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  • Alex P

Saying thanks makes good business sense

Updated: Feb 7, 2023

Often one of the first things our customers ask us is "does sending thank you videos make financial sense"?

It's a very good question, as ultimately it takes time (only a minute with our app though) to record a video for each of your customers thanking them for their order.

We ran the numbers, and sanity checked them with a handful of our customers. So although yours will be different, we're confident these will be well inside the ball park.

The Findings

If you're too busy and just want the results, here's the meat and potatoes: taking the time out to record a thank-you video to each and every one of your customers does make sense.

A small business that sends a thank-you video to each of their customers can:

  • gain 184 more repeat customers per annum

  • grow their annual sales by $18,400 or put another way, a 9.2%increase in revenue

  • avoid $1,054 in marketing costs

  • improve their sales margin by 10.1% on each repeat sale

  • realise $14,814 in overall net profit per annum

  • protect $6,400 worth of margin by avoiding the use of discount codes

The detail

To come up with these numbers we worked on the basis of a Shopify store that makes 2,000 sales per annum (all online, no POS).

We went super conservative, under-estimating costs the retailer would probably be bearing, and over-estimating the time required to send videos using our platform.

The average sale value of each order is $100, with a gross margin of 40%. So the store overall has a turnover of $200,000 per annum.

Most companies lose between 80 and 90% of first time customers - but we went optimistic and assumed this business performs better with a 60% drop off rate. In other words, 40% of customers buy more than once in a given 12 month period with this shop.

We know our Shopify app performs well, with a winery reporting a 46% increase in repeat sales. Staying conservative, we halved that and worked off only a 23% improvement in repeat sales.

A thank-you video typically takes 60 seconds to record, and you can record them back-to-back to get through them efficiently. We allowed 90 seconds per video to create, with a 90 second break between each video - which is far more than necessary.

The cost of a full time retail store employee was assumed to be $60,000 ($31.25 per hour), so they would require 100 hours per annum to send out 2,000 videos, therefore at a cost of $3,125 in labour.

We assumed one person would use our app at a cost of around $70 per month to purchase via the Shopify App Marketplace.

Typically retailers spend a lot of money in remarketing, we allowed for $330 per month allocated towards adwords/remarketing. We didn't factor in the time or cost of creating content for initiatives such as bulk email sends, or of marketing consultants, which usually starts at a few hundred dollars a month for a business this size.

We allowed for $33 per month in marketing adtech software licensing, which is fairly understated if they had purchased a loyalty/points system.

Finally, we assumed this retailer currently offers 10% discount vouchers to encourage repeat purchases, and of the customers that do come back 80% enter this discount code at the checkout.

We are happy to run your store's numbers, so contact us if this is of interest.

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