Analysis of Detroit Bikes

Detroit’s economy after the crash of 2008 has been on a consistent rise due to new manufacturing companies like Detroit Bikes. Detroit Bikes is an American bicycle manufacturer that wanted to improve its Direct-To-Consumer sales through its e-commerce website. I aided with implementing Search Engine Optimization strategies and analyzed the decision Detroit Bikes made to outsource its marketing to Marketing Supply Co. The majority of my data was from primary sources. By using accurate cost and interaction data from two online tracking instruments, I was able to weight the extent to which outsourcing was successful. Additionally, the decision to outsource marketing to Marketing Supply Co was analyzed through the lens of an Ansoff Matrix. The main findings were that this decision was indeed successful as there was an improvement in clicks generated through organic means or user-generated clicks and inorganic means or paid ad campaigns. However, it was noted that due to the low quantity of product purchases during the timeframe, the customer acquisition cost and the cost per product sold was high. Likewise, a high bounce rate and low e-commerce conversion rate was displayed. Due to the short timeframe, further research will likely be necessary and is recommended.

Additionally, a recommendation of investment in cart abandonment software that reminds customers about remaining products in carts will not only allow one more point of interaction but will allow an increase in the customer database due to the provision of emails. Detroit Bikes “believes that streets are best explored on two wheels” was founded in 2011 with a goal of bringing back manufacturing to Detroit. Detroit Bikes makes high-quality American bicycles manufactured with American steel on the west side of Detroit. Detroit Bikes “also assembles, distributes, sources and contract manufactures” for third parties. Currently, “99.5% of bikes sold in the United States are made by overseas manufacturers and simply branded by American companies.” By using American labor, American steel, and building high-quality bikes, Detroit Bikes aims to bring this number down. Detroit Bikes sell its bicycles to the customer in three ways: through their Detroit retail store, through third-party retail stores, and direct-to-consumer through the Detroit Bikes website. However, another major profit stream is large orders for custom built bicycles from companies like local builder Toll Brothers.

Finally, Detroit Bikes also offers specially made bicycles for police departments that are not available for civilian purchase. Due to the nature of the startup, limited capital has been spent in marketing efforts. However, this has recently changed with an outsourcing of their marketing. Through outsourcing, the major change Detroit Bikes aims to make is marketing to improve customer interaction with the website and, ultimately, increase sales. This leads me to pose the question: to what extent did outsourcing marketing to Marketing Supply Co. and Below-The-Line marketing efforts to improve customer interaction and sales at Detroit Bikes. The primary research was conducted with pre-compiled data provided by Mr. Pashak. The main data obtained is online tracking data from 2017.

Additionally, I will be tracking the implementation of social media advertising. To do so I will be tracking the change in sales and customer clicks or sessions caused by the social media implementation. In terms of secondary research, Detroit Bikes has recently started working with a company called Marketing Supply Co. that will provide all additional customer data and assist with the implementation of Above-The-Line and Below-The-Line (4.1). The validity of my data is dependent on the information provided by Detroit Bikes. Considering this, there will be a certain expectation of inherent internal bias. However, it can be assumed that the combination of internal and third-party research will provide valid and credible information.

The business tools I will use will help me in my general goal of assessing the impact of developing a website forum and social media implementation. I will be using an Ansoff Matrix (3.3) to determine the risk associated with the decision to outsource marketing and the investment into SEO and ‘web-marketing’ and its approximate effect on customer interaction. I will also utilize external Benchmarking (5.5) Shinola Bikes against Detroit Bikes to gain insight into the pricing. Main Results and FindingsThe first steps taken while understanding Detroit Bikes were creating a product portfolio to understand the various bikes and their individual price points. This research was mainly conducted through website data and discussions with Mr. Zak Pashak.

Next, I took advantage of primary Google Analytics data through a ‘viewing admin’ position. Google Analytics is a subscription-based software that allows website owners to track interaction data. The data collection began in November 2017 once work began with Marketing Supply Co. This data compared the total ‘sessions’ to the sessions that made a purchase which was displayed as approximately 131 users. Likewise, there was a need to identify the medium through which customers were being attracted. The e-commerce conversion rate refers to the “percentage of visits that resulted in an e-commerce transaction.” In the case of Detroit Bikes, this value is 0.85%. The paid ad campaign timeframe corresponded with the spike in sessions on the social media platform.

Additionally, for all users, the greatest channel of interaction was social with 31.2% followed by the display with 23.5%. Analysis & Discussion The major implementation during the time period has been Below-The-Line promotion through social media targeted ads and Search Engine Optimization to drive the Detroit Bikes website to increase sessions and decrease the bounce rate. The product portfolio allowed me to realize the scope and price range of the products and the value that could be achieved by the below-the-line marketing of lower-priced options or limited edition models through images on Facebook and Instagram.

Additionally, this portfolio allowed for benchmarking against Detroit Bikes’ primary competitor Shinola Bikes. A major competitive edge to be marketed has been the undercutting of the Shinola Bikes’ price range. Detroit Bikes’ prices range from (C-Type) $599.99 to (Cortella) $799.99 and Shinola Bikes’ prices range from (The Detroit Arrow) $1000 to (The Runwell) $2950. This reveals that even the highest priced Cortello or Limited edition models are approximately $200 cheaper. This price range provides Detroit Bikes a competitive advantage and allows ‘Detroit brand focused’ customers a lower priced product without an effect on quality. This idea has been the focus of recently paid ad campaigns during the holiday season. By identifying one or a few areas of focus, the marketing team was able to set itself up for success as a narrow scope allows for more effective advertising. Upon primary analysis, it is important to notice that Google Analytics began tracking after November 13, 2017. November 13th is also the date that Marketing Supply Co. began implementing SEO, page tracking, and targeted ads on Facebook. The first basis of discussing the outsourcing of marketing is through the Ansoff Matrix. Detroit Bikes has been operating in the Midwest through its own retail store and has a national reach through third-party specialty bike retailers. They have 6-7 bikes on offer (depending on limited edition models) that they have been making since inception. Outsourcing is a low-risk strategy that Detroit Bikes can use to improve the effectiveness of selling existing products in existing markets.

Market penetration is being achieved through outsourcing to Marketing Supply Co. Another strategy not specific to research is the medium risk strategy of market development through an increased third-party retail network. Additionally, they have revamped their Direct-to consumer e-commerce website. A recent sale has also increased marketing spending ability. An ongoing effort at Detroit Bikes aims to continue to bring third-party retailers to improve the national network. The data that is most beneficial to answering the question is the interaction data. The main medium of interaction is ‘social’, with 31.2% clicks originating from Facebook/Instagram. This growth can be attributed to a more focused social media advertising strategy. The next largest category is ‘display’ at 23.4%. It can be generally assumed that these two categories have seen the greatest growth due to the outsourced marketing efforts. Originally, the only marketing activity that Detroit Bikes was involved in online was posting of pictures, web links, and information. Detroit Bikes has 13,000 followers on Instagram and has recently begun taking advantage of a ‘one click shop feature’. This allows the customer to view the price and be taken directly to the product page from a post; direct linking to the product page allows for Detroit Bikes to gain more interaction. Additionally, Detroit Bikes has also activated a paid advertising campaign on Instagram. However, the tracking of the Instagram social media platform is limited.

A more apt example of Marketing Supply Co’s below-the-line marketing implementation is Facebook tracking data. The standout statistic when viewing the efforts of Marketing Supply Co. are the clicks generated for Detroit Bikes. The Facebook ad campaign began in November 2017 and has generated 27,102 clicks in approximately the 2 months of November and December. This value can be compared to pre-organic advertising clicks last year that generated a mere 361 clicks. This confirms the effectiveness of the below-the-line promotion click generation.

Similarly, the sessions that interacted with ‘Detroit Bikes’ (on all mediums) is 15,346. Of these, 131 sessions resulted in a purchase. The current e-commerce conversion rate is 0.853% and to have a successful DTC model, a conversion rate of 5-10% is deemed ideal in this industry. Additionally, the costs associated with a simple, singular ‘cart add’ is $163.64. This conversion rate is rather small and the individual cart add price is high but it is important to consider that the website was made more consumer-focused and revamped in late November so the rate is likely to improve in the future. Bounce Rate The “bounce rate is the percentage of single-page visits (or web sessions). It is the number of visits in which a person leaves [a] website from the landing page without browsing any further.” Currently, it seems that the bounce rate is rather high with almost 48.81% of users navigating away after viewing just one page. Since most customers land on the homepage, it is likely that the appeal or ‘drawing’ ability is lacking. A bounce rate value as high as 50% reflects that website isn’t retaining enough of its visitors. This results in two situations: people are coming to the Detroit Bikes website and finding what they want (but no other goods) or not finding what they want at all. To combat this, Detroit Bikes must use cart abandonment software.

Detroit Bikes pays $163.64 per product added to the cart so it is imperative that cart abandonment software contacts the customer about remaining products in the cart. This can be implemented by asking customers to create an account on the homepage or require the provision of an email to add items to the cart. Validity The data suffers from a short sample time and a singular medium. However, the data is valid as the Google Analytics tool is generally considered to provide an accurate representation of customer interaction data. Two main tools were used to access raw data: Google Analytics and Report Garden. These two tools were set up to analyze customer behavior pre and post implementation of organic advertising strategies. At the onset, this investigation was relatively successful as Detroit Bikes had a limited online marketing presence and limited tracking software, to begin with. In fact, the only efforts to boost the Detroit Bikes brand had been through SEO implemented by Mr. Pashak. Additionally, the brand had received positive publicity from multiple national and local news outlets. However, all of this marketing was organic and the brand had limited control over publicity through Public Relations practices. Since outsourcing marketing to Marketing Supply Co., Detroit Bikes has seen an improvement in tracking through the use of Google Analytics and inorganic advertising on social media– strategies that had not been implemented while marketing was being internally managed.

The improvement in online sales has been evident through tracking on the Report Garden Software. This move was furthered by the development of a consumer-focused website to improve D2C sales. Due to all these elements and a marketing strategy being created ‘from scratch’ it can be concluded that Detroit Bikes was successful in its move to outsource marketing in an attempt to improve customer interaction.

Overall, Detroit Bikes saw significant improvements in customer interaction across the board with an increase of 31% on social media and 23% on display media. It also saw a 2000 individual follower growth on Instagram. However, considering that this is the first major overhaul of the Detroit Bikes marketing practice, customer acquisition costs are relatively high and the e-commerce conversion rate is quite low. Naturally, the increase in purchases from cart additions will drive this cost down. In the future, it is imperative that Detroit Bikes employs cart abandonment software to prevent lost sales through customers forgetting their cart additions.

Finally, an area of improvement that may require long-term efforts and significant capital is reducing the bounce rate. Reduction of the bounce rate from a high 48.8% will require constant efforts on the website front (in terms of appeal and usability) and market segmentation strategies by Marketing Supply Co.