Posted on 30/08/2023 in customer

Ecommerce Customer Service: 6 Tips For Online Support

Picture this: You’ve spent the afternoon shopping online, have finally pressed the fateful Order button, only to realize you’ve ordered two of the same item. Who do you turn to for a quick and painless fix?

Customer service, of course.

Customer support is an integral building block for any ecommerce business—so integral, in fact, 77% of consumers think good customer service is critical to earning brand loyalty and generating business.

This guide shares how to provide excellent customer service for your ecommerce brand, alongside techniques to measure and improve your current strategy.

Table of Contents

What is ecommerce customer service?
Advantages of good ecommerce customer service
6 ecommerce customer service best practices
Ecommerce customer service practices to avoid
How to measure customer service success

What is ecommerce customer service?

Ecommerce customer service is the support and assistance provided to online shoppers before, during, and after their purchase. It includes addressing inquiries, resolving issues, and ensuring a positive online shopping experience to enhance customer satisfaction and loyalty in the digital marketplace.

Advantages of good ecommerce customer service

Good ecommerce customer support isn’t just good for the consumers who shop online—it’s good for business, too. At its best, an exceptional customer service team can help build consumers’ confidence in your ecommerce brand. It can also do the following:

Boost customer loyalty

When online shoppers feel appreciated, their sense of customer loyalty deepens. In fact, a Statista survey found 94% of customers are more likely to buy from a brand again when they have a good customer service experience.

Improve customer experiences

Ecommerce customer service can resolve technical issues for online shoppers who have run into any issues and improve their customer experience. Self-service options like FAQ pages and chat functions can also help online shoppers resolve issues instantly.

Attract more customers

Good news spreads fast. The more often your customers have a positive experience, the more likely they are to spread the word about it and refer new customers to your online business—creating added value for you along the way.

Improve conversion rates

Ecommerce conversion rate is an important metric—one that can be hard to improve. Good customer service can help get potential buyers over the hump and move the most important conversion metric you have: sales.

6 ecommerce customer service best practices

Leverage customer reviews
Have an FAQ section
Develop multichannel support
Utilize live chat support
Personalize your approach
Integrate inventory data

1. Leverage customer reviews

Customer reviews are a great way of parsing through customer feedback. And when you engage and respond to those who’ve left a review, you get a better understanding of what your customers want from your ecommerce business—because you’re practicing proactive customer service.

Proactive customer service means fulfilling a customer’s needs before they bring it to you or your customer service team. It’s a fantastic way to build confidence in your ecommerce business and retain loyal customers. By acknowledging reviews—both the good and the bad—you give your online shoppers the sense that they’re both heard and appreciated.

Here, shoe brand Vessi’s customer service team responds to a customer who was dissatisfied with their order. They acknowledge the challenge of finding shoes that fit, and proactively offer additional help to the customer.

A three-star review on a product on the Vessi website, with response from the customer support team — The Vessi support team proactively responds to a three-star customer review, offering help and thanking the customer for their review.

2. Have an FAQ section

The most successful ecommerce businesses offer online shoppers a way to solve their problems on their own before escalating to a customer service agent.

Easily reduce the number of support questions by building out some sort of resource—a frequently asked questions (FAQ) page or a comprehensive knowledge base—that covers both the basics and the most common queries. Magic Spoon, for example, outlines whether its cereal is keto-friendly, whether kids like it, and what it tastes like, which is important for customers who haven’t tried it before.

Image of Magic Spoon’s FAQ page answering common questions. — FAQ page answering questions across five categories: product, shipping, international, orders, and general.

3. Develop multichannel support

Modern shoppers are inherently multichannel. That doesn’t just apply to their purchasing journey—customers interact with brands across a range of communication channels once their order is complete.

Develop multichannel customer support and meet customers where they are. From email and SMS to social media support, provide a direct line of communication to your ecommerce customer support team to not only meet expectations, but deliver excellent post-purchase support.

4. Utilize live chat

Speaking of multichannel support, some customers will head directly to your online store when they need assistance. A survey by Tidio found 88% of web users chatted with chatbots in 2022, and seven out of 10 of them found the experience positive.

Chat software not only answers questions from website visitors, but gives them instant answers instead of waiting for your ecommerce customer service team to come back online.

Shopify Inbox, for example, can alleviate pressure on your support team by providing customers with real-time responses to basic queries like:

Where is my order?
What’s your refund policy?
Do you offer an affiliate program?

Chatbot showing three customer support prompts: “Track my order,” “Return policy,” and “Shipping rates and timelines.”

5. Personalize your approach

Every ecommerce business can approach the idea of personalization differently. It can mean providing email or phone support from a customer service representative when things go wrong or when online shoppers have questions.

Personalization can also extend to specific customer service phrases and post-purchase follow-ups. Small gestures like including stickers or notes in your packaging or sending personalized emails can make a world of difference.

6. Integrate inventory data

Customer service is an opportunity to sell. Whether you’re helping website visitors find the right gift or assisting an existing customer with purchasing products that match their last order, the job is made easier when you have inventory data on hand.

Choose a customer service tool that integrates with your Shopify store. It’ll ensure you don’t sell out-of-stock products, have an accurate picture of your bestsellers, and create a sense of urgency if a popular item is selling fast.

Ecommerce customer service practices to to avoid

Slow response time

Online shoppers expect brands to meet or exceed their expectations. These expectations are especially strict when waiting for a response to customer support tickets. According to a survey by Tidio, about 53% of respondents find the most frustrating part of interacting with a business is waiting too long for replies.

Setting clear customer expectations around your response times is an easy way to improve customer service. Then, meet or beat them. If your phone support is limited to a specific time frame, be upfront about it. If response times are longer on the weekend, be clear about that too.

No multichannel support software

Allowing customers to contact your team is the first step in making your support strategy more accessible. But if you’re fielding several types of communication, it’s easy to lose track of who said what. That’ll put a wrench in the works if you’re leaning on personalization to connect with those contacting support.

Help desk software diverts all incoming tickets to a central location. All incoming requests—be they phone calls, emails, or social media direct messages—arrive in the same dashboard.

Multichannel support software like Gorgias or Reamaze can also sync your Shopify data and act as a customer relationship management tool. Each incoming ticket will connect to a customer profile. Support agents can see:

The customer’s name
The customer’s contact preferences
The items the customer has ordered
Any previous support tickets
The agent who handled their previous request

Gorgias’ helpdesk software showing an example customer timeline. — Gorgias’ help desk software showing an example customer timeline.

Inconsistent messaging

Inconsistent messaging is one way to sabotage your efforts in building a strong brand reputation.

Ensure everyone interacting with your brand gets the same experience with templates. Write up your most common customer queries and save them as a template. It ensures customers get the same message regardless of which team member they interact with, while also saving your agents time and allowing them to blaze through more tickets.

How to measure customer service success

Customer satisfaction score

Your customer satisfaction score (CSAT) measures how happy customers are with the support provided. It’s calculated as a percentage of people who voted a high satisfaction score out of all those who took the survey.

Implement post-support customer satisfaction surveys to calculate your CSAT. The goal is to have this metric as high as possible, which shows most people who interact with support leave the conversation feeling satisfied.

First contact resolution rate

First contact resolution rate is the percentage of support tickets resolved in a support staff’s first messaging conversation. If an agent doesn’t have to follow-up, or the customer doesn’t have to reach back out via your help desk software, it’s a strong indicator your team is resolving outstanding issues and delivering incredible customer support.

Net Promoter Score

Net Promoter Score (NPS) is a metric that allows you to measure customer loyalty. To calculate it, ask customers how likely they are to recommend your company to a friend. Subtract the number of negative promoters from the positive promoters to find your NPS.

While it isn’t intimately linked to customer service, it’s worth keeping an eye on how your NPS changes as your support strategy changes. An increase indicates your support team is contributing to positive ecommerce customer experiences, resulting in more people who’d likely recommend your products to a friend.

Provide great customer service for online shoppers

An excellent ecommerce customer service strategy helps you retain loyal customers, acquire new ones, and improve overall conversion rates. In other words: good customer service is integral to the success of online businesses.

Most importantly, a thoughtful strategy around ecommerce customer support can help to set your online store above and beyond the competition—and encourage your customers to keep coming back for more.

Wrapping Up:

We at ShopShipShake have been working with businesses like yours with fulfilling experiences. We offer one-stop services, including an efficient supply chain, over 10 thousand of China’s suppliers, over 1,000,000 SKU and more. With a successful track record of over 100,000 clients, we are sure to deliver your orders requirements.

Let’s get in touch to build, sustain, and grow your businesses! If you would like to know more details about us, please contact us: blog.shopshipshake.com. If you are interested in cooperating with us. Please register on: https://shop.shopshipshake.com/register/business

This article originates from: https://www.shopify.com/blog/ecommerce-customer-service

Posted on 20/06/202313/10/2023 in customer, customers

What Is Customer Acquisition Cost? (and How to Reduce It in 2023)

Abstract coins spilled across a vibrant gradient surface

Earning a sale—and hearing the cha-ching from your Shopify app—feels great. But how much did you spend to acquire that customer? Was the transaction profitable? If you can’t answer these questions, you may not have a grasp on your customer acquisition cost (CAC).

Spending the right amount to acquire a customer can be a tricky prospect. Spend too little and you miss out on sales, spend too much and your business is unprofitable.

While finding the right balance might sound daunting, there are a few simple formulas you can use to calculate your CAC—and get it on track. Ahead, learn why customer acquisition cost is important, find out how to calculate it for your store, and get advice for reducing it.

What is customer acquisition cost (CAC)?

Customer acquisition cost is the total cost of acquiring a single customer. This includes sales team costs, ad spend, marketing costs, and any other expenses that contribute to getting your product into a customer’s hands.

It’s important to understand your CAC because it directly informs profitability. Your CAC tells you how much you need to earn from each customer in order to have a profitable business. Put simply, if you’re spending more on business costs to acquire customers than customers are spending on your products or services, your business model is not viable.

📝 Note: The basic formula for CAC doesn’t include all your costs like cost of goods sold (COGS) and other operation costs. It focuses on marketing efforts and the costs associated with those only (marketing staff or agency, ad fees, etc.). Later, dive into several formulas for gaining a true snapshot of your profitability.

What is the difference between CAC and CPA?

CAC and CPA (cost per acquisition) are similar terms in that they calculate the cost of achieving a single business goal. While CAC measures how much it costs to acquire a paying customer, CPA measures the cost of acquiring a lead. For ecommerce businesses, a lead may be as simple as email capture from a newsletter signup.

What’s included in CAC?

CAC takes into account a number of costs associated with acquiring new customers. This includes both the direct and indirect costs of your marketing and sales efforts. When you calculate CAC, don’t forget to include:

Ad spend (Facebook Ads, Google Ads, traditional advertising)
Sales and marketing team wages
Marketing software company fees
Agency fees
Creative costs (hiring designers or photographers to execute creative or design software subscriptions)
Publishing and PR costs
Production costs (videographer fees or production equipment)
Influencer partnerships (as part of a social media marketing budget)
Inventory maintenance

📝 Note: As a rule of thumb, you shouldn’t spend more than 5% to 8% of your business budget on marketing.

Why is customer acquisition cost important?

Ultimately, CAC is a key metric for determining a business’s viability and profitability. But understanding CAC for your business offers other benefits:

CAC determines the effectiveness of each marketing channel or campaign. Which marketing efforts are the most effective and which aren’t performing? You can use CAC calculations to measure all marketing channels as a whole or at the specific channel and campaign level.
It’s the first step to reducing costs. Knowing your CAC is the first step in evaluating how you can reduce it—and boost ROI.
CAC helps find roadblocks in your sales funnel. Examining your CAC will uncover areas where you may be spending too much to get a customer to the next stage of the funnel. This allows you to focus on the specific areas where inefficiencies are happening.

📝 Note: CAC is always higher for acquiring new customers (versus retaining existing ones). While reducing your CAC is important, it’s equally critical to invest in customer retention strategies.

How to calculate customer acquisition cost

Marketing for a small business can sometimes feel like throwing spaghetti at a wall. Understanding the effectiveness of your marketing efforts can help you keep costs low and invest more in performant channels and campaigns.

CAC is only one piece of the puzzle, however, so this guide also covers how to consider other factors and calculate CAC as part of a larger formula to determine your true profitability.

1. Use the basic CAC formula

The basic formula assumes that your only costs are marketing costs. It’s an effective calculation for early stage businesses and those struggling with marketing costs in particular.

In this example, a business spent $500 on Google Ads and those ads resulted in 10 customers. The customer acquisition cost would be $50.

🪄 Formula: Total Marketing Spend ($500) / New Customers (10) = CAC ($50 per customer)

2. Factor in COGS

Marketing accounts for only some of a business’s costs. These include day-to-day operations and cost of goods sold (COGS). COGS includes costs and expenses directly related to the production of your products, from raw materials to manufacturing labor. It excludes indirect costs, such as marketing and sales. Adding COGS into the calculation gives you a more accurate CAC.

Graphic of a basic CAC formula with COGS

🪄 Formula: (Total Marketing Spend + COGS) / New Customers = True CAC

3. Consider average order value

Average order value (AOV) tracks the dollar amount spent for each customer order on your website or in your store, and determines an average across all customers. To calculate your business’s average order value, divide total revenue by the number of orders.

🪄 Formula: Total Revenue / Number of Order = AOV

4. Determine your gross margin

To get the calculation of your profit, you need one more figure: gross margin. Gross margin represents the total sales revenue your company retains after the direct costs associated with producing your goods. Gross margin may be calculated as a dollar value or as a percentage.

Graphic of a gross margin formula two ways

🪄 Formula (dollar): Net Revenue – COGS = Gross Margin
🪄 Formula (percentage): Net Revenue – COGS / Net Sales x 100

5. Calculate your profit

Now you’ve determined your CAC, COGS, and gross margin, you can put it all together to get a true picture of your profitability.

🪄 Formula: (Average Order Value x Gross Margin) – Customer Acquisition Cost = Profit

📝 Note: Another way of looking at profit is through a break even analysis. Once you have a clear picture of your profit margin, you can do an analysis of your costs and find ways to increase it.

How customer lifetime value (LTV) affects CAC

Customer lifetime value (LTV) is important to the overall picture of profit because it measures the potential revenue you can earn from a customer through the lifetime of the relationship.

The link between CAC and customer lifetime value is determined through the LTV:CAC ratio. This ratio is important in determining the profitability of your business. The metric can confirm whether the value of the customer is higher, lower, or the same as the cost to acquire a customer.

A healthy LTV:CAC ratio for ecommerce businesses is around 3:1. Any lower than that and your business is at risk. A higher ratio is good news but it could be a signal that you’re ready to scale up. As such, this is a useful calculation when you’re revamping your overall business strategy and marketing strategy.

🪄 LTV:CAC ratio: (Customer Lifetime Value) / (Customer Acquisition Cost)

5 ways to reduce customer acquisition cost

Prioritize organic marketing
Focus on your AOV
Lower your cost of goods sold
Improve retention
Tap into the power of AI

If your LTV:CAC ratio is less than 3:1, your business isn’t operating efficiently and you’ll eventually run out of money. The good news is that there are tried and true ways to reduce your CAC to improve this ratio and start down the path to profitability.

1. Prioritize organic marketing

Organic marketing ideas including email marketing, SEO, and referral marketing are effective at driving customers to your website without costs associated with other types of paid marketing. Many of these ideas are more resource-intensive than other methods. Therefore, don’t forget to factor in the cost of marketing teams’ wages and other indirect costs associated with organic marketing.

2. Focus on your AOV

CAC and pricing go hand in hand. CAC can be an indicator that you’re spending too much on marketing but it can also signal that your prices are too low. If your marketing budget looks good, take a closer look at your prices—they may need an increase. Doing so will increase your average order value (AOV) and help offset your CAC.

Aside from raising prices, you can increase average order value in different ways:

Offer free shipping with a minimum order value
Bundle products or create gift packs
Upsell or cross-sell complementary products

3. Lower your cost of goods sold

So you’ve rid your marketing strategy of any inefficiencies and your pricing strategy is sound. Now what? Lowering the cost to produce your products is another way to lower CAC. Ask yourself:

If you’re purchasing raw materials, is your supplier competitive on price? Are there cheaper materials you can substitute that won’t impact your brand? Can you comparison shop with competitors?
Can you lower manufacturing costs through negotiation with your manufacturer or by switching producers?
Is there any way to streamline the production process and lower labor costs?
Have you negotiated your shipping costs? Can you consolidate shipping or increase order quantity to reduce these costs?

4. Improve retention

As outlined earlier in this article, it’s more expensive to gain a new customer than it is to retain an existing one. Implementing retention strategies like loyalty programs, repeat purchase discounts, referral incentives, and customer perks can help to offset a high CAC.

5. Tap into the power of AI

Reducing your CAC may mean reducing some of the human costs associated with marketing. Automate some of your marketing efforts to free up more of your time to explore other marketing ideas and grow your business. AI chatbots, automated email campaigns, and smart recommendation tools can all deliver personalized marketing experiences to customers while you focus elsewhere.

Keep customer acquisition costs low—and profits high

Acquiring customers shouldn’t cost more than the value they bring to your business. If it does, it’s time to evaluate your marketing expenses, business practices, and pricing strategies. To improve customer acquisition cost, you need to look at it within the larger picture of your business. Once you understand how these calculations can help you run your business, you’re on track to keeping it profitable.

Remember customers acquired offer more value over time when you can retain them, as your acquisition costs are much lower. As you look to reduce your CAC, focus at the same time on customer loyalty through experiences and incentives.

Wrapping Up:

The article refers to: https://www.shopify.com/blog/customer-acquisition-cost