Welcome to the first instalment of a new regular feature where B2BNN recaps insightful podcasts chock full of actionable information ideal for B2B professionals.
Our first column in this series looks at Xero Hour Episode 1: How to Start an Ecommerce Business.
The podcast, hosted by Bob Knorpp and Saul Colt, features an interview with Window Farms founder and CEO Britta Riley. Window Farms is a Brooklyn company making vertical herb and vegetable gardens that hang in apartment windows. Riley broke down the importance of community development, and the power of cloud-based APIs to build a suite of tools for managing every aspect of your business.
In the opening segment of the show Colt set the tone saying, “The barrier to entry with all these tools like Google apps and Squarespace, it’s actually easier than ever to start an e-commerce business.”
Knorpp agreed, remarking: “All the tools you need to use are there right out of the gate. You probably won’t even have any downtime. You could start one in less than a week if you wanted to.”
Inside the Cloud-Based Revolution
Riley spent a lot of time extolling the power of the cloud because you can buy apps a la carte, and there is much more flexibility with the cloud than with traditional business management programs. As your business develops, you need to constantly be looking for improvements.
“You always have to have a segment of your budget dedicated to continuing to look at these tools that you’re using to operationally service your business,” Riley said. “You can’t get locked into one thing permanently because things change over time.”
It can be easy to start an ecommerce business because of how readily available all the necessary tools are, but the amount of variety can be daunting. Every business is different, and there is no magic bullet. It may take some experimentation and research to arrive at the ones that work best for your enterprise. Riley advised starting with an app that services the most important aspect of your business, and building out from there.
A Strategy to Analayze Customer Metrics
An interesting takeaway during Riley’s interview was the importance of looking at your customer acquisition cost and comparing it to your customer lifetime value. If it costs $40 to acquire a customer, but they only make a one-time purchase of $41, you won’t generate a healthy cash flow.
That’s why you need to prolong the relationships with your customers. Hook them with your primary product, and then keep them engaged with secondary products. A recurring line of business is essential to keep your profits high, Riley recommended.
Don’t Neglect Community Development
“It requires a certain amount of humility to admit that you don’t know what the market really needs,” said Riley. To find that out, you need to build a community with your target customers.
Riley used a freemium model to achieve this, and in her case it worked very well. Even though she was giving something away for free, in the long run it paid off in the form of a substantial email list of customers.
Build your customer community, and listen to what they say. You might be surprised at how good ideas can easily be found just by listening, Riley added.
If you want to listen to the Xero Hour podcast you can find it on iTunes.