There’s an insightful article in MusicRadar this week that will help you with your own ecommerce business.
Rarely do my work and pleasure mix (apart from those 5 years I spent building a guitar retail business) so I’ll take full advantage of this situation.
A six string wonder
Fender (makers of wonderful guitars) found out that 9 out of 10 beginners that bought their guitars gave up after one year. Consider that stat from a brand perspective (probably your perspective). 90% of the opportunity to attain repeat business has disappeared as there’s no longer an interest in buying what you sell.
And that’s 90% of customers that represent 45% of their marketplace (first time buyers).
Talk about putting a squeeze on your marketplace….
However, what about the 10% that do progress and stick with guitar beyond that first year? That’s where the loyalty is built and the money is made. Their lifetime value to Fender is $10,000.
Where the money is really made
So, it goes without saying, Fender’s task is to keep more guitarists interested beyond that first year. That’s why they’re investing heavily in learning platforms for beginner guitarists. They can’t survive on that single first purchase. Their job isn’t just to make amazing guitars, it’s to keep guitarists playing.
And we all know what it’s like to struggle with a new hobby. To find the time, to stay patient and to keep motivated through the darkest days of bleeding finger tips and constant bum notes. It’s tough.
The task of keeping customers motivated is a task that you have to own for your own brand.
It’s no good selling the single candle if your customer doesn’t see the value in keeping each room smelling beautiful. You sell the scents. The feel good factor of fresh new smells. You teach how scents blend and which scents work best in which rooms.
It’s no good selling the bike if your customer rarely rides it. You sell access to local routes and communities. You get people on their bike.
Make sure that your customers discover the worth in the product you sell. Give them access to the insight that will motivate their use and make what you make matter to them.
“So we did the math. The 10 per cent of the salmon that make it through the dam have a lifetime value of $10,000 [each]. They buy five to seven guitars, they buy multiple amps, they drive the hardware side of the business.Fender CEO Andy Mooney
“We felt if we could reduce the abandonment rate by just 10 per cent we could double the size of the industry. [There are] a million new entrants in English speaking countries alone every year; only 100,000 of them commit. If you could reduce abandonment by 10 per cent, that’s an incremental 100,000 with an average lifetime value of $10,000. That’s an incremental billion dollar retail business every year.
There’s such a wide scope of opportunity here. To create educational content focused on the use rather than the sell. Our marketing world is dominated by talk of how to acquire. How to reach and convert that new customer.
And yet, the gold is discovered when you arm that customer with your knowledge and expertise to help them do what they set out to do in the first place.