Powerful Revenue Generation for the Brave New AI Era

Traditionally, the revenue generation playbook for increasing revenue, as taught in economics classes and MBA programs, focuses on four primary strategies:

1. Increase the number of customers – expanding your customer base.
2. Increase the average transaction size – encouraging customers to spend more.
3. Increase the frequency of transactions per customer – motivating repeat purchases.
4. Raise prices – improving profit margins.

While these methods have stood the test of time, they overlook a crucial element in today’s business world: digital innovation and even more recent, AI innovation. The advent of digital technology and AI has revolutionized how businesses operate and grow, offering new pathways to increase revenue that extend beyond these traditional approaches.

In the dynamic landscape of e-commerce, I’ve identified several innovative strategies that it’s time we added to the four conventional methods above. These strategies don’t just add to the existing playbook; they rewrite it by leveraging the power of digital tools and a forward-thinking mindset. Here they are, not in order of importance but as equally vital components of a comprehensive approach to revenue growth:

5. Ramp up your A/B testing practice – harnessing data to make informed decisions.
6. Test new revenue-producing channels, services, partnerships, and offerings – exploring uncharted territories for growth.
7. Productize and sell your expertise as a service or software – turning your strengths into revenue streams.
8. Remove team members resistant to change – fostering a culture of innovation and adaptability.
9. Create and hand off “busy work” to custom AI bots – ensuring you and your team are spending time on the highest revenue and ROI opportunities.

Each of these five new methods reflects a shift in thinking, from traditional revenue generation to a model that embraces digital innovation, assists from AI and change. Let’s dive deeper into these modern strategies for increasing revenue, examining how they can be applied effectively in today’s fast-paced E-commerce environment.

Ramp Up Your A/B Testing Practice

A/B testing isn’t just a tool; it’s a mindset. In my roles as an e-commerce VP and director, I’ve seen firsthand how leveraging A/B testing can transform a product into something world-class over time. Taking a test-and-learn approach allows your teams to test everything from email designs to which features to build, leading to incremental improvements that, over time, significantly boost revenue.

The key is to create a culture where it’s okay to question and test everything. As a sign in Silicon Valley famously reads, “Data ends arguments.” Once you get a team in agreement with this, the sky is the limit.

Test New Revenue Generation Channels, Services, Partnerships, and Offerings

The digital landscape is constantly evolving, presenting new opportunities for revenue generation. I’ve directed initiatives to explore untapped channels like emerging social media platforms, which often offer lower advertising costs and access to new demographics. Additionally, developing strategic partnerships can open up cross-promotional opportunities.

For example, a partnership with a popular influencer in your niche can introduce your products to a broader audience. Also, don’t overlook the potential of new services or product offerings. Sometimes, what starts as a value-added service can evolve into a standalone revenue stream.

Productize and Sell Your Expertise as a Service, as Software, or Both

Every business has unique strengths and expertise. In my career, I’ve turned these into marketable products or services. For instance, if your company has developed an efficient supply chain system, consider offering it as a SaaS (Software as a Service) solution to other businesses. This approach not only opens a new revenue stream but also establishes your brand as a thought leader in the industry. Remember, what may be routine for you could be revolutionary for someone else.

In my last VP role, I was very impressed by Walmart’s recent entries to the Ecommerce SaaS space. Their Store Assist product is a SaaS version of the tried-and-true Omnichannel BOPIS software that has powered Walmart’s in-store omni operations for ten years. Additionally, local delivery drivers that operate for Walmart often have extra capacity. Enter Walmart GoLocal, a service for Ecommerce retailers to provide speedy at-home delivery on-demand. I love seeing retail companies taking their expertise outside of their four walls. Kudos to Fortune #1 to be leading the way.

Remove People Closed-Minded to Change

In the fast-paced world of digital commerce, adaptability is key. Team members resistant to change, whether the most senior leader or the most junior intern, can be a significant barrier to innovation and growth. It’s essential to foster a team culture from top to bottom that embraces change, encourages experimentation, and values continuous learning. Sometimes, this means making tough decisions to let go of those who cannot let go of the past.

This isn’t just about removing a negative influence; it’s about opening space for new, dynamic talent that can drive your business forward. Addition by subtraction is real!

The common thread among these strategies is the need for a digital-first mindset. This involves understanding that digital tools and technologies are not just support functions; they are integral to every aspect of the business. This mindset shift is crucial for traditional businesses transitioning to the digital era.

Create and Train AI Bots to Make Your Team Smarter, Faster, and More Organized

With the introduction of OpenAI’s “GPTs” feature, anyone has the ability to create and train an AI bot to perform whatever task you want it to, including data analysis, text generation, image generation, and basically anything an algorithm can do. Most people in Ecommerce still don’t realize what is taking shape with AI, which appears to be a world where a business’s and an individual’s ability to deploy multiple AI bots provides a distinct advantage now and for the foreseeable future.

Consider that an Ecommerce brand could deploy a bot that systematically improves your meta titles, descriptions and keywords? Whereas a year ago this kind of bespoke app might cost $25,000-100,000 to build, now the barrier of entry is a $20 per month Plus plan with OpenAI. If we believed innovation was already happening at a super quick pace, we are on the verge of an explosion of technologies and companies building on this new and essential infrastructure.

Leveraging Data for Decision-Making

Data is the lifeblood of digital innovation. In my experience, the effective use of data analytics can uncover hidden opportunities for revenue growth. This can range from identifying customer behavior patterns to optimizing supply chain logistics. The goal is to move from a reactive approach to a proactive, data-driven strategy.

Investing in Technology and Talent

To effectively implement these strategies, investment in both technology and talent is vital. Technologies like AI and machine learning can automate processes and provide insights that would be impossible to glean manually. Equally important is investing in people who can bring fresh ideas, possess the technical skills to implement these technologies, and have the vision to see where the market is heading.

Conclusion

Expanding the traditional “rules” of increasing revenue requires a bold approach that embraces digital innovation. By ramping up A/B testing, exploring new channels and partnerships, productizing your expertise, and fostering a team open to change, you can unlock new revenue streams that were previously unimaginable. The future of Ecommerce lies in the hands of those willing to innovate and adapt.

Here’s the final list of how revenue can be increased in 2024:

1. Increase the number of customers – expanding your customer base.
2. Increase the average transaction size – encouraging customers to spend more.
3. Increase the frequency of transactions per customer – motivating repeat purchases.
4. Raise prices – improving profit margins.
5. Ramp up A/B testing – harnessing data for customer-led decisions.
6. Test new revenue-producing channels, services, partnerships, and offerings – exploring uncharted territories for growth.
7. Productize and sell your expertise as a service or software – turning your strengths into new revenue streams.
8. Remove team members resistant to change – fostering a culture of innovation and adaptability.
9. Create and hand off “busy work” to custom AI bots – ensuring you and your team are spending time on the highest revenue and ROI opportunities.