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Valentine’s Day E-Commerce Marketing: How Post-Purchase Brand Partnerships Drive Customer Value
The Opportunity Cost Of Following The Known Path
The Merriam-Webster dictionary defines Opportunity cost as:
“the value of the next best alternative that is forgone when a choice is made”
Merriam-Webster expands on it by explaining that opportunity cost represents what you give up in order to pursue a particular action, even if no money visibly changes hands.
CEOs, CTOs, VPs of Ecommerce, and most humans are naturally averse to change, especially when what they are doing to increase online profitability seems familiar, and is what they have always done.
In the early 2000s, Netflix co-founder Reed Hastings approached Blockbuster with the idea of a partnership or sale. Multiple accounts from Hastings and former Blockbuster executives confirm this, and even suggest an offer from Netflix to sell for $50 million. Blockbuster executives were skeptical of Netflix’s DVD-by-mail model and declined to pursue it. (Source)
Blockbuster Executives made a decision, based on what seemed familiar and had worked for them in the past, and bet on their more traditional model, and continued investing in physical retail stores and distribution.
It is difficult to know what Blockbuster would have done with Netflix, if they had purchased, but Blockbuster’s opportunity cost in this case led them to file for bankruptcy in 2010 while closing thousands of stores, while Netflix value is estimated to be $350-400 billion today.
The Cost of Doing Nothing in E-Commerce
As acquisition costs rise, growth is less about driving more traffic and more about maximizing existing demand.
For example, Falcon Labs has noticed that many leading ecommerce brands are leaving money on the table by not monetizing their Thank You and Order Status pages. This may be because they don’t know monetization is an option, or because they don’t want to make any changes. These pages are among the most visited in e-commerce, as customers want confirmation that their order has gone through and, from time to time, to check the status of their shipment.
Not testing post-purchase monetization doesn’t eliminate risk; it simply leaves revenue untapped.
Most brands can quantify this quickly. Multiply annual order volume by $0.35 to $0.50. That’s the incremental revenue typically left on the table by opting out by default.
The better question isn’t, “Is this for us?”
It’s, “How could this work for us, on our terms?”
Testing in e-commerce is the only way to know whether something will work or not. Brand operators can rely on case studies and available data, but ultimately, every brand is different, so it’s important to test and learn from your own online store.
When it comes to Falcon, launching a test is simple, and stores can start seeing the impact of post-purchase monetization within hours. Over time, the Falcon team tests different campaigns for your store to determine which ones resonate with your customers and which are the most profitable.
It’s time to test. Remember, doing nothing has a massive opportunity cost.
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