In the race to grow sales, it’s tempting to search for a magic bullet to solve everything overnight. But having helped hundreds of store owners scale up, we recommend focusing on improving 7 key business metrics by just 10% each to double your profits. Here we outline how it works step by step.
While it was already mainstream, online shopping has been turbocharged by the pandemic with more Australian households buying online, and more often, than ever recorded. For online retailers, this has created both a massive opportunity as well as increased competition.
Tactics like discounts, large ad spends and seasonal promotions can work to spike your sales short term, however the holy grail of a valuable ecommerce business is steady long-term growth driven by a series of continuous optimisations.
That’s why in our Growth program, we use the proven 7 Levers Framework for Ecommerce to drive consistent and sustainable growth. Over a period of 13 years, we’ve built 340+ stores on Shopify and Shopify Plus, collecting over 180+ verified reviews.
What is The 7 Levers Framework for ecommerce?
Created by best-selling author and entrepreneur Pete Williams, the framework outlines a focused process of rapid experimentation, data-driven testing and iteration across 7 key areas of your ecommerce business to achieve long term growth.
By lifting each key lever by just 10%, the compounding effect can double your profit over time, and create a sustainable and consistent approach to long-term growth.
The framework specifies 7 metrics to measure and optimise:
1. Suspects: Visitors to your product pages from Google, social media and other sources
2. Prospects: People who show intent to buy, by adding a product to their cart for example
3. Conversions: Visitors who complete a purchase and become customers
4. Average Item Price: The average price your products or services are sold for
5. Average Items per Sale: The average number of products purchased in each transaction
6. Transactions per customer: How often customers make repeat purchases
7. Margins: Your overall profit margin of all sales as a percentage
So, where to start? It is important to note that The 7 Levers Framework is not a linear process. Where you focus first will depend on your analytics and business priorities. We recommend you analyse the data for each lever, and start where you find the quickest wins before moving to the next after a three month optimisation period.
For example, you may have strong traffic, but poor conversion rates. Or you may sell multiple items per transaction, but have low repeat purchases. The analytics will tell you where to focus first for the biggest return. Then it’s a matter of consistently pulling the levers.
If you’re planning to launch a new online store, then it’s best to embed best practice features for all 7 levers from the start. If you already have a Shopify store running, then the next step is to analyse each lever to get a baseline of where you are today.
TIP: Analytics are your friend. Become data-driven to better understand your ecommerce customer journey and identify improvements. Curate data from all the sources such as your in-built Shopify Analytics, Google Analytics, email marketing provider (Klaviyo, DotDigital and so on) and Hotjar recordings and heatmaps.
Strategy: Drive quality traffic with multichannel sales
The Suspect Lever is all about generating a 10% improvement in quality traffic by making it easier for the right customers to find and visit your Shopify store.
In this context, quality means attracting people who are willing to purchase rather than just random visitors. The first aspect to look at is if you are visible on the right platforms or sales channels.
It’s important to integrate in-store experiences and online channels including Google Shopping, social commerce channels such as Pinterest, Facebook, Instagram, Tiktok and marketplaces like eBay or Amazon.
Don’t overlook a physical presence like stores, markets, industry events and wholesale. While COVID drove online sales, consumers are also craving an in-store experience with Shopify’s Future of Commerce Trend Report 2022 predicting over 50% of consumers are likely to look online and buy in store.
Choosing which sales channels are right for your business depends on your industry, type of product, who your target audience is and where they like to shop.The strongest Shopify brands are the ones that meet customers where they already spend their time and implement a multichannel sales strategy combining an in-store and online experience.
Tactics: 10% win opportunities to attract more suspects
- Increase the click-through rate from Google to your site by optimising your metadata site information and Google My Business profile
- Build quality backlinks to your store from high authority websites
- Create engaging content like blogs and guides to increase organic SEO traffic
- Create a multichannel strategy integrating the in-store experience and online channels that suit your brand
- Experiment with live shopping and influencer marketing to run demo products, review them and engage with your audience, especially Gen Z consumers
- Run targeted SEO and paid advertising to find the right customers – Google Shopping campaigns, Google Ads, Facebook Ads, giveaways and promotional contests
- Set up a referral program to unlock the networks of your current audience
- Participate in pop-up shops, markets or events to test consumer demand for physical retail, reach new audiences, build brand awareness and boost sales.
TIP: Collect your own customer data. You may have heard about stricter third-party data privacy changes that limit how platforms like Google, Apple and Facebook are allowed to target Ads to audiences. In short, this will make it harder for small businesses to target existing and new customers using paid advertising. As a result, it’s more important to collect your own first-party data from customers visiting your store (email address, phone numbers etc) and track their actions on your site so you can market to them directly.
Strategy: Engage visitors and turn lurkers into browsers
A prospect is someone who shows buying intent via a micro commitment. Offline this means they try the shoes on, ask about sizes or check the prices. Online they’ll watch a video, view multiple products and add an item to their cart. They may not quite buy, but they’re interested!
When customers take an action that shows interest in your product or an intent to buy, this can allow you to communicate with them at a different level. The Prospect Lever focuses on measuring how many prospects continue from one step to the next, and how many abandon the funnel at each stage.
Prospects are a huge conversion opportunity. So it’s critical to identify where and why they are dropping out of the funnel. Is the site trustworthy? Are the images high quality and plentiful? Are product descriptions engaging? Do pages load fast? Are there errors? Is the checkout smooth?
Again, data is your friend. To get a deeper picture, head into your Shopify store’s Google Analytics and pull up the shopping behaviour report of your store for the last 6 months. This report is one of the most powerful tools to understand your ecommerce customer journey. It lets you see the big picture of what’s going on once your suspects land in your store and move across the purchase funnel with data including:
- All sessions/visitors (Suspects Lever)
- Sessions with product views (Suspects Lever)
- Sessions with add to cart (Prospects Lever)
- Sessions with checkout (Prospects Lever)
- Sessions with transactions (Conversion Lever)
Tactics: 10% win opportunities to create more prospects
- Identify and optimise the content and load times on high traffic pages to reduce exits
- Optimise your homepage to help your suspects take action and move smoothly towards the collection and product pages
- A/B test product pages designs and layouts to see which converts better.
- Highlight the main product benefits clearly on product pages and address any possible concerns
- Feature other helpful information such as shipping times, return policy, care instructions etc
- Include filters on collections page to make it easy to find products
- Run user testing by asking a friend to visit your site, find and buy a product to help identify any blockages in the process
- Add reviews, testimonials and other elements to increase trust
- Retarget customers that added to cart or viewed products and left your website
- Find pages where people commonly leave and see how to make it more engaging
Strategy: Optimise your Shopify checkout experience
Once you’ve got traffic and interested prospects, the next critical step is making the sale. The Conversion Lever is at the pointy end of the purchase funnel and focuses on how prospects complete a sale and become a customer. This step is all about optimising your checkout process and in particular minimising anyone who is adding products to their cart but not checking out.
People are very careful with their hard-earned money, and it doesn’t take much to frighten them away. Some of the most common reasons for abandoning a shopping cart are unexpected extra costs, having to create an account, slow delivery, complicated checkout or a lack of trust.
Anticipate barriers and objections that your prospects might have to complete the transaction to make the experience as seamless and smooth as possible.
The Baymard Institute published this data on the main reasons shoppers abandon their cart:
What is a satisfactory Shopify conversion rate?
Don’t worry, conversion rates are always low, with lots more browsers than buyers. While it differs by industry, an average conversion rate for an ecommerce store is typically 1-2%. To see how your conversion rate compares, here’s a handy chart from Growcode.
Tactics: 10% win opportunities to improve conversions
- Allow a guest checkout option to let more prospects flow through the checkout process without the hassle of creating an account
- Audit the design and layout of your checkout and ensure it is consistent with your store design to increase trustability
- Clearly communicate shipping times, extra pricing and returns processes before checkout
- Allow express checkout options to speed up payments – Shop Pay, Apple Pay, Google Pay, PayPal Express
- Enable ‘buy now pay later’ options such as Afterpay, Klarna, humm, LayBuy and Zip which are known to increase conversions
- Allow customers to offset the CO2 impact of their online purchases
- Offer sustainable, biodegradable or compostable packaging – according to Sendle 52% of Aussies are more loyal to sustainable packaging and shipping options
- Add third-party trust badges and trust related reviews
- Add a phone number to reassure prospects that personal support is available
- Run win back email campaigns – ‘You left something in your cart!
Identify upsell opportunities and premium options
Making a sale is great. Selling your highest-priced items is fantastic, as it usually means higher margins for the same amount of work. The Average Item Price Lever is all about selling more of your most valuable items.
One way is to produce or source more higher-priced items to increase your average price. However, if you already have a range of higher-end products that are selling well, you can look for ways to add value to these items and upsell customers.
For example, you could create premium or limited edition versions of the products that attract a higher price and/or have extra features such as warranties, guarantees, customisations or added support.
Tactics: 10% win opportunities for upselling
- Run promotions on higher value items to drive more sales
- Add extras to popular products to increase their perceived value and price point
- Incorporate these upsells within the product pages or checkout to make them easy to add on
- By default sort your collections and catalogue by price from high to low
- Highlight the most popular high-priced items on collection pages
- Configure your related products widget on product pages to showcase high-priced items
- Favour higher priced items via your product comparison tools
- Include free shipping on premium products to incentivise purchases
- Give away additional perks or membership with premium products to bring buyers into an exclusive community
Strategy: Include cross-sell, add-ons and related items
The Average Items Per Sale Lever is one of the most effective ways to improve the revenue and profits of an ecommerce business. You already have people who love your products, trust you and are happy to hand over their money, so it’s only a small step to add a few more items to their basket.
Cross-selling related items, add-ons or impulse purchases is a great way to drive sales. If a customer adds a bikini to their cart, it’s a great time to offer a beach towel or pair of thongs. Following this theme, you could offer discounts on a second bikini or free items like a tote bag when they reach a spending limit. Free shipping is also an easy and effective way to boost sales and can be built into the original price of the product.
Tactics: 10% win opportunities for growing items per sale
- Targeted cross-sells like ‘chosen for you’, ‘frequently bought together’, ‘recently trending’, ‘best sellers’ or ‘on sale’
- Send personalised follow up emails with product recommendations and upsells
- Offer volume discounts over a certain quantity or dollar figure
- Create kits or bundles of commonly purchased products
- Add incentives like bundles, order bumps or bonuses during checkout to add to cart
- Offer free shipping at a higher price point to encourage the purchase of more than one product
- Create quizzes or questionnaires to drive personalised product recommendations
- Include upsell and cross-sell offers in your FAQs
- Offer extras like a gift box or gift wrapping for a small fee.
Strategy: Grow your community and drive opt-ins to increase loyalty
Sure, make new friends, but look after your old ones too. Depending on which study you read, research shows it is 5-25 times more expensive to acquire a new customer than retain an existing one, which is why it makes no sense that loyalty is commonly overlooked by ecommerce businesses.
In the hunt for the next sale, store owners forget about the customer after the first transaction is done. The Lever of Transactions Per Customer aims to sell more, and more often, to current buyers by maximising customer loyalty, lifetime value and profits.
Tactics: 10% win opportunities to boost repeat purchases
- Cut back on acquisition costs & boost retention by creating an engaging loyalty program to reward your VIP customers with referrals, points or exclusive offers
- Grow your email list with discounts and bonuses in return for contact details
- Run surveys and look at past behaviour to personalise email communications and offers
- Start collecting mobile numbers for SMS communications with loyal customers – according to Klaviyo 99% of texts are read, 90% are read within 3 minutes and 54% of consumers would like text promotions, but only 11% of businesses send them
- Streamline returns and exchange processes to decrease frustration – consider free returns
- Set up post-purchase automated email automations to ensure satisfaction, stay top of mind and resell
- Consider if ongoing subscriptions can work to retain revenue for loyal customers
- Offers deals and discounts for repeat purchases within a certain timeframe
- Create regular engaging and useful content to remain top of mind for previous customers
- Create a members-only community for loyal customers/fans with exclusive benefits
- Create memorable in-store experiences that align with your unique brand values such as events or workshops, brand collaborations or support for charitable causes
- Offer one-on-one or group appointments with shoppers to enable personalisation and in-store experiences
- Offer free samples of new products to incentivise return purchases and cross sells.
Strategy: Cut costs on your business operations
There are two ways to improve your margins – increase the price or lower the cost. While pricing is always something you can experiment with, there are limitations in terms of what the market will bear. So the focus of The Margins Lever is to reduce the costs of running your business to maximise profits.
From negotiating with suppliers to automating repetitive tasks, there are many ways you can be continually removing waste and keeping downward pressure on prices. Beyond that, an undervalued way to cut costs is to minimise returns and refunds by streamlining processes to avoid costly problems.
In an increasingly competitive landscape, keeping your operation lean and mean is critical to maximise profits.
Tactics: 10% wins for optimising your margins
- Use intelligent technology to automate repetitive marketing and administrative tasks - for example if you are on Shopify Plus, Shopify Flow has automation built-in
- Continuously curate a list of any complaints from troublesome customers to help avoid or fix problems before they become costly
- Shop around for shipping carriers and delivery partners – especially regional – as there are more and more options on the market
- Deploy inventory management software to avoid overstocking costs or losses through under stocking
- Review and rationalise all software, apps and technology subscriptions
- Automate the fulfilment process to reduce manual labour and stock handling
- Build diverse relationships across your supply chain, shipping and fulfilment networks to avoid business disruption
- Don't be afraid to ask and negotiate prices with your suppliers across the board
It’s time to pull the levers!
Simple yet powerful, The 7 Levers Framework of Ecommerce helps increase Shopify sales by lifting key metrics in your business by just 10% to create a compounding effect that will double your profit.
Whether you’re in the startup stages of growing your store, or you want to accelerate your baseline sales, following this continuous ‘test and learn’ approach can help you consistently and sustainably grow your sales.
Need help to increase Shopify sales? Speak to a Shopify Growth Expert
How can I grow my Shopify sales and revenue?
What are the 7 levers for ecommerce growth?
- Suspects: Visitors to your product pages from Google, social media and other sources
- Prospects: People who show intent to buy by adding a product to their cart
- Conversions: Those who complete a purchase
- Average Item Price: How much do you sell your products or services
- Average Items Per Sale: How many products are in each transaction
- Transactions Per Customer: How often will customers make repeat purchases
- Margins: How much profit do you make on sales after costs
How can I drive quality traffic towards my Shopify store?
Create a multi-sales channels strategy: maximise your reach by using multiple online sales channels where your potential customers might be hanging out and that makes sense for your brand to be present.
Focus on organic SEO traffic, produce and share quality educational and entertaining content such as guides, blog posts, interviews and podcasts.
Dive into live shopping and influencer marketing to run demo products, review them and engage with your prospects, especially Gen Z consumers.
Experiment with pop-up shops to test consumer demand for physical retail or attend Pop-up events. Emerging and established brands attend pop-up events to reach new audiences, build brand awareness, and boost sales.