It’s no secret that online shopping grew exponentially during lockdown. The latest figures released by the UN trade and development department (UNCTAD) reveal e-commerce sales rose to $26.7tn in 2020, accounting for 30% of global gross domestic product (GDP).
According to the same report, the UK saw the third-highest growth rate of seven major economies, with online shopping accounting for 23.3% of all retail sales, compared to 15.8% the previous year. A further study by Retail Economics on behalf of NatWest reveals that just under half of UK consumers (46%) purchased at least one product online that they had previously only ever purchased in store.
Little discussed but just as important were the 195,000 UK-based logistics enterprises, employing more than 2.5 million key workers that enabled this to happen. Success was by no means guaranteed, however. Week one of the pandemic saw logistics businesses reporting confidence levels of just four out of 10, according to a survey of the industry by technology firm Touchstar. By week two, 76% had seen a general downturn in business and by April 3 2020 69.5% of delivery and logistics businesses had scaled back or suspended operations.
What set the successes out from the rest was a willingness and ability to change and adapt to the new reality. One such success story was Palletised Shipping Services (PSS). Set up in 2014, the company offers quick, easy and cost-effective transportation solutions both within the UK and internationally through its online booking platform.
With a strong digital offering perfectly suited to the needs of businesses and individuals, there were two clear opportunities presented by the lockdown:
Disruption in supply chains in B2B markets meaning many companies needed to source new suppliers for the transportation of goods
A phenomenal rise in e-commerce transactions, dependent on an effective, easy-to-access delivery service
To take advantage of this unprecedented opportunity and establish itself as the go-to provider of quick and effective bulk goods shipping, PSS had to ensure that its customer acquisition strategy was as effective and streamlined as possible. Thanks to an ongoing partnership with customer acquisition specialists MCG Digital Media, that is exactly what the logistics firm did.
Delivering a return on investment
Gez McGuire, MCG Digital Media founder, outlines exactly how he was able to take the business from a position of making a loss on initial transactions through to 4:1 return on digital adspend: “Historically, PSS has often made a loss when acquiring a new client from PPC advertising.
“The business’s low-cost model means that, like many firms within the logistics industry, after deducting adspend it realizes profit from the second or third transactions. To enable PSS to take full advantage of these unprecedented circumstances and ensure businesses of all types had access to quick and effective delivery, it was integral that its Google Ads were running as effectively as possible.
“To achieve this we set to work analyzing more than five years of data to identify the devices and time segments that delivered the lowest cost per acquisition (CPA) and then segmenting it into:
Primary converters – those with the lowest cost to acquisition
Secondary converters – those with a higher CPA but still driving sales
“We then set to work to create a granular campaign structure using all of the elements that had worked historically and created a much more targeted, segmented campaign approach. This gave us complete control over budget spend in terms of:
Time of day (morning/afternoon/evening/weekends)
Primary or secondary converters from historical data
“As a result, the campaign structure grew from three core campaigns to 18, each focused on either primary or secondary converting keywords, the optimal time and day and best-performing device.”
Having segmented the data, MCG Digital Media was able to draw on more than ten years of digital advertising experience to manually optimize campaigns, identifying trends and CPA parameters that were realistic and, more importantly, ‘sticky’. The customer acquisition consultancy was then able to take advantage of the latest AI bidding techniques to further improve Return on Investment.
McGuire explains further: “Our unique method of initial manual bid management considers fluctuations in the data where we see higher-than-normal click-through rates and a cost per click that is at least 5% lower than the bid for that particular keyword. When we identify these patterns, we manually reduce keyword bids by small percentage points using a unique method that we perfected going back to 2006, before smart bidding existed, and it allowed us to achieve the initial results we needed.
“Over the initial three to six months, we constantly optimized and manually altered bids, budgets and campaign delivery to get a full understanding of the marketplace – not just the cost per acquisition, but also the immediate revenue generated by the PPC campaigns at each campaign level.”
He adds: “With time against us, our aim was to roll out the new customer acquisition campaign strategy as quickly and effectively as possible.
“The average cost per acquisition for the previous 12-month period was £16.28. We set an initial goal of reducing this by 10%. In fact, we more than tripled that target, with average CPAs down to just £10.35 within the first 60 days – a 36% reduction.
“By month three, we had achieved a 47.79% reduction, delivering a reduction in the cost per acquisition of 55.59% over a rolling 12 months up to March 2021. In fact, the cost per acquisition for the first two months of 2021 was a remarkable 74.7% lower than the first two months of 2020.
“In the 12-month period up to March 2021 we also increased the PPC conversion rate from 6.14% to 17.07% across the board, achieving an increase of over 178% in conversion rates, and increased the PPC sales volume from 2,008 to 5,322 – a 165.04% increase.
“The campaign delivered £178,000 in immediate revenue directly from a PPC spend of £37,000, which is just under 5:1 in terms of turnover related to adspend. PSS operates on an average margin of 22.5%, which means that for the first time ever, it made an immediate profit from its PPC campaigns. In fact, our only limitations within this period were the operational requirements of the business and available adspend, with a modest 16% increase in adspend helping to deliver the exceptional revenue returns.
“Additionally, we know that on average each new customer will complete at least three transactions per year. This means that by a conservative estimate PSS will have generated over £500,000 in revenue through PPC alone – a 14:1 return on investment.”