THE BLOG
12/09/2014 05:14 pm ET Updated Feb 07, 2015

5 Mistakes New Online Businesses Need to Avoid

Offering your products or services online can introduce your business to a worldwide audience and contribute to exponential growth. During the 2013 holiday shopping season, consumers spent $42.75 billion online, with $1.2 billion spent on Black Friday alone. If you are looking to venture into e-commerce, make sure to avoid these five mistakes.

1. Not testing enough advertising sources

Uncovering successful advertising sources is not an overnight process. Every business is going to be different, so it is important to test many options with small test budgets. Many online businesses assume Google AdWords is the only game in town. They load up their entire budget, create some ads and click "Start!" It is possible to blow through a huge budget in a matter of hours if the campaign is not properly set up.

Take small steps and test several ad networks. Twitter, Facebook, the Yahoo/Bing network and AOL all have great traffic, but they aren't all going to work the same for every business or offer. Start small, testing several advertising networks and split-test ad copy variations until you find what works best for your business. Once you identify the best advertising source begin to increase your spend.

2. Not providing adequate online customer support options

When a consumer lands on your website, they should be able to immediately identify multiple ways to get in touch with your business. This can include a phone number, physical business address, contact form, live chat or support ticket system. Take a look at these reasons why your business needs to provide top-notch customer service:

  • 40 percent of people purchase from a competitive brand because of its reputation for great customer service
  • 55 percent are willing to recommend a company due to outstanding service, more so than product or price
  • 85 percent would pay up to 25 percent more to ensure a superior customer service experience
  • 82 percent of people have stopped doing business with a company due to bad customer service
  • 95 percent of customers have taken action as a result of a bad experience, with 79 percent of those telling others about their experience.

3. Not building a customer list

It is no secret that email marketing is one of the most effective marketing channels, so wouldn't it be a smart idea to build a list of potential and current customers? This allows you to keep them up to date on new products and special offers, which turns them into repeat customers and future revenue.

Offer something of value in exchange for their email address - special discounts, new product alerts, free shipping, etc. My company offers our email subscribers a free online marketing eBook when they join our list.

4. Offering predictable discounts and special offers

Announcing sales too far in advance and having predictable discounts, such as "save 20 percent every Wednesday" will ruin your regular business. If you are predictable with offers your customers will hold out on ordering until your next special offer. They become accustomed to the discount and will stop buying at your regular price.

This crushes your bottom line and now you have to work harder to make up for the loss caused by predictable discounting. Discounts also have the tendency to make you look desperate and can ruin your brand.

5. Carrying too much inventory too soon

Many businesses assume that the customers will come knocking as soon as their website is launched, so order heavy inventory amounts. If the sales don't come in as quickly as first thought you will be stuck holding onto inventory, which is just an added expense.

Having to constantly order more inventory in the beginning is a great problem to have. Sure, having to make multiple orders might cut into your margins slightly, but wouldn't you rather that instead of having a warehouse full of product that isn't selling and a pile of debt?

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