How Understanding the Life Cycle Stages of an Ecommerce Website Can Facilitate Growth
As an ecommerce leader, you know that business is not always a straightforward trajectory of growth. Healthy businesses of all kinds experience cycles, and online retail is no different. In my experience of working with ecommerce businesses, I see that they typically go through three life cycle stages: challenge, equilibrium, and growth. Understanding these cycles is crucial to achieving the results you need for your business.
Remember: these three stages are not linear; they are cycles. The challenges you face as a retailer next year will build upon what you learned or gained from solving this year’s challenges. When I think of this visually, it’s much more like a set of stairs than a smooth ramp heading upwards.
But who doesn’t want the ramp? It sounds easier, right? But, as I know from my own experience as a business founder, lusting after the ramp can cause a lot of pain and frustration. Instead, understanding the stair-step trajectory will help you begin to open your mind to a different way of thinking about your business. The reality is that challenges are often a sign of growth – or at least change. And in the world of ecommerce things are a-changin’. All. The. Time. NOW MORE THAN EVER.
Understanding the current life cycle stage of your ecommerce business is critical to structuring how you invest in your site. In working with business owners and ecommerce directors, I see that it’s tempting to ignore this. After all, there are a lot of moving parts to an ecommerce business, and retailers can feel the pressure to address everything at once. But order is everything.
For instance, let’s say your company is spending a lot of money on a marketing campaign. This campaign is increasing traffic to your site, however, customers are not finalizing their purchase. Maybe your site takes too long to load. Or maybe there’s a pop-up that blocks the add to cart button. The low conversion rate could stem from any number of issues. My point is it’s imperative to address these technical issues first. Only then will your investment in the marketing campaign create the opportunity for a higher return.
The Lifecycle Stages of an Ecommerce Business: Challenge, Equilibrium, Growth
At Command C, we identify the three lifecycle stages of ecommerce as Challenge, Equilibrium, and Growth. They are not isolated from one another, and you can experience elements of multiple stages simultaneously, but the goal is to understand which cycle you are mostly in. And that informs how you should optimize and invest.
The indicators that your site is in challenge are fairly obvious. There’s a lot you’re up against. You may have an upcoming build or migration. Or you’re struggling with low conversion rates. Perhaps your development team isn’t a good fit. Or your site has lots of issues, like it’s slow or it requires a lot of duplicative tasks to manage it. Any of these – and more – can indicate that you’re in the challenge phase of the cycle. Generally speaking, when your site is in the challenge phase, you have a fairly clear sense of what isn’t working. The great news at this stage is that even though you have a lot to address, fixing items associated with this phase can lead to exponential results.
You know your site is at equilibrium when you really don’t know what’s wrong any longer. You may have some goals that you haven’t met yet, but for the most part there aren’t glaring issues. If there are issues, you know what’s causing them. Your analytics are solidly in place and you’re in a position to measure and collect data about what your users are or aren’t doing.
Growth is characterized by new strategic or feature initiatives, an active optimization strategy (conversion or otherwise), active marketing that’s balanced with a clear CRO plan, and testing. Lots and lots of testing. Growth is where we try new things and measure to see which direction to go next.
The Joy of the Challenge Phase
The challenge phase can seem overwhelming, but as I alluded to earlier, it’s where we see the most dramatic improvements in our optimization efforts. We’re passionate about the challenge, or ‘rescue’ phase, if you will, because we’re motivated by solving pain points for our clients – and solving for the challenge phase is very, very rewarding. It’s kind of like, the worse off you are, the better positioned we are to help.
Here are some recent rescue stats from a severely challenged project. This merchant came to us with all sorts of site issues. In three months, compared to the same time period from the previous year, we were able to achieve the following:
- 79% increase in conversion rate
- 150% increase in the number of transactions
- 153% increase in revenue
- 106% increase in mobile conversion rate
Why Does Identifying the Lifecycle Stage Matter?
The reason why it’s so very, very important to be aware of which stage you are (mostly) in is because investing in items associated with a phase you’re not in will lead to a diminished return on investment (ROI). I see merchants doing this all the time. And it’s not because the pros managing an ecommerce site aren’t smart or aren’t knowledgeable. It’s because they get paralyzed by the sheer volume of information and decisions and new tools and features that are being thrown at them every day. This leads to confusion in the decisions they are making. Identifying the lifecycle stage of your retail business is an organizational tool for your company’s nervous system, as it creates a framework from which to make decisions.
Let’s say that the checkout page of your site has conversion issues. Maybe it’s a lack of trust, maybe the buttons on your mobile experience aren’t touch friendly – the issue itself is irrelevant (and perhaps unknown). Spending marketing dollars driving traffic to your site when the checkout makes it challenging for a user to complete a purchase will diminish the ROI of your marketing dollars. In this instance, it’s important to focus your attention on a seamless mobile experience before a big marketing push.
Here’s another example I see often. Merchants come to us wanting to start some sort of CRO or testing initiative. But their site is already facing multiple challenge criteria. You don’t need to test when you know what’s wrong – you need to test when you don’t know what’s wrong or what’s going to work better. Testing when you know what’s wrong will only affirm what you already know. If you have a hunch, but really aren’t sure, testing can always confirm for you. That said, very often there is low hanging fruit that can be addressed way before testing needs to happen. My point is we want you to be as efficient as you can be in your decision making.
It’s tempting to get attached to the idea that your retail company should be on a non-stop, trajectory of growth. But this isn’t true for any business, yet alone those in ecommerce. Technology is changing all the time, and sometimes these changes create new challenges for online retailers. When you know the current life cycle of your business – whether it’s challenge, equilibrium, or growth – you can address issues in the optimal order. As a result, your investment in your company’s online store will yield a greater return. The key is to make sure the technical problems are solved first, so your customers finalize their purchases without friction.