization (SEO) the biggest traffic draw to Vaping websites. When utilizing social media marketing efforts, marketers in the Vape industry pay even closer attention to the effectiveness of each campaign.