Balancing Acquisition and Retention in E-Commerce Business

Hey, hi, everyone. Welcome to your show E-Coffee with Experts. My name is Ranmay. Today we have Jay Neyer, who is the founder of LanternSol with us. Welcome, Jay, to our show.

Thank you. Thanks for having me.

Great. Jay, before we move forward and pick your brains on SEO or digital marketing for the e-commerce domain, why don’t you introduce yourself, talk a bit about your journey and what LanternSol is all about, and we can take it forward from there?

Definitely. I’ve been doing e-commerce for about 12 years now. I originally went to school actually for accounting and philosophy. I had no idea what I wanted to do at the time. I just picked two random majors and hoped to find something in the middle. Along that way, I quickly realized accounting specifically wasn’t for me. I started reading about famous tech entrepreneurs. I realized many of them were in technology. Because of that, I started learning how to code and build websites. That was about 12 years ago since then, have built probably 600 websites, helping companies do over 100 million online sales. I co-founded a fitness product company myself. In the early stages, we grew that from zero to 25 million. About a quarter of that total business was from a company I also co-founded. And yeah, it’s been a journey. I’ve worked with hundreds of different industries, everything from dog supplies to industrial packaging to workout equipment, home appliances, fashion, beauty, makeup, chocolate, coffee, wine, anything, and everything in between. So it’s been a fun journey and it’s always new surprises, and new businesses, and I love it.

Lovely. As you mentioned, surpassing $100 million is a remarkable success. Could you elaborate on some of the key strategies or insights that have contributed to this level of success?

I tell people, there’s not one item. It’s just the persistence. I think for most people, failure is just giving up too early. None of these happened overnight. I used to have multiple years, in some instances, nearly decades, shy of the decade to play out. So the number one thing I think is just unwavering persistence and commitment. It’s not easy. It does not happen overnight. Anyone telling you otherwise is wrong. And so, persistence is the thing I would say.

Great. Absolutely. A rumor is not built in a day. We all know that. Right? Agreed. Exactly. Shopify has democratized e-commerce so much, allowing entrepreneurs to set up shop relatively easily versus what it was earlier. So from your experience, what are the common pitfalls new entrepreneurs should be cautious of while starting the Shopify journey?

Yeah, there’s a ton of variables that go into it. At the end of the day, basic business 101 is you need more income coming in than more revenue than your expenses. What I was saying about the persistence in long term, especially depending on where you’re starting, if you’re self-funding, if you’re taking outside investing, if you have initial capital, if you’re bootstrapping, all those are starting from very different points and positions, which would ultimately shape the strategy and perspective. I think that one of the things that I love about what I do is I just get to see so many different business models and play off the hand, so to speak, of what someone’s looking at to custom-tailor each suggestion. The main thing I would emphasize is to understand where you’re at and try to focus on profitable growth. It won’t always be profitable, of course, so you need to treat things like investments. You’re making decisions. Hey, should I hire this agency to improve our SEO or email marketing? What are the short-term costs? What are the long-term opportunities? There’s a value equation you’re constantly looking at. So yeah, I think those are the main things I would have in consideration for store owners.

Great. And in subscription models, you must be aware that this, has gained significant popularity in recent years. As per you, what are some of the key considerations and challenges you would have encountered while implementing subscription-based strategies for different e-commerce businesses?

Yeah, first of all, the subscription is amazing. The model is more akin to a SaaS model where you’re getting a monthly revenue. Everyone will want that off, hey, you’re getting a consistent customer. So just skyrockets. Some of the main numbers you need to be paying attention to are your AOV, your something one-time single order, and then the LTV, the lifetime value. So I see this with customers who sell, or some of my clients who sell coffee, wine, food delivery, and chocolate. Those are supplements. Those are all models that are consumables. But I even see it in non-consumable markets. So with fashion makeup or beauty, you can turn many items into a recurring box of some sort. So obviously, you want to do what you can to increase both the AOV and LTV. Those are really poor concepts to just increase your overall profitability as a company. The main pitfalls, I think, are just they’re not necessarily the cheapest tools. You can have a very low-cost implementation, but you’ll have an out-of-the-box cookie-cutter display on it, UI/UX. So there’s a lot of different customization you can do on top of that. I think the main thing is just understanding what options are out there, what’s available, what are the costs involved?

Does it make sense at the stage I’m at in my current business? Are there things that need to be done through the app or that can be done outside of the website? So as far as messaging with customers or reminding them to update orders in some instances with food selection. I think the main one is just to be aware of the costs that come involved with that. Many of the better ones are not paid, or they are paid rather, they’re not free. The analysis of does this makes sense to offer with the projected goal of increasing LTV.

And you had so much of options that all the customers have and all the niches that we all try and sell any product or service. How is your strategy built around attracting new customers and at the same time retaining the existing ones so that you do not have a leaking bucket situation?

Sure. Yeah, they’re different. At the end of the day, a better product is the best marketing. Above anything else, any marketing tactic or approach, retention approach, the single core best thing is going to be having a better product. So if at any point in time you can improve your product and your issue is the product, then that would be my attention and focus. Great products will continue to drive demand and more requests and repeat usage. So that’s step number one. New customers are going to be different from repeat customers. So for repeat customers, that’s the name of the game. If someone’s signing up for a subscription, they can just cancel right after the first order and get the discount or whatever. So that can and does happen. Store owners should just be aware of that and assess their churn rate and see if that’s what’s going on. But really, I find that, more specifically, email and SMS the probably better tools for increasing retention. You just want to make sure that you’re following up afterward. Hey, how’s the product going? Anything you need? Do you know how to use it? Here’s some information guide.

At by the way, here are some other cool use cases for what you can do with it. I’ll use the example of food. Here are some recipes or some ideas of how other people like to use it. You just want to make sure you’re engaging in that conversation. And you also want to have a conversation. So that implies two ways, you’re hearing their feedback as well, and listening to your customers that will give you the best insights. Top of funnel, so these are people who don’t know about the product yet. This is typically more so through SEO, ads, partnerships, influencers, affiliate models, and things like that. Those are typically going to be more driving top of the funnel where you’re getting people into your funnel, getting them to convert on a new subscription, then ideally retaining that and lowering your churn rate as much as possible.

Yeah, great. Jay, thank you so much for all the insights which you have shared. But before we wrap it up, I would like to play a quick rapid-fire with you. I hope you’re game for it.

Yeah, I’m good.

What was the last Google search?

My last Google search.

You can check your mobile or laptop system. It’s an open book.

I was just doing, it’s called 16 personalities, doing personality tests for the whole team to understand what are the different personality types to help further educate ourselves on who we’re talking to, and interacting with internally on a given basis. Sometimes you might forget that we all have unique nuances traits and personalities. So that was the last thing, looking up the 16 personality traits.

Great. Your favorite day of the week?

My favorite day of the week is Sunday. Sunday is always reflecting with friends, usually doing some of my hobbies including music, and exercise.

Oh, lovely.

So it’s usually a day of just a complete day where I’m just doing everything I love. Then also preparing for the week, doing accounting, finances, I just really love Sundays.

Great. And what is the best thing that you like about your job, our industry? Just that one thing that puts a smile on your face.

I alluded at the beginning, but I think just the multitude and variety of problems and business models I see, I think that’s the most rewarding aspect is I love being like a mechanic, being able to pop up in the hood and just seeing a unique puzzle or configuration setup each time. You find the meta points or the commonalities amongst those. I think between that you find those first core principles. But I think just being presented with unique problems, unique scenarios, that’s one of my favorite aspects of my line of work.

Great Jay, I will not grill you any further. Once again, thank you so much for doing this. I appreciate your time, man.

Likewise. I appreciate it.