It’s no secret that online shopping grew exponentially during the lockdown. The latest figures from the UN Department of Commerce and Development (UNCTAD) show that e-commerce sales rose to $ 26.7 trillion in 2020, which is 30% of the world’s gross domestic product (GDP).
According to the same report, the UK had the third highest growth rate of seven major economies, with online shopping accounting for 23.3% of all retail sales, compared with 15.8% a year earlier. Another study by Retail Economics on behalf of NatWest shows that just under half of UK consumers (46%) have bought at least one product online that they had previously only bought in-store.
Little discussed, but equally important, were the 195,000 UK-based logistics companies employing more than 2.5 million key workers who made this possible. However, success was by no means guaranteed. In the first week of the pandemic, logistics companies reported a trust level of just four out of ten, according to an industry survey by technology company Touchstar. By week two, 76% had experienced a general downturn in business, and by April 3, 2020, 69.5% of delivery and logistics companies had scaled back or stopped operating.
What made the successes stand out was the willingness and ability to change and adapt to the new reality. One such success story was Palletized Shipping Services (PSS). Founded in 2014, the company offers fast, easy and affordable transportation solutions both within the UK and internationally through its online booking platform.
With a strong digital offering that is perfectly tailored to the needs of companies and private individuals, the lockdown offered two clear opportunities:
Disruption of supply chains in B2B markets, which means that many companies have had to look for new suppliers to transport goods
A phenomenal increase in ecommerce transactions depending on an effective, easily accessible delivery service
In order to take advantage of this unprecedented opportunity and establish itself as a provider of fast and effective bulk shipping, PSS had to make its customer acquisition strategy as effective and lean as possible. Thanks to an ongoing partnership with customer acquisition specialist MCG Digital Media, the logistics company has done just that.
Achieve a return
Gez McGuire, founder of MCG Digital Media, describes exactly how he managed to run the business from a loss on initial transactions to a 4: 1 return on digital advertising: new customer from PPC advertising.
“The company’s low-cost model means that, like many companies in the logistics sector, it realizes profits from the second or third transaction after deducting advertising expenditure. In order for PSS to take full advantage of this unprecedented circumstance and to provide businesses of all types with access to fast and effective delivery, it was critical that its Google Ads run as effectively as possible.
“To achieve this, we set out to analyze more than five years of data to identify the devices and time segments that delivered the lowest cost-per-acquisition (CPA) and then segment them into the following segments :
Primary converters – the ones with the lowest initial cost
Secondary converters – those with higher CPA but still increasing sales
“We then set out to create a granular campaign structure that used all of the elements that had worked in the past and create a much more targeted, segmented campaign approach. This gave us full control over budget spending in terms of:
Time of day (morning / afternoon / evening / weekend)
Primary or secondary converter from historical data
Device (desktop / tablet / mobile device)
“As a result, the campaign structure grew from three core campaigns to 18, each focusing on primary or secondary conversion keywords, the optimal time and day, and the most powerful device.”
After segmenting the data, MCG Digital Media was able to draw on more than ten years of experience in digital advertising to manually optimize campaigns and identify trends and CPA parameters that were realistic and, above all, “sticky”. The customer acquisition consultancy was then able to use the latest AI bidding techniques to further improve the return on investment.
McGuire continues: “Our unique method of initial manual bid management takes into account fluctuations in the data, where we see above average click-through rates and a cost-per-click that is at least 5% lower than the bid for that particular keyword. When we spot these patterns, we manually reduce the keyword bids by small percentage points using a unique method that we perfected since 2006, before Smart Bidding, that allowed us to get the first results we needed.
“In the first three to six months, we continuously optimized bids, budgets and campaign delivery and changed them manually to get a full understanding of the market – not just the cost per acquisition, but also the immediate revenue generated by the PPC campaigns every campaign can be generated. Level.”
He adds: “As time went against us, our goal was to implement the new customer acquisition strategy as quickly and effectively as possible.
“The average cost per acquisition for the past 12 months was £ 16.28. Our first goal is to reduce this by 10%. In fact, we’ve more than tripled that goal, cutting average CPAs to just £ 10.35 in the first 60 days – a 36% reduction.
“By the third month we had achieved a 47.79% reduction, which resulted in a 55.59% reduction in cost per acquisition over a rolling 12 month period through March 2021. In fact, the cost-per-acquisition for the first two months of 2021 was a remarkable 74.7% less than in the first two months of 2020.
“In the 12-month period up to March 2021, we also increased the PPC conversion rate across the board from 6.14% to 17.07%, achieved an increase in conversion rates of over 178% and the PPC sales volume of 2,008 increased to 5,322 – an increase of 165.04%.
“The campaign delivered £ 178,000 in instant revenue direct from PPC spend of £ 37,000, which is just under 5: 1 in terms of revenue related to ad spend. PSS operates with an average margin of 22.5% and has thus benefited directly from its PPC campaigns for the first time. In fact, our only constraints during this period were the company’s operational needs and available ad spend, with a modest 16% increase in ad spend helping to achieve the exceptional returns on sales.
“We also know that every new customer completes an average of at least three transactions per year. This means that PSS has conservatively estimated sales of over £ 500,000 from PPC alone – a return on investment of 14: 1. “
Gez McGuire, founder of MCG Digital Media.