The Customer’s Economics

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Had an interesting chat with Swee Yeong (entrepreneur and angel investor in the Malaysia tech scene) earlier this week. He mentioned about 2 very important metrics that businesses, especially e-commerce businesses should look into:
1) Customer Acquisition Cost
2) Customer Lifetime Value

Companies often tries very hard, and I believe that’s an understatement, to acquire customers. And when these would-be customers convert into real customers, these very same companies usually do nothing to keep these customers happy. And then, the customers leave. And the whole cycle repeats again.

I believe a lot of this is contributed by one key factor- the performance metrics. Here’s the ugly truth- most company evaluate their performance on how much sales they get over a period of time. And if they go a bit more further, the profits they make out of the sales. And that’s the easy part of the game, and most company can provide this sort of reporting to ‘The Management’ without any problem. How difficult can that be? Just sum up all the sales from all channels, and then minus away the expenses incurred. Job’s done.

And there’s always this tinge of excitement when it comes to signing up a new customer or opening a new account. Comparatively, there’s very little mention going to the channels that sells to the same customer, over and over again. Much worse, when a customer stops buying, companies usually go straight into denial mode.

This largely happens because the customer’s lifetime value is not so easy to profile. It’s not impossible, but it’s just not as straightforward as the standard sales/profit metrics mentioned earlier. And profiling customers according to their buying frequency and volume required more clicks in the reporting system.

It’s also very likely a supply-demand thing. If ‘The Management’ never needed to know about the values of each customers and what they can do to increase this metrics, nobody is going to go through the trouble of generating these reports.

In the world of e-commerce, where your competitor is only a click away, it becomes a battle to the death to get customers to stick around. Losing them after their first purchase is not only going to cost you money, you are also probably losing them for good. Of course, there’s a reason why they are leaving but it’s very likely they are not going to tell you, especially if their most recent experience with you hasn’t been a pleasant one.

Swee Yeong also mentioned that it’s indeed a painstaking process to get these critical customer metrics. You can know which street your customers stay, male or female, fat or skinny and married or single but that’s all there is to it. All the demographics and profiles you have about your customers only helps you to understand more about their personal life, but it doesn’t reveal much about how they response to your marketing strategies. You want to know did they click on your last email campaign or did they even opened the email? If they hadn’t, what would make them want to click? Is RM100 voucher enough to buy them over?

There are many things you can start doing once you have a very detailed information of your customer’s responses to your marketing techniques. As Swee Yeong puts it, “This is when things start to get interesting.” You can start segmenting your customers into various tiers. The shopaholics and the bargain hunters. The click-happy customers and the untouchables. And with these custom segmentations, this is when you can get creative with your marketing messages and use your advertising dollars most effectively.

I would love to hear if you have any other metrics that you feel is important when it comes to understanding your customers.

2013-08-18T01:57:05+08:00August 18th, 2013|E-Commerce, Entrepreneurship|1 Comment Scams

Scams has always been around since greed was ‘invented’. So, with today’s technology, it has become easier to become a victim of scam, and if you look at the bright side, to become a successful scam artist. is an online classified platform that allows seller to post their items with a short description of what they are selling, the price of the product and a few photos.

If you have ever transacted on, you would know that it’s a platform full of crocodiles, as compared to say, This is not to say does not have their own share of sinister traders, but is one place that these scam artists are allowed to fester.

The situation got so bad that buyers are not willing to buy unless sellers offer them COD (Cash on Delivery) services- which means a face-to-face, belly-to-belly meet-up for the transaction. This is necessary if you are selling used cars or dealing with properties, but if you are selling a toothbrush, there’s no way you can make it a scalable sales channel.

I ‘was’ once an active merchant too, but if you are serious about growing your e-commerce business, there are much better things to do.

So, what could do? Of course, there are many things they should have done to safeguard buyers, because in an online classified platform, there’s only one party that stands to lose the most- the buyers.

It’s not up to me to advise how the biggest trading platform in Malaysia should go about doing their business. From the way I see it, they definitely do not have the buyers interest in mind, because revenue comes from sellers’ listing fee and advertising credits. This is one website that should have a big ‘BUYER BEWARE’ banner in all their pages.

As with all anti-scam strategy, here’s a 3-step check list before you transact:
1) Deal is too good to be true?
2) Can you easily verify reputation and legitimacy of the seller?
3) Ensure all transactions (bank-in slips, SMS, emails) are documented for damage control later on.

2013-08-09T18:03:56+08:00August 9th, 2013|E-Commerce|2 Comments

The Power of Pixels


How important is the picture of your product, you asked.

Let’s say you are given a choice to only use either text or a photo to sell your product, which one do you think have a higher chance to convince a prospective customer?

Unless you are selling software, the choice is pretty obvious. The old adage a picture speaks a thousand words is very true in this case, and it can in fact be a deciding factor.

The product photos should achieve the following objectives:

  • It gives customers a clear visual of what they are buying. So, if you have something complex, provide multiple angles. Label them if you have to.
  • It shows that you are a serious seller, especially if the quality of the photography is good. By good, I mean it’s well-lit, high resolution (anything above 600 pixels in width and height wise) and most importantly, does not have watermark that does not belong to you.
  • It removes doubts when it comes to product similarity disputes. Again, a good point for buyer confidence.
  • Triggering impulse buying. This might sound a bit manipulative, but it’s true that visual is much more effective in triggering the emotion than just pure text alone.

It’s true that not everyone is proficient in graphic editing softwares, but a taking up a quick course in Photoshop will give you an edge over your competitors. There’s simply no excuse for not learning a skill that is critical to your business. Yes, if you have the resources, hire someone but if you are bootstrapping like most of the online entrepreneurs out there, you need this skill to get to the next phase of the game.

Investment in good photography equipment will definitely pay off in the long run. If you don’t have the time to shoot your own photos, outsource them. If you need product photographers’ contact, let me know. The going rate is about RM30 per photo.

With higher speed bandwidth, it’s also a very good idea to have how-to videos of your product to increase conversion rate.

2013-08-09T06:04:42+08:00August 8th, 2013|E-Commerce, Entrepreneurship, Graphics & Designs|0 Comments

To SEO or Not to SEO

Having experienced the rise of Yahoo! to the mainly Google-dominated search engine era, I’ve seen how search engines can make or break your online marketing strategy.

Let’s face it, unless your mother-in-law is able to type your domain name right into her favorite browser, you are still going to rely pretty much on the search engines to get traffic to your site.

That being said, you should never start to design and write your web content to solely cater to search engine’s demand. The key here is to understand and keep yourself up to date what the search engines are up to so that you do not get penalized unnecessarily.

So, in my opinion, search engine optimization (SEO) should always be an after thought in your to do list. Why do I say that? Simply because if you focus on producing good content which is useful to your visitors, you will get much more genuine visitors who stick around. And because you write good content, search engines would also give you more brownie points in return. So, always start with good content, and the rest will take care of itself.

I’ve seen companies who offer SEO services on how they can rank your site to the first page of the keywords that you desire. I think this is great for any new websites who are struggling to get traffic, as long as you are not paying an arm and a leg for it. If you have started a website from zero traffic, you’ll understand how challenging building a healthy traffic with high returning visits is. But do not let this ‘traffic building’ objective sway you to the wrong side of the game. Ask yourself this before you pay these SEO companies for their services- “When the traffic comes to my website, am I able to convert it to a paying customer?”

If the answer is not a resounding yes, then you have a bigger issue at hand. You need to do some housekeeping and take stock of your existing landing pages. You have to study how your competitors who are already successful design their landing page. You have to experiment with various layouts and observe how they affect your overall conversion rate. In short, you need figure out what to do with the traffic once they start flowing in.

Think about it, if you spend money on buying traffic, either with Google AdWords or engage an SEO consultant but you neglected your website’s content management, do you think it will give a good impression to first time visitors? An advertisement of a lousy product will create a more damaging results than with no advertising at all. External consultants or ad agencies generally know nothing about your business nor would they bother since their KPI is not about how much money you make at the end of the project.

10,000 visitors a day with 1% conversion or 1,000 visitors with 50% conversion? I’ll pick the latter anytime of the day.

So, it’s always important to get down to the fundamentals. Technology is always changing, but only you know which are the ones that your business can take advantage of. Good luck!

2013-08-08T04:43:46+08:00July 19th, 2013|E-Commerce, Entrepreneurship|0 Comments

Demand, Creation or Fulfillment

It helps to know which side your business is when it comes planning your resources. From a simplistic viewpoint, all business exist to fulfill consumer’s demand. However, if you look more closely at your business and its activities, you will probably identify which part of the demand coin your business really is.

Demand creation is usually associated with creating a need for your products or services, and it usually takes a lot of patience and financial resources before you can really begin to see any feedback from the market. Compared to demand fulfillment, it’s much more risky, but if done right it can be much more rewarding.

A business that fulfills an existing demand is much easier to kick start, and hence the barrier of entry is lower and in turn requires volume to stay profitable. For instance, a department store that carries various branded products do not need to educate their consumers about the products they carry (the brands should have done that already) and their focus would be giving consumers a good purchasing experience.

By understanding which one you are, you can allocate your marketing budget and talents in the right projects. Most e-commerce stores falls in to the demand fulfillment category. The products carried are usually brands which they resell from third party distributors who control the pricing and supply. So, as an e-commerce entrepreneur, your job should not be focused on branding those products, but on the shopping mechanics of your online store. So, it’s always a good idea to get products that are established already so you can focus on the purchasing experience.

You can still do both at the same time- branding your own products and fulfilling needs for brands your customers are already looking for but remember not to spread yourself too thin or you might not achieve success in either one.

2013-08-08T04:43:53+08:00July 17th, 2013|E-Commerce, Entrepreneurship|0 Comments

The One Best Tip before You Start Your e-Commerce Store

Okie, so you are all geared up to the teeth to slaughter your way through the cyber marketplace and make your presence known to your competitors who’re already on Facebook, Instagram, Tumblr and all the latest mumbo-jumbos of the latest internet technologies. Even if you do not have the resources, you at least want to have a piece of the action all these online traders are getting.

Before you plunge yourself out from your current comfort zone, you wished someone would have told you what’s the single most important thing that you should do before you bare yourself naked on the online battlefield.

And here the one best tip I could give to anyone who never had any experience of selling with just using a keyboard and mouse- the easiest way to find whether you have what it takes to be an e-commerce entrepreneur is to start selling your products online right away, using whatever platform that is available to you. And I do mean RIGHT NOW!

Forget about setting up an online store with your own domain name, but it’s a good idea to have it registered already.

There are already many platforms available out there, ready for you to get your first online customers without you having to develop your own store. If you are looking to target oversea customers, eBay is the obvious channel, but there are of course many other platforms that might be more suitable for your products. If you are selling hand-made stuffs, is a good place to start.

If you are looking for customers within Malaysia, then you won’t go wrong starting your online selling career with Or And the list goes on.

The idea is to go where the traffic is, because traffic is something you can never build overnight. If you have to pay to be on these platform, do it. But please make sure you that the fees doesn’t cause your company to fold up in the event you don’t get any sales out of it. These platform usually only charge a minimal fee when you list a product and it only becomes painful when you actually sell something. But on the bright side, at least you sold something, and that’s a very good thing for a start.

Don’t get me wrong, I am not saying having your own online store with your own domain name is not important. In fact, it’s one of the most important sales channel that you need. But the time has not come for that yet. At this very moment, you need to experience the challenges an e-commerce entrepreneur would face and decide if you are willing to do it every day for the next couple of years.

So, go ahead and open up your stores by leveraging on existing platforms. Some platforms has a steep learning curve while some are a breeze to use. Some are customer-biased, while some are seller-biased. Every platform you use will teach you something about how consumers behave in the marketplace. For instance, if you list your products are, be prepared to be bombarded by phone calls asking for Cash On Deliveries (COD). I strongly discourage you to transact outside the computers, but if you are really desperate for sales, make sure you take all the safety pre-cautions- meet in a crowded place, and if you are selling something of high value, always bring a bodyguard along.

My take is that you should focus on these platforms for at least 6 months just to see if there’s a big enough market for your offerings. You will also learn how a typical transaction take place, from listing your product, shipping it to your customer and receiving a thumbs up for your good work.

It can be a very exciting period because you will be learning tonnes of new things, from logistics to product photography.

Good luck!

2013-08-08T04:44:00+08:00July 11th, 2013|Daily Observations, E-Commerce, Entrepreneurship|2 Comments