Thanks to Internet Retailer Magazine and Research Analyst, Fareeha Ali for writing this in-depth profile of how e-commerce companies are exploring non-traditional methods to grow their business by redirecting marketing funds away from advertising to improving customer service.
Excerpt from Internet Retailer Magazine
How ScanMyPhotos.com builds its business without advertising
The photo digitizing company says a new focus on customer service contributed to 30% growth for ScanMyPhotos this year.
ScanMyPhotos.com has found a way to grow its e-commerce business without spending a dime on online advertising, says president and CEO Mitch Goldstone.
The company that turns printed photos into digital files used to spend $100,000 annually on digital marketing and advertising, such as targeted Facebook ads and paid search ads on Google, but those efforts resulted in such a low return on investment that Goldstone says he ditched all paid advertising for ScanMyPhotos. The company reinvested that entire advertising spend on customer service. It also launched a new mobile website in March.
The focus on customer service and engagement has boosted the e-retailer’s sales about 30% this year, Goldstone says. ScanMyPhotos projects just under $5 million in sales for 2015. In the past year, the Irvine, California-based company spent no money on advertising, and in 2016, Goldstone is sticking with that plan.
When Goldstone was investing in ads on Facebook and Google, he found that he was paying for clicks that didn’t result in many sales. Plus, the few customers that did make a purchase after clicking on an ad often never returned to buy again. The retailer received no more than $5,000 in return from every $100,000 investment in advertising.
To win more loyal customers, Goldstone shifted his focus from ads to better customer service. His investment in customer service includes the addition of online surveys just prior to checkout, the hiring of 10 additional staff members and a copywriting team dedicated to interviewing customers and sharing their stories on social media. ScanMyPhotos has 18 employees.
“Engaging with customers can cost a lot of money,” Goldstone says.
“But when people ask me how I can afford [spending this much on customer service], I tell them that I can’t afford not to do it.”
One form that engagement takes is sending each customer a personalized email after they complete an order, as opposed to an automated message, which would be cheaper. If a customer mentions in her order that she is digitizing photos for a specific occasion, for example, then the retailer will mention that in the email and follow up later on asking how the event went. Personalized emails take a lot of time, Goldstone says, but the extra effort has paid off.
He knows it spreads the word because before completing an order customers are asked where they heard of ScanMyPhotos, and many who respond say it was recommended by an acquaintance. Referrals now account for 60% of all new orders at ScanMyPhotos. If customers filling out the survey mention the name of the person who referred them, the e-retailer sends the referral a personalized thank-you message.
Without advertising, all of ScanMyPhotos’ site traffic comes from blog posts, social media and weekly emails. One way the e-retailer drives sales through these channels is by sharing customers’ stories. For example, a story about a customer finding an old letter from her deceased mother in the stack of photos she was getting scanned by the company yielded 167 Facebook likes, about 75 visits per day and about $10,000 in sales since it was published Oct. 13.
ScanMyPhotos also shares such stories in a weekly email blast to customers.
“It works for us because my business is so emotional,” Goldstone says. People share personal pictures, so they want to be engaged on an intimate level, he says. “People relate and respond to stories we share, and that’s when they tell their friends and family about our business.”
The customer service initiative receiving the most attention from consumers, though, began about two years ago when ScanMyPhotos started sending flowers to select customers each week to commemorate important events. If a customer is digitizing photos for a memorial service, for example, the retailer might send her flowers for the occasion. One arrangement of flowers, which costs the company $50-$70, consistently brings in, on average, seven new customers and roughly $1,250 of new business, Goldstone estimates based on surveys and tracking new orders.
The company hasn’t seen adverse effects from not investing in paid advertising this year, he says. Since cutting advertising, traffic to the site has increased 32%, and the consumers who come to the site are better, more loyal customers, Goldstone says. Personalization, asking for referrals, sending flowers and the new mobile-friendly site contributed to increased traffic.
“The one drawback, however, is that I didn’t do this from day one. Our advertising outreach has had zero results for us, and all that money we spent on it over the years was just wasted,” Goldstone says. “I kick myself every day for not doing this from the start.”
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