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Can Your Business Survive Without Ads? Find out if it’s Default Dead or Not

  • Posted on August 4, 2022 by natalia
  • Reading time about 5 minutes
Loyalty Program Platform

The eCommerce world is highly competitive as customers have infinite choices when it comes to the brands they wish to associate with. If you are new in the market, making a place in this business era can be quite tough without the right set of marketing campaigns.

Gaining a competitive advantage is possible only when your business can make an impact and offer something unique that your competitors might not be offering. To make customers aware of their brands and offerings, many brands rely on paid marketing and ads to survive in the market. The question is- how long can you stay in business if you have to turn off all the ads? Let’s find out how you check the status of your business and how Customer Loyalty Software can help you thrive.

Default Dead or Default Alive

Talking about the eCommerce world, “Default Dead’ is the condition when a business loses all paid acquisition channels, repeat customers, and new customers are not able to cover basic expenses. That is when you realize your business will no longer survive and will have to shut things down soon. On the other side, if your business can survive without any help from paid marketing, then it can be termed “Default Alive”.

Paul Graham came up with these terms for tech startups, which defines that if the startup continues to grow at its current rate, Default Dead startup will run out of money & may shut down while Default Alive startup will not.

For eCommerce brands, it can be calculated by the following formula-

Default Dead or Alive= Profit Margin on an Average Sale – Average Cost to Retain a Buyer

If the above is higher than 0, you belong to Default Alive, and if less than 0, your business is Default Dead.

The charges associated with retention can be calculated by-

Cost to retain= Average Discount Amount + Average Marketing Spend per customer

How eCommerce Brands Can Stay Default Alive?

As technology evolves, we have witnessed iOS changes and social media algorithm updates that lead to good sources of new customers. A study says Facebook ad campaign that can track shoppers on iOS devices has brought a tremendous fall in marketing spend i.e. 6 times (ROAS)return on ad spend to 2.4 times ROAS. Another thing that happened is rapid updates on data privacy policy making it hard for merchants to quickly adapt to unexpected downturns in ad effectiveness.

So, if you are a merchant, you must make sure that your business is default alive, which means there are a few things you must keep the focus on i.e. maintaining the relationship with existing customers & your brand. This doesn’t mean you should focus on advertising but you should also keep the focus on retention and organic demand-based activities to help your brand stick for a long time even if any unprecedented challenges come on your way.

Here are some of the ways to help your brand stay in Default Alive status and build customer loyalty for better business revenue & higher customer retention rate-

– Know Your Customers

Get personal with your customers to know their buying habits and make them feel valued with personalized experiences like special treats on birthdays, extra discounts on favorite items, etc.

– Go for a Loyalty Management Software

The next step is to encourage & reward loyal customers for higher retention with the help of a well-strategized loyalty program that offers relevant rewards as per the customers’ preferences

– Create a Referral Rewards Program

Make sure to reward customers for doing nothing but engaging with your business. They can refer your company to their colleagues or families. This helps in not just bringing new customers but also retaining old ones by incentivizing them.

– Focus on Strengths & Values

Know what your business is good at and focus on that! To connect with buyers, staying true to your brand and focusing on what you do best is a must. Don’t imitate your competitors’ offerings blindly as long as you are offering what your customers need.

– Be Active on Social Media

Build a relationship with customers through social media by keeping them updated with new updates and offerings. Interact with them & build a strong online community to encourage customers to stay for a long time.

– Take Customer Feedback Seriously

Make sure that you are listening to your customers to show how much you value them & always be prepared to constantly improve or upgrade as per their feedback. Customers are more likely to get associated with a brand that values their opinions & gives them a better experience.

– Store & Analyze Customers ‘Data

Ensure that you store customer data and analyze them to make it easier for customers to shop from your brand in the future. Members can easily create an account that stores shipping address & payment details making it easy for them to make a quick purchase.

Key Takeaways

As we can see, it can get quite hard for any eCommerce brand to maintain a mark and stay in the business where every other brand is offering similar services. If your business turns out to be Default Active status, you must make sure that you can withstand future updates to the eCommerce ad landscape. On the other hand, if your business is Default Dead, you must take swift action to make your business survive any volatility that revolves around ads.

Making your customers stay is one of the major things you must focus on, which is why you need a personalized loyalty program tailored to the needs of every individual customer. Novus is an end-to-end Loyalty Program Platform that enables brands across the world to attain the best possible results with custom-made loyalty solutions aligned with the best technologies at an affordable cost. Connect with our experts to see how you can improve customer satisfaction rates through a well-planned loyalty strategy.

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