Facebook ECommerce Strategy for Small Business (Targeting, Funnel & AoV)

In this blog post, we will look into the details of three basic Facebook optimization techniques for ECommerce Stores. Those three important techniques basically address the three main issues that most of the eCommerce stores running campaigns on Facebook faces. These pain points are:

  • Targeting
  • Customer Funnel and,
  • Average Order Value
  • Campaign Structure (Bonus)

Targeting

I define targeting as finding the sweet spot where you can target. If you already have some historical data in your account, then finding the sweet spot becomes easier. If there are not many historical data in your account then, your strategy needs to encompass the target audience as much as possible.

ROAS Analysis by AGe Group

Above is a simple ROAS analysis by age group of a Facebook account that I have recently been assigned to do the marketing. Looking at the ROAS, in this case, the sweet spot is the 25-54 age group. However, the 18-24 age group also sounds promising. Similarly, when you acquire a Facebook ad account, before deciding on targeting, it is recommended to analyze the historical data. There are different parameters using which you can analyze the historical data. These could be

  • Device
  • placement
  • day of the week
  • hour of the day
  • Gender etc.

Not all of the parameters might be important. However, try to stick with the top ones when to try to define the targeting. The same rule applies for a new account or marketing initiative. Try to be closer to your target persona as much as possible while also keep monitoring the campaign performance at the same time.

Customer Funnel

It is always important to keep testing your ECommerce Store Customer Journey funnel and try to optimize that. With so many online tools such as ClickFunnel, VWO, Google Optimize, etc, it has become easier to optimize your ECommerce funnel based on the data-driven way and measure and remeasure the changes or edits. So, let us start with a customer funnel which has a benchmark and can be measured in a data-driven way as well.

ROAS Analysis by AGe Group

The same picture above also shows the customer funnel data. Here is a full-funnel approach based on the customer’s journey (all of these metrics can be found in most of the ads manager or analytics tools):

  • The conversion rate from outbound click to landing page view
  • The conversion rate from landing page view to content view
  • The conversion rate from content view to add to cart
  • The conversion rate from add to cart to initiate checkout
  • The conversion rate from initiate checkout to purchase

Funnel Steps KPIs

The following benchmark/baseline KPIs I am about to describe is going to be based upon my experience running ads for eCommerce brands. The KPIs for your business could be different because there are many factors can come into play such as price point. However, these are some baseline KPIs for the 5 steps of the customer journey:

  • Outbound Click → Landing Page View: 80%+
  • Landing Page View → Content View: 50%+
  • Content View → Add To Cart: 10-15%+
  • Add to Cart → Initiate Checkout: 25%+
  • Initiate Checkout → Purchase: 50-75%+

Customer Funnel

 

Diagnosing the funnel

If you are not hitting the baseline KPIs above, that is okay because all businesses are different. However, I believe that EVERY business as the ability to improve their current funnel. As a reminder, if you can increase your website conversion rate, you can spend the same amount of money on ads and make more money from it. When you are trying to improve your website conversion rate, you should have one of the two tools installed:

  1. Lucky Orange
  2. Hotjar

These tools allow you to use heatmaps and see how customers are interacting on your website. These tools let you see a recording of how customers are interacting with your website, making it a lot easier to diagnose problems.

Outbound Click to Landing Page View

Not getting 80%+ loading your website? You could have a website load speed issue. People are very impatient, if your website doesn’t load fast enough, especially on mobile, they will click away. Also, many of the clicks are accidental touches on mobile screen devices. Amazon did a study about page load time and found out that for every 1 sec your page loads past the acceptable speed (which is decreasing as tech becomes more advanced), you lose 10% of your conversions on average.

You can use the Google Page Speed Insight tool to measure your website speed. It also helps with website SEO, that’s a bonus. Some of the common problems are

  • High size images on ECommerce stores
  • Website slow on certain browser or operating system
  • Do not have click baits. They might bring in clicks but not pageviews
  • Here is a list of possible website speed issues

Landing Pageview to Content view

The Landing Page View to Content View conversion rate will vary a lot depending on where you send your traffic to. Obviously, if your landing page is your product page or fires a view content pixel event then this won’t necessarily matter. However, if you send traffic to the homepage or a collection page. You might need to take a look at how it is laid out. Some of the tips to push more people towards the content or product view in the funnel are:

  • Try changing what people see first, such as the type of products
  • I often recommend ECommerce owners to follow the major ECommerce website product page design such as Amazon
  • Ask questions to re-engage the audience
  • Here are also some tips on the landing page optimization

I often try creating different ads within an AdSet and try to find the most engaging ad with a better landing page view. These Ads would often be about

  • Current offer
  • Top sellers
  • Category
  • USP
  • Trials etc.
Perfect landing page

Example of a landing page

Add to Cart Issue

This means you potentially could have a product page issue. Some simple things you can change or test are:

  • A different CTA button color
  • Adding a video demonstrating your product
  • Adding diagrams explaining the benefits of your products
  • Add social proof such as any publications your brand was in
  • Add customer reviews with photos
  • Have some user intent on your product page. I will highly recommend following Amazon SEO guide to understanding the user intent

Dynamic AdSet audience targeting for Add to cart audience

Don’t have reviews with photos from your customers?

Try setting up an automated email to customers after about a week of when they are supposed to receive the product, offer them a discount or free product in exchange for some user-generated content and a review.

Checkout Page & Beyond

  • Ask questions on exit intent in lieu of a coupon code to re-engage the high-intent audience
  • Have all the information required at these steps such as shipping, return, payment, etc.
  • Offer option to try some coupon code
  • Offer different payment method such as Paypal, credit card, net banking, etc.
  • Offer automated signup using Google or Facebook
  • Have Sticky Add to cart and Checkout option on mobile devices so that it’s always visible to the audience
  • Offer time-sensitive coupon code
  • Send an email with a personalized coupon code to urge a user for checking out.

Some of the AdSets level audience targeting examples:

  • Dynamic prospecting
  • Pushing Dynamic retargeting AdSets for users with product view but no purchase in last 28 days to do an add to cart
  • Pushing Dynamic retargeting AdSets for users with Add To Cart but no purchase in last 14 days to make a purchase

Make sure that the audiences are non-overlapping in order to avoid showing the same ads to multiple audiences.

Average Order Value

Increasing your Average Order Value does three main things:

  • Allows you to spend more per customer
  • Increases your bottom line
  • Decreases your ad costs

The two drivers for Return on Ad Spend (ROAS) are the Cost Per Acquisition(CPA) and Average Order Value (AOV). Therefore, if you want to increase the ROAS of your Facebook campaigns you either need to decrease your CPA or increase your AOV. AOV is a factor of how many items on average a person purchases once, and the costs associated with those items.

From my experience, anything you can control as a brand owner is the easiest things you can change to improve your ROAS. You can change practically anything you want on your website which can have a positive impact on your overall performance.

You can change things on your product pages, load speed, landing pages, checkout process, etc which can all improve conversion rates thus improving your overall campaign performance. Similarly, you can also implement things on your website that can increase your average order value. The power is in your hands. You have the ability to optimize your website for conversions and higher AOVs.

You can increase the number of items a customer purchases by:

  • Bundling products
  • Quantity Breaks
  • Post-purchase upsells and Cross-sells

Bundling Products

Different ECommerce stores have different apps using which you can bundle products. For example, if you are using the Shopify platform, there are many apps out there that allow you to bundle products together. A great app to use is VITALS. Another app you can use is called Frequently Bought Together.

Frequently Bought Together by Amazon

Frequently Bought Together by Amazon

Bundling products is pretty self-explanatory but typically, you want to bundle products that are related to each other and improve the overall customer experience. An example is selling a phone case and bundling it with a phone charger or selling a winter coat and bundling it with a pair of warm winter pants. When bundling, I find offering a slight discount works effectively.

Quantity Breaks

Quantity Breaks is similar to bundling but instead of offering a different product, you are offering the customer a discount if they buy multiples of the same product. This works great for products that are consumable such as supplements. People typically will continue to buy a 30 day supply of a product every month, why not sweeten the deal if they buy 3-6+ month supply at a time?

Post-purchase upsells

A post-purchase upsell is presented after a person has purchased a product from your website. Typically instead of hitting the thank-you page, they are sent to a one-time offer page to buy a different complimentary product at a discount or the same product at a discount. The following three apps/tools can be used to implement post-purchase upsells on the Shopify Platform:

  • One-click Upsell (OCU)
  • Cart Hook
  • Sweet Upsell

One-Click Upsell and Cart Hook allow for what is known as a one-click upsell. This means that all the customer has to do is click the “Add To Order” button and their card will be automatically charged.

AoV Example Study

Let’s say you average 10,000 website visitors per month, you currently have a website conversion rate of 3%, and an Average Order Value of $30. At a 3% conversion rate, you get 300 customers. Times this by $30 and you get $9,000 in revenue.

Now, let’s say you are able to increase your average order value, using the methods above, to $40 (which is completely possible). If your website visitors stay at 10,000 and you are converting 3%, you still get 300 customers. At an AOV of $40, you now make $12,000 instead of $9,000 or $3,000 more! Use this example and plug in your own store numbers and see how much of a difference it can make on your bottom line.

Retention

Once a customer has invested some $$ amount in buying a product, you do not want those customers to lose and it’s time for customer acquisition plan. Here are some of the customer retention plan. You should also consider different channels of customer acquisition though.

LTV by Acquisition Channel

LTV by Acquisition Channel

Cross Sale/ Up Sale/ Bundle Sale

  • Use a plugin similar to Zipify to target one click upsell during the checkout process
  • Recommend some bundled product with discounts during the checkout
  • Cross-sell products during checkouts such as mattress topper or mattress pad with a mattress

Customer Win Back

  • Ask customers who have given you bad reviews and solve their problems
  • Remind customers of the benefits that they have received
  • Use cohort analysis to understand user behavior in Google Analytics. Here is a nice article on GA Cohort Analysis for ECommerce

Customer Buy Back

  • Send special discount code during birthdays
  • Remind the customers to refill their products and send them some bundle offer
  • Ask customers to try new exclusive products at a cheaper price
  • You might also find this article on Facebook Marketing Tips For Holiday Seasons interesting

Facebook ECommerce Campaign Strategy

The main 5 components of the campaign structure of ECommerce accounts are:

  • Account Structure
  • Prospecting
  • Warm Retargeting
  • Hot Retargeting
  • LTV Optimization

Account Structure

Setting up a proper account structure is like building a proper foundation. Too many people want to build a skyscraper on surface dirt which can topple over when things get hectic. Instead, you need to view the initial account structure as digging a deep foundation, so you will always have a stable and consistent set up to fall back on. Before running ads on any account, I make sure I have the following campaigns in place:

  • Ad creation campaign
  • Warm retargeting campaign
  • Hot retargeting campaign
  • Prospecting testing campaign

The ad creation campaign is pretty self-explanatory. We know that social proof is king when it comes to Facebook ad performance. The more likes, comments, and shares you have on your ad, the more people will be interested in what you have to be selling because the product appears viral.

To frankly put it, the majority of people are like sheep. They will gather to wherever a lot of people are gathering. This campaign is quite basic. No special hacks, tricks, or tactics. The campaign’s purpose is to only create all of your ads excluding DPA because you will be able to share post IDs a lot easier. I personally use a conversion campaign for this step. Targeting and optimizing don’t matter. All that matters is what is on the ad level.

Rule of thumb: make sure the campaign stays turned off because you don’t want to spend money on these ads.

After the ad creation campaign, I will begin setting up our retargeting before prospecting. Going back to foundations, you want to make sure people won’t fall through the cracks if they don’t initially purchase from a prospecting campaign. Therefore, I set up a separate campaign for warm and hot traffic with the purpose of retargeting. Having retargeting makes sure I am using the total monthly budget as effective as possible.

Once warm and hot traffic is in place, I set up the initial prospecting test campaign. Don’t worry, I will go more in-depth on each campaign later on in the post. This initial set up is what I start all accounts on and the approach to consistently crushing it.

Prospecting

When it comes to prospecting, I like to keep testing and scaling separate, so I will have dedicated campaigns for each step, starting with testing. Depending on the account, I will either start with a conversion purchase optimized CBO campaign or using ad set budgets. If there is history on the account, the data will give us an indication of what budget style I initially test with. Testing optimized for purchase, overall allows you to test quickly so that you can start scaling asap.

Here is the basic setup:

  • Minimum 10 audiences
  • 3 creatives

Typically for the audiences, I like to start with a majority of lookalikes and a few interests. These audiences have had the best performance for me across all accounts. Super LLAs are when you use multiple lookalikes in the same ad set. For example, I will have an ad set for the following lookalikes:

  • 1% Purchase 180 Days
  • 1% Add To Cart 180 Days
  • 1% View Content 180 Days
  • 1% Website Visitors 180 Days
  • Exclude Purchases 180
  • Exclude Page Viewers 30 Days
  • I will do the same thing but using 1-5% lookalikes and lastly, a third ad set with 5-10% lookalikes.
  • So out of the 10 audiences initially being tested, 3 will be super lookalikes and 7 will be interests.

From the interests, some that have been working well are fact-based interests such as related celebrities, magazines, TV shows, movies, and other brands. These interests will typically have an audience size of about 1-5 M. Additionally, something that has worked really well is going wide open and not using any interests.

Going wide open with no interests will not work for every account but it is something to definitely test. This strategy has worked well with accounts that have at least 1,000 conversions in the last 30 days. Essentially, you are letting Facebook’s algorithm do all the targeting work for you. Additionally, always on prospecting campaigns, I am excluding 30-day page viewers and 180-day purchasers so that I don’t get overlap. You can read here about Facebook Exclusion.

Budgets are dependent on the product price but I like to start with 4X product price with a minimum of $100 per ad set. Additionally, this will depend on the brand’s budget but typically the higher the budget the better. I want to collect data, cut, and scale fast. With creatives, I like to test the following ad types:

  • Still image
  • Video
  • Carousel

I am using lifestyle shots, Buzzfeed style videos, product demo videos, influencer content, user-generated content, etc. Additionally, when starting off testing, I like to stick with one copy and one headline. That way I can keep tests contained to a single variable, the creative. Here are some copy templates that have been working:

Number 1:
[BOLD CLAIM]
🗸 Selling point 1
🗸 Selling point 2
🗸 Selling point 3
Tap [Shop Now] to see the collection.

Number 2:
[claim or question that evokes emotion]
[Selling Point]
Shop Now
👇👇
Link
Link

Once I find my winning audiences & ad combinations, I will duplicate the winners into a CBO scaling campaign. I will keep any profitable ad sets running in my testing campaign. The strategy here is at a minimum break even on prospecting because the blended ROAS with retargeting will make the overall account profitable. Additionally, as I am scaling, I am continuously testing new ads in the background because at higher budgets, fatigue will start to set in and you will need to switch out ads to keep performance consistent.

Warm Retargeting

Warm traffic consists of people that have interacted with your brand but have not been to your Website. These people include:

  • Facebook page engagement
  • Instagram page engagement
  • Video viewers

From my experience, warm traffic campaigns are being left out of a majority of brand campaigns. It’s crazy because there is some easy revenue to be made with these audiences. I like using user-generated and influencer content as the creative and will typically test between a carousel or slideshow video. Even better, if a video testimonial is available, I will use that too.

The copy is quite simple. I am either answering any objections the potential customer might have or I am using a customer testimonial. I will even offer a discount for customers that make their first purchase, this is typically lower such as 10%. A great way to start testing warm audiences is by grouping your warm audiences into one ad set. I like to start with:

  • 30 Day Instagram Engagers
  • 30 Day Facebook Engagers
  • Exclude 30 Day Page Viewers
  • Exclude 180 Day Purchases

Hot Retargeting

Hot traffic is anyone that has been to your website but has not purchased yet or pretty much your basic retargeting. If the website is a low traffic store, I am usually creating a 30-day retargeting audience containing all website visitors, view content, add to cart, initiate checkout, and exclude 180 purchasers. All of these people are in the same ad set.

If the website is a high traffic store, I will separate my retargeting audiences and start with 3-day audiences rather than 30. Personally, I like to start with Dynamic Product Ads (DPA) no matter how much traffic there is. They are perfect because the ads show the exact product a prospect was looking at.

I like to test between carousel and collection with the collection creative being a video or influencer/UGC still image. Depending on the brand, I will typically offer a discount of 10-20%. With higher traffic stores, I start testing sequential retargeting where I am further breaking the audiences apart and using different messaging/offers at each step of the retargeting funnel.

A sample breakdown would be 3/7/14/30+ day audience. Additionally, once DPAs consistently convert, I will start testing still image or video retargeting ads using the traffic objective to squeeze more revenue out of the campaign. For single product stores, instead of starting with DPA, I start with testimonial, unboxing, or other product/experience focused videos.

 LTV Optimization

Lastly, I like to set up a campaign to increase the LTV of a customer or getting customers to purchase over and over again. Similar to warm retargeting, I rarely see brands targeting their past customers. These people should be the EASIEST to convert again and again as long as your product, customer service, and user experience is on par.

LTV by Acquisition Channel

LTV by Acquisition Channel

LTV optimization campaigns are extremely powerful for brands that have products that last a set time frame such as cosmetics, supplements, and consumables. Your customers will need to refill your product, why not give them a reminder?

A basic set up would look like:

  • 7-day purchasers – Use a thank you video filmed by the founder thanking the customer for their purchase and ensure them their product will get to them asap.
  • 14-day purchasers – Use another video ad, stating that they hope they received their product and are enjoying it. Ask them to leave a review or film a testimonial for a special gift.
  • 30-day purchasers – DPA or still image (refill reminder) offering them a one-time special customer only discount.

Here is a nice blog on Cohort Analysis and customer LTV for ECommerce.

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