Kurt Elster is an e-commerce consultant who specializes in the Shopify platform. He is a founder and partner at EtherCycle, and host of the Unofficial Shopify Podcast. He earned his MBA from Illinois Institute of Technology. Kurt is a newlywed, and the theme for his wedding was “Day of the Dead,” the Mexican version of Halloween.
Focusing On a Single Product
What is the most important thing you can share about pricing?
Charge more. In the e-commerce space, businesses regularly undercharge and then go straight to discounting to move product. People tend to undervalue themselves and their brand. It is rooted in misunderstanding their value proposition.
Because it is so easy to comparison shop on the internet, price shoppers will usually go directly to Amazon, assuming it is the lowest price. This means customers for smaller brands maybe value, rather than price, shoppers by default.
Who is a customer you have helped develop a premium position?
Everest Bands sells replacement bands for Rolex watches. They incorrectly assumed their customer wanted to customize their Rolex. After conducting a survey, they learned their customers had an active lifestyle and wanted to avoid scratching the original band.
They asked their customer two questions. 1) Would you recommend this product to a friend? 2) To what kind of person would you recommend it and why? Ironically, the customer wound up describing how they see themselves and the reason they bought.
How was Everest Bands able to leverage their premium position?
They changed the message of their marketing to “preserve your Rolex's bracelet by buying an aftermarket one.” The value proposition became an insurance policy for an $8,000 watch. A year later they added a bracelet-preserving case to their products.
What is the most common mistake you see in e-commerce?
Not focusing on a single pain, single product, and single message. When you have a singular focus, you can really understand who the customer is, why they buy and the lifecycle of the product. Then you can scale the product line or move sideways into companion products.
You cannot experiment with your pricing until you understand your positioning. Then you can use anchor pricing and bundling to your advantage.
How did you transition to become an e-commerce consultant?
Ethercycle started by narrowing once, and then again and again. They went from generalist to e-commerce to Shopify to revenue generation for Shopify stores. Kurt asked his best customers what he did best to learn their perspective.
How did you choose the five criteria on your Why Ethercycle page?
Kurt actively disqualifies leads because he only wants to work with his best customers. This allows him to work with customers he really enjoys and quote premium prices. Being picky about your customers allows you to charge more and attract more quality customers.
Focusing On Revenue Generation
What is revenue generation?
The common strategy is conversion rate optimization. Remove the friction in the buying process to increase the percentage of customers who purchase. However, other strategies include increasing customer lifetime value, increasing average order value, or creating subscription revenue.
For example, increasing customer lifetime value. It is easier to sell to the same customer twice than to two different customers once. Kurt worked with a custom mouthguard supplier to create a Facebook campaign to sell the second mouthguard at a 25% discount.
Do you recommend offering options for e-commerce?
Yes. You can do anchor pricing against your own products. Or you can offer a bundle of a product with some accessories. Then you can create a premium bundle. The result is often more revenue than sales of the product alone.
Do you leverage A/B testing with e-commerce stores?
It is difficult for small stores to have a large enough sample size for split testing. However, Kurt does experiment with ideas that have worked for other customers. Customer mindset and tendencies can vary widely by industry.
What is your experience with charm pricing, prices ending in 7 or 9?
Kurt has done some limited experimentation and prices ending in 9 usually sell better. However, this is not a one-size-fits-all rule. You must consider the context of your customer and your value proposition. For example, charm pricing makes very little sense when selling professional services (accounting, legal, etc.).
What other strategies are effective in the e-commerce space?
Part of what the customer is buying when shopping online is convenience–not going to a brick-and-mortar store. Groceries are generally more expensive from Amazon. You can charge slightly more for convenience. This is an example of challenging customer assumptions.
What is your favorite assumption to challenge for your customers?
You are not your customer. Especially if you started your business to solve your own pain. Your positioning is not the same as the reason you started your business.
Focusing On Being Small
How much of your consulting involves Black Friday?
The shopper mindset in the holiday season is different from the rest of the year. How they use your e-commerce site does not change; however, the reasons they buy do change. It is dangerous to base your marketing solely on the fourth quarter. Successful businesses are planning the holiday season at least one quarter in advance.
How can you influence the average order size on an e-commerce site?
Use product upsells. For example, if a customer adds a camera to the shopping cart, display a popup window suggesting a tripod as an accessory. Usually, 40% of customers will take advantage of an upsell with a strong value proposition.
Another way is to use bundles. For example, if you sell a drone on your website, create a starter bundle that includes the drone plus the other accessories the customer will likely need for one price.
How much does Amazon influence the expectations of online shoppers?
Regarding usability, Amazon trains most shoppers what to expect, even if it is not the most user-friendly option. Free two-day shipping was not the standard five years ago. Now, it is.
At the same time, a smaller business can offer a more personal experience than Amazon. For example, you can provide live chat to answer questions, personalized follow-up and exclusive educational content to your customers.
Is productized consulting your only business or a gateway to customized services?
Productized services are the main line of business at Ethercyle. There are several advantages. First, they do not require writing a proposal. Second, the customer already knows the value they will receive before they call. Third, they eliminate the risk of buying because the customer knows the price up front.
What is your most popular productized service?
Website Rescues is conversion rate optimization for an existing Shopify store. For a fixed price, Kurt will go through the website and make the most valuable changes possible, often correcting the result of a DYI deployment.
What is one of your best stories about creating value for a customer?
Kurt created a website, RainyCafe, to play background sounds to help him concentrate while working. It was mentioned on Lifehacker and would up generating enough Google AdSense revenue to pay his rent for several months.