June 2010 – Online Insights: Merchandising

Take Your Site to the Next Level With On-Site Targeting

Marketers have entered a new and important era of data capture on the most direct of direct digital marketing channels–the website. It is easier than ever to secure a plethora of valuable data from site visitors, both known and anonymous. Capturing consumer data online was once a primary challenge that marketers worked tireless hours to overcome.

While that challenge now has been addressed for the most part, it has given way to a new set of challenges. Now that marketers have an abundance of data, they must discover how to properly harness it in order to solve another traditional challenge to selling online: capturing the endangered sale.

The majority of e-commerce software is fantastic because it expertly secures a massive amount of sales. But, while some e-commerce software has additional tools within it for personalization and content targeting on the website, the data feed that powers these tools is unable to react effectively in real-time and is rather expensive to deploy. As a result, many e-commerce strategists have chosen to focus on making the straightforward sales, while targeting website visitors in real-time to capture the sales remains a low priority.

Those priorities are now shifting, and data is the key part of the equation for capturing the less-apparent sales. The difficulty lies with the fact that marketing data does not yet evolve as individuals evolve. The inability for marketers to quickly adapt to rapid changes in how their customers behave is undermining the effectiveness of their communications on the website.

It begs the question: How can what is learned about an individual be leveraged into a better user experience on the website, but also become a conversion for the marketer? If that question is equal parts intriguing and befuddling, then you are ready for a universal profile management system to power on-site targeting.

Enter Universal Profile Management Systems

Conceptually, a universal profile management system is very simple. It is a marketing database that captures and stores both known customer attributes and anonymous customer behavior in one location for the purpose of easily powering personalized and targeted marketing content on the website.

The importance of a universal profile management system is revealed in two ways. First, it lives within the same software platform that is responsible for executing timely and targeted content on the website–or any other marketing channel like e-mail or mobile. The proximity of the data to the content enables dynamic content quickly and easily–regardless of channel–and without the usual slow-downs encountered as data is forced to navigate an increasingly complex enterprise data ecosystem.

The ability to capture and store known and anonymous customer attributes, then build a segment and attach it to content, is unique. For example, a universal profile management system is able to capture and store enterprise customer data, past purchase history and customer preference or survey feedback directly–or bring it into the system through a secure API. It is also able to capture behavior from unauthenticated website visits, e-mail, mobile marketing activity, organic or paid search activity and any online advertising participation. As the data is captured and stored, it is able immediately to be put to effective use.

Large investments in enterprise data warehouses and business intelligence systems are important–and valuable to any marketing organization. But they are limited in that they lack ability to support real-time online marketing execution.

A universal profile management system serves as a direct digital marketing datamart capable of supporting real-time, data-driven marketing campaign execution. It is not designed to replace existing database investments, but rather to deploy alongside existing environments for real-time targeted marketing.

In many ways, a universal profile management system is the missing piece marketers are searching for to achieve effective and efficient customer-centric marketing. And the time is right for marketers to re-prioritize their data strategy.

Capturing data is still important, but marketers have more than enough data to improve marketing communications, especially at the point of sale, where targeted content is often the difference between a sale and a website bounce. For marketers, the objective is no longer simply to get as much data as possible, but to organize it better and put it to better use–the two primary strengths of a universal profile management system.

Existing database investments support linear, traditional e-commerce. It is very straightforward to build a segment in a database for upselling when a customer’s recent purchases on a website are known. But most current marketing database ecosystems are not able to, in real-time, adjust and switch site content according to unexpected or sudden changes in the behavior of an individual consumer.

Universal Profile Management in Action

Consider an example of using a universal profile management system to power a relevance-based on-site targeting strategy. “John” has a profile within the universal profile management system that identifies him as a single male who is a big spender–valuable information that is captured by business intelligence systems. However, unexpectedly, John’s next visit consists of a search for baby formula and diapers. The sophisticated back-end data tools, like the aforementioned enterprise data warehouse, lack the ability to adapt to John’s latest profile development in real-time.

A universal profile management system can recognize the new search, immediately transform the website experience to accommodate John’s newfound needs–even before John’s next click–and then feed that new data back to the appropriate internal systems. The result is a better targeted and more relevant consumer experience that often leads to a sale, and a more efficient data flow that ensures every database is working from the same set of data.

Using a universal profile management system to power targeted website experiences has many advantages. Marketing organizations are better able to avoid the real cost–and opportunity cost–of re-platforming an entire website just to make necessary upgrades to content relevance and personalization. The combination of a universal profile management system and on-site targeting also is simple to set up, deploy and measure. Perhaps most important, the combination’s sophistication and elegance does not mean it is difficult to use.

The closer the data is to the content in the campaigns, the better the campaign will perform. A universal profile management system enables timely content personalization and dramatically improves website relevance in real-time–two key drivers for campaign success. And, from a 30,000-foot view, it makes the considerable investments in e-commerce software, business intelligence software and massive data warehouses even more valuable.

Marketing organizations have tremendous resources and consumer insight, but often lack the nimble systems necessary to apply that intelligence in real-time, for real results. A universal profile management system enables marketers to achieve real-time message adaptability so they can effectively evolve with their customers and drive measurable results.

Brian Deagan is the co-founder and CEO of Knotice, a direct digital marketing solutions company. You can reach him at bdeagan@knotice.com. Read Deagan’s blog at http://lunchpail.knotice.com/.

June 2010 – Online Insights: Customer Centricity

Live Chat: The Customer is Always Right…There!

Our second annual independently fielded research project with regular Internet shoppers reveals five critical best practices online retailers should heed regarding live chat. Without fanfare or dramatic build-up, they are:

• Know the demographics of site visitors. It matters because certain demographics show a stronger affinity for live chat;
• Put chat in the shopping cart;
• Don’t fake it: Your chat solution must connect visitors with human operators;
• Invite visitors to chat; and
• Encourage visitors to engage by using incentives and 800 numbers/on-site reminders about live chat’s availability.

Let’s take a look at some of the data which drove the conclusions cited above.

Know the Demographics of Site Visitors
The research shows a statistical link between those who’ve had a live chat before (chatters) and certain characteristics. Chatters are more likely to have higher household incomes, be older than 30 and be college educated.

Put Chat in the Shopping Cart
Among all respondents–and especially among chatters–”experiencing a shopping-cart error” was the scenario under which people were the most likely to want to engage in chat: 71 percent for all respondents and 85 percent for chatters.

Don’t Fake It
The single statement most agreed with about live chat by the respondents was that if they are to engage in a live chat, they want it to be with a live human being. Eighty-two percent of the sample agreed.

Invite Visitors to Chat
Many retailers are afraid to proactively invite visitors to chat because they believe it will annoy customers or potential customers. The research showed that more than half (52 percent) of the sample are receptive to being proactively invited. Those indicating that the practice annoys them are more likely to have lower household incomes and not hold a college degree.

Intentionally Encourage Chatting
Respondents who’d never had a chat before (a little less than half the sample) indicated that they would be likely to chat if:

• Special incentives were offered for chatting (like free shipping);
• They were proactively invited to chat;
• A reminder that chat was available was part of an 800-number voice-response system; and
• Approximate wait times for all communication methods were published on-site.

The entire report spans 23 pages and includes more than 30 figures. What it shows, quite simply, is that live chat works–it drives sales and it empowers superior service.

Ross Haskell is director of marketing for Bold Software, which offers the live chat product BoldChat. He can be reached at ross@boldsoft.com. To learn more and download the full research findings, visit www.boldchat.com.

June 2010 – Feature: Put Every Dollar to Work!

Combating the Top-10 Enemies of a Successful Sales Funnel

By Timothy Seward

Success in online marketing is possible when every advertising dollar is accountable. You want predictable growth that comes from a continuously optimized sales funnel. A “sales funnel” is the defined sequence of pages that your visitors must proceed through to take an action on your website. For e-commerce sites, this usually culminates in the add-to-cart and check-out pages. For lead-generation sites, the funnel may lead to a form and submission success page.

If you aren’t tracking the conversion rate of every step in your funnel, you’re almost certainly leaving money on the table. Likewise, success will be elusive if you can’t define the sequence of steps you want your prospects to take before they become customers. Data-driven advertising requires an organized and reliable sales funnel.

There are ten major enemies of a successful sales funnel that you must avoid at all costs.

1. Ambiguous Goals for Your Website
What is the goal of your website? This is perhaps the most fundamental question you’ve got to have nailed down. A website built to satisfy your ego or to simply “be helpful” won’t make you much money at all.

You are doing well if you’ve defined and organized your website according to the primary action you want your visitors to take. Every superfluous link or paragraph of text along the way that doesn’t support this goal should be questioned and potentially eliminated. If your goal is to sell something (e-commerce), then crystallize your goal with sub-goals such as the number of new customers you want to acquire (per period), average order value, cost-per-sale, ROI goals, etc.

2. A Lack of Tracking
Tracking is imperative. The more data points, the better. At a minimum, you need to be tracking traffic sources, visits and goals. Before spending any money on traffic, you need a solid website analytics implementation. There is simply no other way to know what’s working and what isn’t. Google Analytics is typically the default platform and has all the features necessary for most marketers.

3. Holes in Your Tracking
Sometimes an airtight analytics implementation is hard to come by. With gaping holes in your website tracking, the data becomes useless. Sometimes a complicated sales funnel is to blame. A common example is forcing the user to switch web domains mid-funnel. The traffic source is often lost along the way. Or perhaps you’ve got a web designer inadvertently removing the tracking code from random pages of your site. These elements are all within your control. Don’t be a victim.  Make the necessary process changes to guarantee your data’s integrity.

4. Ambiguous Sales Funnel Metric Definitions
If you are setting out to improve your metrics, you must be able to trust their meaning. What is a lead? What is a sale? Oftentimes during testing, your metrics change definition. Where a sale previously meant a dollar value, now it might mean a free trial. Where a lead previously meant 10 fields of data for your sales people, during a test it might only be a name and e-mail address.

Sure, everything is eligible for testing, but be very careful when changing the definitions of success. When your metric definitions themselves are up for grabs in a test, you need to be honest with your data before picking a winner. It will take more work, but your back-end sales data may be needed to determine a winner. This requires a more robust analytics implementation that tracks actual sales by source and test version.

Be aware that some month-to-month and year-over-year comparisons won’t be possible when the definition of a conversion changes. Be sure to keep a log of these changes so that you’ll be able to interpret your trends.

With all that said, data should be subservient to results. Even if your tracking isn’t 100-percent accurate, at the end of the day, an increase in sales is all you’re after. Trends are much more meaningful than definitive metrics.

5. Treating All Traffic Sources the Same
Once you’ve got reliable goals, tracking and metric definitions, it’s time to interpret the data. A common error is to make decisions based on averages. Averages hide significance. Your visitors are usually defined by their sources. Direct traffic performs differently than paid traffic, which performs differently than organic traffic. Within each of your primary sources, traffic from different campaigns, locations or keywords will often perform quite divergently.

You’ll want to segment your traffic to know if a landing page or sales funnel is working well for one source of traffic but not another. Your highest volume traffic sources deserve their own sales funnel testing and optimization.

6. No Testing
If you are getting a significant amount of traffic to your website, you should be testing now. (“Significant traffic” is roughly 1,000-plus visitors per day for e-commerce, and much less for lead generation. If your daily page views are low, focus first on traffic generation.) Test copywriting, design or even completely different funnels.

The primary purpose of accurate and meaningful metrics is to allow you to test with confidence. High volumes of traffic are usually costly. Testing (and optimization) will move the needle and allow you to afford more and more traffic. Additional traffic to an increasingly optimized funnel translates into accelerated growth for your company.

Don’t fret over tools. Just get started with a testing tool like Google Website Optimizer. It is free, simple to use and robust enough for most of your needs.

7. Slow Testing Cycles
Nearly all marketers are convinced of the need to test. A small percentage actually test regularly. If this is you, congratulations. The enemy is still lurking, however. Even among those that test regularly, new tests are often delayed far too long.

To be sure, you need to wait until enough data has accumulated before declaring a winner. I’ll assume that you are waiting until you’ve got statistically significant data before concluding your tests. The problem is that once a test is completed, many marketers wait weeks or months before beginning another test. It is as if the test was so much work, they need a rest.

Sorry…it isn’t time to sleep on the job. There’s no reason why you should wait any longer than a couple of days between tests. Just before the current test concludes, start planning (and coding out) your next test. Remember, testing is the surest path to growth and profits–so keep testing!

8. The Sales Funnel Quick-Change
Tracking and testing can be very complex. Because of this, many marketers are tempted to make wholesale changes to their funnels on a whim–with no means of determining if the new is better than the old. Trust me, there are much better sources of data than your gut. Test the steps in your sales funnel; don’t simply replace them outright. Since data is so easy to come by, there are no reasons besides laziness or arrogance to make major changes with your eyes closed.

9. Sales Funnel Multiplication
Many marketers wisely refrain from making major changes to their sales funnels without testing. The danger is that they sometimes just make another funnel instead. Multiple funnels can co-exist, right? Be careful. Competing calls to action can confuse your prospects. Should they sign up for the newsletter or buy your product? You may end up with many funnels, each sub-optimized.

10. Treating Success as a One-Time Event
Have you found an offer that works wonderfully? It is surprising how many people treat this as a one-time success and then look for another one-time success. When you find something that works, build a process around it. A process could mean a new sales funnel, e-mail sequence, direct mail sequence or source of traffic.

You don’t have to put up a site and hope for the best. Combat these 10 enemies of successful sales funnels and you’ll be on the path of predictable growth.

Timothy Seward is CEO of roi+revolution&utm_id=370&gclid=CLyokvnxu6ICFRk7gwodykf05g" target="_blank">ROI Revolution, an agency specializing in PPC management and Google analytics and website optimization. He can be reached via e-mail at timothy@roirevolution.com.

June 2010 – Cover Story: Leveraging the Long Tail

Channeling Invisible Crowds Could be the Key to Profitable Long-Tail Sales

By Jack Jia

I often ask e-commerce executives to identify who can do the best job selling their products. Their best salespeople? Their best customer? A group of customers? Interestingly, most people know intuitively that the right answer is “C.” Yet, surprisingly few put their innate belief in the wisdom of crowds into practice. We are so trained and comfortable trusting the few: merchandisers, sales geniuses, content editors and a few other experts.

This is particularly important within e-commerce environments that depend on the long tail. Propelled into the popular lexicon more than five years ago by Chris Anderson of WIRED, the “long tail” refers to the concept of selling fewer units of many different special-interest products, as opposed to selling large quantities of a select group of popular products, such as an iPhone or the latest Harry Potter book. It’s incredibly important to help customers find the products they desire the most, even if it’s not popular among a high percentage of the population.

The concept also is applied to online marketing strategies in order to target more relevant content to site visitors. NASA’s website is a good example of one that manages the long tail well. NASA attracts a broad assortment of visitors with varied needs—from students to researchers and space enthusiasts. Yes, a space shuttle launch is an important topic to cover by NASA.gov, but you can get the same information on CNN as well. The real long-tail reason for people to visit NASA sites is to find that unique deep-space picture by Hubble that nobody else has.

In the e-commerce realm, the long tail has led retailers to expand their inventories to incorporate more niche products with higher sale margins and ultimately, to increase overall revenues. Despite this movement, many online retail marketers still push the most popular items on their site visitors because “that’s what users want.” This is a fundamentally flawed way of thinking that causes e-commerce companies to miss out on an opportunity to sell higher margin products–and ones that the customers were actually looking for in the first place.

With this in mind, the key question for any online marketer looking to capitalize on the long tail is, “How do you drive customers to highly specialized and profitable products?”

Said a bit differently, how do you sell a lot more of what you’ve rarely sold before?

Simply offering an expanded array of products may sound like a tempting strategy, but it’s not that easy. Matching the right product to the right shopper is profoundly difficult when you may be dealing with hundreds, if not thousands or even millions of product segments. To compound the situation, these products may be changing at a rapid pace depending on your particular site and inventories, and research indicates that shoppers feel overwhelmed and are less likely to make a purchase when confronted with too many decisions.

The key is to target a smaller set of long-tail products to the right people at precisely the right time. But how? It’s time to start listening to your site’s invisible crowds.

Let the Invisible Crowds Lead the Way
Merchandisers may know company inventory better than anyone else, but the reality is that applying business rules to meet forever-changing long-tail needs is a losing battle. You simply cannot scale to the infinite permutations of product assortments. No matter how good a merchandiser is, he or she will lose their magic touch beyond the top one to five percent of the most popular products, leaving the vast long-tail products hanging high and dry. In response, leading retailers are letting their invisible site visitors self-define the various long-tail product segments and determine what that smaller set of products targeted to each customer should be. By tapping into the wisdom of invisible crowds, retailers can have their customers effectively recommend products to one another; these crowds become their most powerful sales tools.

For example, a major electronics and appliance e-commerce site tapped into the implicit behaviors of its site visitors to discover that they were engaging with red-colored washers and dryers. Sales for these products were low at the time, but they followed the advice of their customers and began promoting the red washers and dryers as “most popular products.” A few months later, these same products indeed became best sellers. In contrast, Best Buy didn’t realize this trend until nine months later by using traditional business intelligence data such as purchase volume.

Compared to solely offline merchants, e-commerce companies are extremely well situated to tap into the long tail because they can uncover the unique, previously hidden desires of their customer base. In this model, retailers are leveraging the implicit, emergent behaviors of visitors who are anonymous and unknown to each other. By understanding these visitors and their interests, retailers can instantly identify the thousands of micro-segments of shoppers who come to their websites, and ultimately match each one with the best and most profitable products available. In doing so, they can deliver a truly adaptive customer experience in the midst of consumers’ increasingly insatiable demand for instant gratification online.

Context Followed by Content
Remember, your visitors are telling you exactly how to grab their attention–if you watch closely enough. Let’s use another example: search. A visitor doesn’t just come to your site out of the ether. Maybe they searched on a particular keyword. Maybe they clicked through on a targeted e-mail.

With this kind of insight about their current state of mind, you can deliver relevant landing pages for each visitor based on what other customers like them searched for in the past.

For example, a customer may use the search phrase “fix a leaky faucet” on Google and land on the Lowe’s Home Improvement site. Her intent is not to look for leaky faucets, of course. Showing her wrenches together with a do-it-yourself book will go a long way to serve her needs. By better understanding user intent, merchants can connect customers to the specific products that like-minded peers found useful. This completely eliminates the need to create custom landing pages for every possible natural or paid keyword–an impossible feat, to say the least. Instead, merchants armed with an intimate knowledge of their site’s invisible crowds can use this collective wisdom to create dynamic recommendations on every page known to convert visitors who have come in through the same query. By doing so, merchants make their sites infinitely more “sticky” and increase sales.

This is unlike recommendations based on “people who bought this also bought that,” because the invisible crowds take into consideration what site visitors need here and now, and what other site visitors like them have actually engaged with, not just purchased. On Amazon.com, for instance, cross-product recommendations have seen plenty of misfires outside of book suggestions. The reason is simple: A book recommendation is most often within the context of the consumer’s individual book preferences. But to always recommend a stroller to an individual who made a past purchase for a friend’s baby shower will almost certainly miss the mark.

This same “context first” methodology is also being applied outside of e-commerce environments at increasing rates, with a range of companies–from telecommunications to high tech to media–all capitalizing on their visitors’ current intent to deliver the most relevant content on their sites, much like the NASA sample given above.

Predicting Future Trends
Leading industry analysts at Gartner and Forrester have been paying attention to this concept. Forrester calls it “customer intelligence” and Gartner has dubbed it “pattern-based strategy.”

According to Gartner, a pattern-based strategy “provides a framework to proactively seek, model and adapt to leading indicators, often termed ‘weak’ signals that form patterns in the marketplace.”

However, most retailers are still looking in the rear-view mirror to determine what products are poised for financial success in the future and should be prominently merchandised on their sites. This is largely because so-called “predictive” applications tend to prioritize the wrong set of indicators, often identifying consumer trends months too late. The reality is that e-commerce transactions actually lag other more relevant indicators about engagement–such as online comparison shopping and mouse hovers–by as much as 90 days.

This is a huge problem, particularly if you are a site with a dynamic inventory. Take an apparel site, for instance. If you are recommending coats in February because that’s what you sold last month, when people are dreaming about spring break on a beach in Bora Bora, you’re going to miss out on all the swimsuits and sunglasses that you could be selling right at that minute. Outside of pure merchandising logic, your site visitors and the invisible crowds could have told you that in real-time. Don’t fixate on transactional data. You have to use the weak signals and collective wisdom of your site visitors to look ahead and effectively market the products on your site for the future.

By observing what products truly give value to customers, e-commerce companies gain an in-depth understanding of community preferences and the thousands of micro-segments that emerge around products and categories without the risk of being misinformed by survey bias or misleading click-based data-gathering systems. With this approach, the silent majority of site visitors are represented instead of ignored. In addition, merchants can better understand how these communities self-organize into like-minded peer groups and better serve these micro-segments with more unique products, making the long tail longer than ever before.

Two years ago, the CEO of USAppliance.com was able to use a “Product Gap” report–which identifies products that are not being promoted to their full potential–to add HDTV and other electronics by following the crowds, completely changing the site’s product mix. By coincidence, the change reduced the impact of the negative appliance growth due to the U.S. real estate downfall. For UrbanOutffiters.com, the emerging Gladiator shoes were prominently promoted due to heavy customer engagements before the actual product sales started to ramp up.

Tapping Into Your Long Tail
The main benefit of leveraging your invisible crowds comes in the form of dynamic product recommendations that have the power to lift conversion rates by 20 to as much as 300 percent. When shoppers arrive at your site, it is possible to instantly determine their intent and display highly targeted product recommendations. The recommendations feel natural because they are drawn from the collective preferences of shoppers that share a similar mindset. Also, the invisible crowd is inherently aware of seasonality and other trends, and naturally promotes those products that are becoming more valuable to your visitors while demoting those that are losing a bit of their sheen.

Today’s online marketers are operating under a different set of rules than those of yesteryear, and those looking to capitalize on the long tail have to be all the more sensitive to the dynamics of marketing and selling niche products. By understanding long-tail economics and harnessing the wisdom of invisible crowds to deliver a more personal and relevant user experience, e-commerce companies can stay competitive and increase visitor-to-buyer conversion rates in ways they could never have imagined before.

Jack Jia is a founder and executive chairman of Baynote, Inc. He is a frequent speaker at major conferences, an in-demand author and has appeared on television programs in several countries. He can be reached at jack@baynote.com.

May 2010 – Online Insights: Customer Centricity

Personalization and Segmentation: Keys to Customer-Centric Retail

According to eMarketer’s Jeffrey Grau, author of the report Multichannel Retailing: A Competitive Differentiator, “Demanding consumers expect retailers to provide more convenience, flexibility and personalization by leveraging the synergies that come from multiple sales channels.”

It’s a common challenge for retailers. Thousands–potentially even millions–of customers visit a retailer’s store, call its call center or click its website…and all of them are treated identically. They’re presented the same promotions, shown the same products and receive little to no personalized information. Within this homogenized marketing environment, it’s little wonder so many retailers struggle to build a loyal customer base.

It hasn’t always been this way. The roots of retail are in the old corner drug and hardware stores, where individual proprietors focused on building one-on-one relationships with their most frequent and valuable customers. But with the rise of big-box retailing, the quality of customer relationships began to take a back seat to the quantity of store square footage and the number of SKUs inventoried. The new slogan, “We have every product you could possibly want” replaced the older, now seemingly antiquated, “We’re happy to help you find the product best suited to your needs.” At the same time, increasing labor needs and margin pressures encouraged retailers to hire associates with less experience and expertise.

Interestingly, the rise of e-commerce during the past 15 years has both contributed to the impersonal feel of the modern retail experience, while simultaneously offering hope that technology can be leveraged to bring a sense of personalization back to retail. On one hand, pure-play “dot-coms” and “clicks and mortar” websites remove the customer from the physical store environment, limiting opportunities for true face-to-face interactions with store personnel and like-minded customers. But on the other hand, advanced segmentation engines and community features offer the potential for digitally enabled retailers to create a seamlessly personalized experience across all their sales channels.

Zooming in to the Individual
Two decades of rapidly advancing technology has led to major shifts in customer expectations. Amazon was an early pioneer in capturing web-based customer information and using that data to feed a powerful product recommendation engine based on an individual customer’s shopping habits. Because nearly every interaction with the Amazon brand occurs on its website, the company can capture a near-perfect record of everything its customers have searched for, looked at, or purchased over the lifetime of their relationship. Personalization capabilities are then combined with Amazon’s constantly evolving community features, including ratings and reviews, lists and tags, to give each customer both the comfort that they’re never shopping alone, and the security that rich data–personalized to the products they’re interested in–is always available.

Many e-commerce-focused solution companies have developed similar capabilities to offer to other online retailers. These include analytics companies such as Omniture and Coremetrics–which leverage their behavioral tracking engines to provide personalized product recommendations–as well as dedicated personalization vendors such as Kefta, MyBuys and Certona. Other vendors–such as Bazaarvoice, PowerReviews and Pluck–offer community-oriented tools like ratings and reviews, moderated discussions and shared customer lists.

Each of these service providers can provide case studies evidencing the financial value of creating a rich, personalized online experience, through some combination of higher conversion rates, average order values, increased customer satisfaction and higher lifetime value.

A Moving Target
Although competition has spurred technological advances in online personalization and community tools, many of the service providers in this area are focused exclusively on the online channel (usually via a combination of web and e-mail). While a growing number of customers leverage the web to research their major purchases, the vast majority of retail purchases still occur in stores. Most customers calling into the call center have also researched products through the website, and many of those may be browsing the website while speaking with a call center associate. For this reason, customers are something of a moving target, shifting between online and offline channels–and few of the available tools empower retailers to track and respond to their customers’ cross-channel behaviors. For example, a recent article written by Forrester Research notes that “only 29 percent of retail executives surveyed believe their company presents a consistent customer experience across channels.”

In a truly optimized cross-channel environment, there are several steps to a customer-centric approach to retail:

• Customer data is captured in real-time across all potential touch-points–in stores, online, over the phone and through mobile devices and kiosks;
• Customers receive personalized content and alerts via e-mail, SMS and targeted web, call center and point-of-sale promotions based on their unique shopping behaviors;
• Product and cross-merchandising recommendations are consistently personalized across channels, leveraging data generated by other customers with similar tastes, preferences and experiences; and
• Beyond the initial transaction, customers are encouraged to share the brand experience through a combination of personalized loyalty programs, engaging community features, in-store and virtual product demonstrations and recommendations for product use and accessorization.

Cross Over to a True Cross-Channel Retail Experience
As consumers adopt more complex cross-channel shopping behaviors, retailers must evolve their tactics for tracking and leveraging those behaviors. Today, many retailers’ organization structures and technological platforms remain siloed. This limits opportunities for a holistic, collaborative approach to customer marketing. However, new technologies are available now that can bridge the existing gaps and help retailers build a more loyal customer base through cross-channel personalization.

Kevin Moffitt is vice president of strategy and customer experience at CrossView, a retail consulting and technology company and IBM Premier Business Partner. He brings over 12 years of Internet business and creative experience to help CrossView’s clients build and optimize their cross-channel businesses. He can be reached at Kevin at kmoffitt@crossview.com.

May 2010 – Feature: Don’t Hang Up on the Phone!

Re-Engage on the Telephone With Call Tracking

By Bradley E. Reynolds

Is your fully automated, completely optimized website leaving money on the table? If you rely solely on web contact forms, electronic shopping carts and frequently asked questions pages to service customers, the answer is almost certainly “yes.”

Of course, it’s true that the success and measurability of contact forms and electronic shopping carts along with online check-out processes are industry standards for online profitability. But the fact remains that customers still desire human contact.

If you don’t have a way for web visitors to contact you via the phone, research suggests you may be losing the opportunity to do business with a surprisingly large number of people who still like to buy things the old-fashioned way: over the telephone.

According to an August 2009 survey conducted by Harris Interactive for human-assisted shopping site IMshopping, 77 percent of U.S. Internet users who made an online purchase in the past six months would be interested in help from a real person before buying things on the web.

The survey went on further to note that though a majority of online shoppers reported a desire for help at least some of the time, 82 percent of respondents said they had not been able to get that assistance in the past. And more than half of that group said this had affected their purchase decisions negatively–at least some of the time. Additionally, a 2009 survey by TMP Directional Marketing and comScore found that 46 percent of local online searchers contacted a business by telephone after web research.

All of this research demonstrates the dilemma online marketers face: How can you most effectively optimize your website to service the needs of every potential customer, including those who want to do business over the phone? And furthermore: How can you measure the impact of those phone calls?

Until now, measuring the impact of phone calls has been inconsistent at best. Perhaps that’s the reason many online marketers have neglected to engage and promote phone calls as a legitimate and powerful way to complement and improve online sales. Fortunately, with the advent of today’s comprehensive call-tracking solutions, marketers now can quantify the offline impact of their online presence at a granular level.

Background: The Road to Automated E-commerce
Part of the rationale for the move to online-only communication has been the growing desire for traceability and measurement. Companies want to know which marketing effort brought visitors to their site and subsequently, they want to tie that marketing effort back to a specific action such as filling out a web form or placing an order.

The prevailing opinion among online marketers has been that if a website visitor picks up the telephone, the connectivity back to the original referring source is lost–along with the ability to measure the overall success of the marketing campaign. This myth is debunked with the powerful tools today’s call-tracking solutions provide.

Another factor which influences the migration away from telephone calls is perceived cost savings. It is much simpler and more cost-effective to create and publish a series of frequently asked questions on a website and encourage visitors to use this information. Only if visitors can’t find answers to their questions are they offered a web form submission.

While publishing FAQs is a good thing and may be effective in resolving many minor customer issues, the solution clearly won’t resolve all questions. And when offered only a web form for contact–with an unknown response time–customers often become frustrated and dissatisfied. Dissatisfied customers are more likely to look elsewhere the next time they are in need of a specific product or service. Often, by the time your company’s customer service representative responds to the web form, the customer has found a competitor who provided immediate service over the phone.

There is a Solution
By publishing a prominent, easy-to-find local or toll-free telephone number on your website, visitors can simply call for information to help complete the sale. Imagine the unfortunate alternative: Customers surf their way through your online check-out process only to become confused in the middle of filling out their information. Do they abandon the transaction? Do they browse through confusing FAQ pages only to return a short time later to discover their check-out process has expired? Or do they just go to your competitor to make their purchase.

When you make a telephone number available, that same customer can easily pick up the phone, connect with your knowledgeable representatives and get the answers they need from a friendly person who is there to help them. They may even choose to complete the transaction over the phone.

By clearly publishing contact phone numbers on your websites, you provide a proven form of communication to both current and potential customers. Sales wisdom reveals it’s far easier to address a concern over the phone than via the inherently delayed nature of web forms and e-mail responses. Although some customers may prefer to complete online forms, research shows the majority want to use the telephone to make purchases. How much business are you leaving on the table by not providing the most preferred communication option–the telephone?

Measuring the Results
As noted above, savvy online marketers often have been skeptical about using telephone numbers for website advertising campaigns. It’s understandable. Until recently, call tracking was limited to revealing how many callers came through on a particular phone number. Measurement just wasn’t possible.

However, today’s comprehensive call-tracking solutions can provide a treasure trove of data which paints a complete picture of how online marketing (pay-per-click, SEO, e-mail, banner ads, affiliates) drives phone calls. In simpler terms, marketers now can quantify the offline impact of their online presence at a granular level by identifying which keywords are driving phone calls.

Even if five to 10 percent of your conversions happen over the phone, call tracking is imperative for maximizing return on investment. Call-tracking data provides users with intelligence about which campaigns, keywords and marketing tactics are driving calls and, more importantly, whether those calls are generating revenue.

The Specifics: How Call Tracking Works
It is much more than simply recording the number of calls received. Call-tracking software is part of a sophisticated marketing methodology that ties results directly to costs and gives clients accurate, real-time campaign effectiveness figures.

Call tracking allocates a discrete phone number–local or toll-free–for each unique source you want to track. These sources can be keywords, affiliate IDs, search engines or any other identifier. When a visitor arrives at your site, the software conducts a dynamic look-up to determine which phone number is associated with the visitor’s origin page. That phone number is allocated and then cookied within the visitor’s browser.

As a result, call tracking gives clients actionable data which allows them to optimize PPC campaigns, SEO and other offline marketing efforts. Instead of associating a phone number with a particular campaign, ad group or keyword, call tracking assigns a tracking number to each unique visitor session. By tracking each unique visitor, clients are able to see granular data associated with the call.

Call data is then logged into a central database system which can also export the collected data directly into many popular web analytics programs. Additionally, reports can be exported into a spreadsheet or XML feed. Clients looking for even more granular data can integrate call tracking directly into their CRM database using the API feature. Some popular analytics packages which complement call tracking include Google Analytics, Webtrends, Omniture and Coremetrics.

Bradley E. Reynolds is founder and CEO of Mongoose Metrics, an enterprise-level call-tracking solutions provider. He can be reached at mktg@mongoosemetrics.com or at 877-784-0496.

March 2010 – Cover Story: The Offline/Online Disconnect

Harmonizing Your Online Brand With In-Store Customer Expectations

By Geoff Galat

If you conduct an online search query for “offline/online disconnect,” you’re likely to see an amalgam of results with no clear definition as to what this term really implies. Yet despite a lack of definition–or arguably, even general awareness–the offline/online disconnect is very much a reality–and an inevitable challenge for any company that operates in the online channel.

The Offline/Online Disconnect, Defined
So what is the offline/online disconnect, exactly? Distilled to its essence, the offline/online disconnect refers to disparities in customer service and experience across the various sales channels, primarily in-store and online. While improving customer service in the online channel presents companies with a cosmic opportunity to boost revenue and overall brand image, many companies simply aren’t up to par when it comes to their customers’ expectations and online experiences. And the proof is in the data.

In a recent survey conducted by Harris Interactive and commissioned by Tealeaf, we found that the percentage of consumers experiencing online transaction problems remains remarkably high at 80 percent. And the potential online shopping dollars impacted by transaction problems rings up at an eye-popping $47.6 billion! Further affirmation comes from recent Forrester Research data, which demonstrates that the majority of companies are still in the nascent stages of customer experience management, with far too many customers abandoning virtual shopping carts because of experiencing glitches and other usability issues online.

With customers across the online spectrum encountering barriers at the virtual checkout, it’s safe to say that brands with an e-commerce channel have a huge challenge ahead of them as they begin to match their online customer experience with in-store shopping. Compounding the offline/online disconnect is the fact that many successful companies may not even know that their online brand is being tarnished when customers’ experiences are derailed, one after the other, by an online glitch or website transaction problem.

Let’s use the example of Quicken Loans, the nation’s largest web retail mortgage lender and fifth largest retail lender. They were unaware of a major glitch in their site: a barrier was blocking one of Quicken Loans’ predominant online revenue generators being used by customers. Despite call center complaints and customer abandonment and frustration, the company simply did not have the visibility it needed to visualize and identify–and subsequently resolve–the online issue.

Quicken Loans leveraged customer experience management software to evaluate its online channel, and soon the company was able to make the small changes in the text on the online mortgage calculation tool necessary for fixing the online glitch. With online visibility finally realized, Quicken Loans increased the pull-through of the mortgage applications by nearly eight percent, which translated into more than half a million dollars in lost revenue recovered. By embracing a higher level of online visibility and tackling the issues at hand, Quicken Loans improved customer satisfaction, via the online channel, exponentially.

From airlines to Fortune 500s and every retailer in between, the proverbial virtual shopping cart needs a major makeover–and soon. With the amount of tools and services available to help companies optimize their online channel and resulting customer experience, every company under the sun is capable of closing the costly gap between their offline level of customer service and their online customer experience.

The Call Center Catalyst and Social Echo Chamber
Further exacerbating the offline/ online disconnect is the call center, as it can often function as a catalyst for online customer disapproval, as well as negative customer sentiment and experiences. Simply put, much of this “disconnect” lies in the fact that call center agents are simply uninformed about the website and so are not armed with the information they need to assist the customer.

This can be solved in part by properly training and educating employees about the website, how it works and the potential problems customers might have. Having this knowledge of the online channel is vital, but it still leaves call center agents blind to the actual experience a customer has had.

An even better solution is to provide agents with complete, real-time visibility into what a customer actually saw and did on the site–giving them the ability to replay a customer’s session while they are speaking to them on the phone or before replying by e-mail.

Today’s challenging economy has also impacted how consumers think about goods and services–every dollar counts. That, coupled with the exhaustive amount of data available on the social web, has prompted consumers to share their experiences on Twitter, Facebook and other social channels, often about sub-par online shopping incidents. The number of adults who share their experiences regarding plane-ticket bookings and other online purchases gone awry via blogs or social networks has more than doubled over the past year. These shared experiences, from a bad call center experience with an agent to a website transaction issue, can be highly influential. Online glitches can have profound effects on the “word-of-mouth” created via technology and new media.

Fostering Your Offline and Online Brand– Smarter and in Tandem
Despite the challenges ahead for online brands when it comes to customer experience and satisfaction, all hope is not lost, and there is a silver lining to the offline/online disconnect. Our survey found that online customer experience reached an inflection point in 2009. The percentage of consumers who have experienced problems when conducting transactions online showed its first substantial decrease in five years–from approximately 87 percent in all previous Tealeaf surveys to 80 percent in 2009. This improvement points to a growing business focus on delivering better customer experiences as we make our way through 2010.

Analysts and researchers alike are in agreement that more business is being conducted via the online channel than ever before. Companies embracing this new level of visibility are able to radically improve customer experience, brand affinity and agent productivity. It is also a great way to ensure that website errors or issues are rectified as quickly as possible, and customer sessions can be quickly packaged up so that underlying website issues can be corrected. With these changes on the horizon, the online customer experience, as a whole, certainly has a bright future “in store.”

Geoff Galat is vice president, worldwide marketing at Tealeaf, a provider of customer experience solutions, helping companies achieve visibility, insight and answers online. He can be reached at geoff_galat@tealeaf.com.

February 2010 – Cover Story: Make Site Search More Personal

Subjectivity is the Key to Driving Site Search Success

By Dr. Scott Brave

If your site search is failing both you and your customers, you aren’t alone. Marketers, website managers and search professionals across all types of organizations struggle every day to produce sets of meaningful search results that truly help their user base–rather than inundating them.

Enterprise search has long been the de facto standard for websites and corporate knowledge databases, predominately employing text-matching algorithms. While statisticians might be impressed with the outcomes, users who initiate searches find themselves drowning in a sea of homogenous data.

Search professionals and merchandisers are in no better position, with product catalogs and content that is constantly growing and changing.

Site search has come a long way over the past few years, and some traditional vendors are even making impressive strides to improve relevance without having to rely as much on manual tuning. Even so, the single most important ingredient to produce relevant search results is still often lacking: subjectivity. In other words, typical search engines still have no reliable way of accurately interpreting users’ intent or determining what results are actually useful in your ever-growing sea of content.

“What exactly is so wrong with objectivity?” you might ask.

For one, the critical information needed to determine relevance is simply not in our content. The content that makes up our websites–whether HTML, flash, video, PDFs or some other type–seems like the best place to discover a match to a user’s search terms, but often it’s not. Frequently, there’s a mismatch in how a user phrases his or her query and the words content creators use–and that’s just for content that the engines are able to spider.

If we make an assumption that the content is in a format that’s spiderable and that it contains the user’s search terms, it still doesn’t mean that the documents that are returned in the results are truly relevant. The key is to understand what content is useful, when it’s useful and who it’s useful for. However, that critical information is in users’ heads, and it’s based on their experiences and needs. That’s why introducing subjectivity into search is so important.

The best approach for surfacing this subjective insight might seem to be to explicitly ask the users. This approach seems good on the surface, but upon further scrutiny it’s flawed from a standpoint of coverage, bias and inaccuracy. Some enterprise search providers are beginning to move in this direction, but have generally failed to recognize a fundamental rule: actions speak louder than words. As social science has taught us all along, if you really want to understand people, you need to watch what they do, not what they say.

A few players in the enterprise search space have even figured this out. That’s the good news. The bad news is that they neglect to look beyond search. What users are doing in search only skims the surface of what’s really going on. Anytime someone comes to your website, they are looking for something. Many times they will have done a search on Google before they came to your site. Their Google search terms are your first clue. Once they get to your site, not all users search. And even if they do, there are many steps and actions that they take after the search is performed. Every action, be it search, navigation, engaging with content–or even all of the above–is providing you with valuable clues about what’s useful, why it’s useful and who it’s useful to.

Consequences of Objective Search
Site search is one of the single most important features on websites, and a primary method for your users to find the products and content they need. The consensus among analysts is that while there have been great improvements in site search technology, the current options aren’t making the grade–on the user experience side or the search manager side. To really move the needle on the search experience, companies will have to look at new methods that fall outside of the traditional search technology realm. Independent analyst firm Gartner predicts that by year-end 2013, more than 30 percent of the most popular websites will use search technology to better target content by adapting to the user’s context.

Poor search experiences aren’t just an inconvenience for users, they are also costly. Marketing budget is spent attracting visitors to your site. Opportunity cost is sunk into the hours spent manually tuning search results and content. Customer service costs rise as users pick up the phone or send e-mails. Revenue is lost as prospects and customers abandon your site in frustration. This clearly isn’t lost on companies. A recent study by Internet Retailer reports that 35.9 percent of online retailers have plans to upgrade their site search.

Creating a Personalized Search Experience
Improving site search isn’t just about producing better search results. It’s about personalizing the search experience to each user based on their specific needs. It’s about making search subjective.

If continuing on with the status quo is no longer an option because of both the negative impact on customer experience and the high associated costs, then you need some concrete, objective points to consider when looking for a solution to the search problem:

Think not only about content, but also about context - Users come to sites with intent. That intent might be indicated in a Yahoo or Google search that brought them to your site. After reaching your site, they might then express intent or context in the pages they visit and engage with, the links they click and maybe the site searches they perform.

What else are they doing to express intent and even engagement on the site? Consider how long their mouse hovers over a piece of content. Are they engaging with multimedia content? Do they spend time comparison shopping, hopping back and forth from one document to the other? This expression of interest may span multiple searches and actions, and finding content that engages them and holds true value for the user’s specific intent or context may also take multiple steps.

By paying attention to the context of users’ visits, you can begin to fine-tune their search experiences and identify what web pages and content will be most relevant to them.

Make search social - In recent years, explicit user actions such as click-throughs, ratings and feedback were introduced to solve the issue of search relevancy. We’ve seen this on the likes of YouTube ratings, Yelp reviews and Amazon product commentary.

However, today’s advanced social search techniques have evolved to take into account how humans search for, find and consume information and products in the physical world. In this sense, the implicit feedback users are giving you as they navigate both the web and your site are much more important and telling than explicit feedback–on many levels. These implicit actions take into account all traffic, not just a small percentage. They also include information such as how a visitor arrives at a site and every action they take once they arrive, including navigation patterns, search behavior, browsing behavior and even interactions with non-spiderable content like video and PDFs.

Remember, actions speak louder than words or, in this case, search queries as well as navigation on the web and throughout your site. It’s amazing what a little listening will tell you about your visitors and what will interest them.

On a larger scale, you should also consider the macro data that can be collected and analyzed from all your website visitors. As this data is continuously distilled, virtual communities of like-minded visitors begin to emerge. Actions, patterns and tendencies associated with these communities form the basis of a collective prospective that you can use to deliver better search.

Automate the fine-tuning process - When companies do find flaws in their search results, the approach most take is to manually tune and tweak the search algorithms or the content. With this approach, companies can only focus on the most popular products and content, and they miss out on the highly profitable long tail. Simply put, it isn’t timely, scalable or all-inclusive.

Furthermore, search administrators are rarely subject matter experts and possess little knowledge about how visitors think about a company’s products and services, making it difficult to establish rules to actually help users. When subject matter experts are deployed to tune the content, it takes valuable time away from more high-value activities they could be focusing on, and still only addresses the most popular searches.

Companies need a solution that automates the fine-tuning of results in real-time, and allows the site to change the results as the behaviors of visitors themselves change, continuously optimizing the conversion potential of search.

Give online marketers “community plus control” - If we rethink how we approach fixing search and let our users or online community automatically surface the right content in the right context in real-time, we can really take our sites to the next level. Yet with that automation, companies still need the capacity for control.

Automation should do the heavy lifting for marketers, but it must have flexibility built into it. Online marketers and merchandisers will still need to create business rules to augment and sometimes even override what the community is doing.

Think outside of the box engine – Remember, search should be more than just a box. The engine is just one piece of the navigation framework that guides visitors to your products and content–no matter where the content lives or the format it takes. Perhaps it’s on the homepage, internal product pages, customer support areas, a microsite or elsewhere. It could be HTML, multimedia, a PDF or even some other format.

If companies begin to accept the limited nature of search engines and the concept of intent, they can do much more than fix search. They can start recommending products and content the second they see users expressing intent. When companies create these personalized experiences–be it personalized search results or personalized product and content recommendations across the site–they create a user experience that is engaging at every touch. And driving users to the best content every time they visit ultimately improves sales and reduces costs.

Dr. Scott Brave is co-founder and CTO of Baynote. He holds a Ph.D. in Human-Computer Interaction from Stanford University. Dr. Brave can be contacted at scott@baynote.com.

January 2010 – Online Insights: Conversion

Live Chat: No Longer a Novelty

I’ve heard time and again that live chat tips the scales of success for e-commerce businesses. I’ve spoken with e-retail entrepreneurs about how the technology catapults conversions and I’ve participated in management conversations with multinational corporations about how live chat delivers superior customer satisfaction at a fraction of historic costs. But I still talk to companies that aren’t convinced–that still believe live chat software is a novelty, a cute feature to be filed in the “nice to have” column.

Until recently, my only retort was to summarize what I’d heard from our customers. But now I say something different. Something like this: “Quantitative data from the industry’s first benchmarking report shows that by adding live chat to your website, sales will go up by anywhere from four to 86 percent. What other initiatives are you working on that will deliver that kind of return?”

This is the story of how a few anecdotes have led to an industry standard.

THE ANECDOTAL

Live chat has grown over the last decade and is finally becoming recognized as a critical customer communication channel. Initially thought of as strictly a customer service tool and relegated to the bottom of “Contact Us” pages, live chat has evolved into an important sales channel appearing at the top of leading e-commerce websites everywhere. Website visitors use live chat to ask questions, find out more information and seek advice. They ask FansEdge.com about color and size selection for the perfect ball cap. They ask Allergy Buyer’s Club about the most space-saving air purifiers. They ask ApplianceZone which water filter fits their LG refrigerator. They want to know whether the Dean and DeLuca tote bag comes with the “Road Trip” gift basket.

These interactions aren’t just simple pleasantries; they have a real and significant impact on the bottom lines of e-commerce businesses.

Abt.com has informed us that chatters convert at 20 times the rate of normal website visitors. A long-time customer of ours, Exent Technologies, tells me they reduced support costs by more than 25 percent. Jim Allen, the CEO at ApplianceZone, is riding a rocketship of growth by engaging more than 11 percent of website visitors in chat. Credit Alliance Group is using live chat to help people who are facing mounting debt and has increased sales by 22 percent. The Source, a Canadian electronics retailer, proactively invites website visitors to chat when they enter the shopping cart–more than 20 percent accept and engage in conversation with an agent.

THE ACTUAL

While the results these customers have experienced are impressive–if not downright enviable–they are admittedly anecdotal. One thing they are not, however, is rare. I used to go on and on describing similar examples from other Internet retailers, but often, it didn’t matter. Prospective customers still wanted to know, “what will live chat do for me?” We’ve spent the last 18 months tackling this question and putting statistically relevant arrows in our quiver. Some time was wasted trying to find secondary sources that proved live chat’s efficacy. When it appeared that nobody was looking quantitatively at live chat, we decided to.

Many companies dismiss live chat under the assumption that if a visitor wants to communicate, they’ll just pick up the phone. For our first foray into this investigation, we went directly to the source and asked the Internet shoppers themselves. Our quantitative project with over 250 regular e-commerce buyers revealed several findings, including some that surprised us.

Under several shopping and customer-care scenarios, we asked respondents to indicate their preferred method of communication. To be honest, we thought the phone would win; after all, it does have a 130-year head start. We were shocked, however, that in every scenario presented, the phone was never the number-one choice. It was, we admit, a close race. But the fact is that live chat won every time.

We learned some other things, too. For example, while 58 percent of the entire sample said that live chat positively influences their purchase decisions, the percentage rises significantly with more regular shoppers.

WE’VE SEEN LIVE CHAT FROM BOTH SIDES NOW

Despite everything we learned, skeptics remain. There are those who criticize our research based on the assumption that what consumers say and what they do are sometimes quite different. So we ventured into new territory. Because our products are provided through a software-as-a-service model, our infrastructure includes aggregated data from one of the world’s largest live chat user communities. We decided to interrogate this data in order to illuminate the real experiences of businesses actually using live chat on an everyday basis. What we found is quickly becoming the de facto standard in the industry.

Here is just a sample of what we uncovered:

• Adding live chat to a website increases purchase conversions by between four and 86 percent.
• The average website can expect to have six percent of their proactive invitations accepted.
• The average website can expect to engage between one and 21 percent of its visitors in chat. One of the biggest determinants is the overall traffic volume of the site in question.
• Placing a chat button on multiple pages increases chat volume by 53 percent.
• Repeat visitors are 64 percent more likely to engage in a live chat.
• Seventy-nine percent of visitors fill out post-chat surveys and, overwhelmingly, live chat interactions are given high satisfaction ratings.

BEATING THE BENCHMARKS: ALLERGY BUYER’S CLUB

Allergy Buyer’s Club is an online retailer of healthy-home and allergy-relief products such as air purifiers, specialty vacuums and dehumidifiers. A long-time believer in live chat, the company has spent years measuring and tweaking their implementation in order to turn it into a major sales channel. Robert Scott, the company’s chief operating officer, has led and managed the effort with results that, by and large, exceed the benchmarks. In November 2009, the beginning of their busy holiday season, we pulled some interesting data:

• Live chat increased conversions by about eight percent for Allergy Buyer’s Club.
• Visitors who engaged in live chat with a representative during this month were about eight times more likely to buy.
• Allergy Buyer’s Club’s use of rules-based proactive chat increased their overall chat volume by a multiple of five in November.
• During this same time, repeat visitors were 70 percent more likely to accept invitations from Allergy Buyer’s Club agents.

Scott and his entire team are able to beat the benchmarks for two primary reasons. The first is their impressive and continuous improvement processes. Allergy Buyer’s Club is constantly applying and re-applying website analytics in order to maximize chat’s effectiveness.

The second explanation for their success is due to their superlative focus on customer service manifested by their extensive live chat agent training. Their focus on developing an implementation that is customized and works specifically for their needs has truly paid off.

I like to believe there’s a third reason that Allergy Buyer’s Club succeeds so impressively. It’s the fact that for them, live chat isn’t a novelty but a primary sales channel worthy of considered measurement and executive-level support.

Ross A. Haskell is director of marketing for Bold Software, a web communications solutions provider. He can be reached at ross@boldsoft.com.

January 2010 – Online Insights: Merchandising

Next Generation Recommendations

Now that we’ve entered the New Year, online retailers are taking a close look at their holiday sales and overall business results from 2009. And with new 2010 budgets in place and a more promising economic environment ahead, retailers are likely evaluating what new e-commerce technologies they need to meet the growing expectations of today’s savvy online shoppers and to outperform their competitors in 2010.

What’s on your “must have” list for 2010? Is it social network integration? Marketing or site optimization? Better ratings and reviews?

What about personalization?

It’s certainly not a new topic. Personalization has been around for many years and has many types and nuances, including both “explicit” (user-controlled) and “implicit” (automated). It is the automated variety of personalization–the technique of personalizing the shopping experience for each shopper automatically based on his or her unique interests–that has caught fire of late. Also called “predictive analytics” or “micro-targeting,” the goal is to harness available knowledge about each customer to automatically show the right products to the right shoppers at the right time. The benefits? More engaged shoppers, higher conversion rates, increased order values and rich behavioral analytics to help inform merchandising strategies.

The good news for online retailers is that automated personalization technologies have evolved and matured. The bad news is that there are dozens of approaches and solutions to consider, each with strengths and drawbacks. The goal of this article is to explore automated personalization–how it has evolved and where it is today–to help you decide whether it should make your wish list for 2010.

Initial attempts at personalization began early in the decade with online cross-sells. Online merchants–using their in-depth knowledge of the product catalog and consumer purchase behavior–added cross-sell suggestions to product detail pages and to the shopping cart.

Yet merchants quickly realized that cross-selling in the online world–while valuable–was difficult and time-intensive. With large, rapidly changing catalogs, constant inventory changes and lean merchandising teams, most online retailers could only realistically apply cross-sells to their most popular products. Even then, cross-sells were not personalized to each shopper’s tastes or current interests.

Over the past few years, automated recommendations engines burst onto the scene. The first true implicit personalization technology to use real-time data analysis, recommendations engines were marketed as smarter, more efficient alternatives to “one-size-fits-all” cross-selling. Using click-stream analysis, collaborative filtering and statistical modeling, recommendations engines automatically display personalized cross-sells and product suggestions for each shopper, making it possible to cross-sell the entire catalog or the “long tail.”

As recommendations engines matured, online retailer adoption increased. Analyst estimates vary, but most suggest that 20 to 30 percent of electronic retailers today employ some type of automation for product cross-sells (either their own technology or a commercial solution). Sites like Amazon and Netflix have brought recommendations to the forefront and a growing number of commercial solutions have made the technology available to virtually all online retailers, regardless of size.

So where does that leave us today? Are automated cross-sells the end game, or just the beginning? Why aren’t more retailers utilizing recommendations? And can the predictive targeting technology underneath recommendations engines be applied to other aspects of online merchandising across the site and beyond it?

THE FEAR OF AUTOMATION
One reason for slow adoption of recommendations may be the “fear factor.” Many solutions rely solely on click-stream analysis or past-purchase behavior to recommend items. As a result, their relevancy is often off the mark. Suggesting items shoppers aren’t interested in buying is a waste of virtual shelf space. Other solutions can’t easily be controlled and often unknowingly violate merchant strategies, such as showing a certain brand of product with a competing brand, or showing an out-of-stock item.

Here’s a simple analogy that helps explain this fear of automation. Ask yourself if you’d trust an in-store associate to recommend products to shoppers solely based on what similar shoppers in the store looked at and ultimately bought. Or, would you ensure that the associate fully understood your products and merchandising goals, so that the products he or she showed and recommended to each customer matched the customer’s interests as well as your business’s interests? Most online merchants want the latter if they are to automate recommendations–and rightly so.

Fortunately, automated recommendations technologies have matured. Next-generation solutions have more predictive relevancy, deeper catalog understanding and more fine-tuned control. As a result, the products they show to each shopper are both more relevant and more aligned with merchant strategies.

AUTOMATION PLUS MERCHANT CONTROL
Innovative online retailers are using these next-generation technologies to push the personalization envelope and exploit their recommendations engines in new ways. They are building sophisticated, automated merchandising “campaigns” that blend the power of automation with merchant control and strategy.

One top-100 retailer, for example, has more than a dozen, finely tuned, automated cross-sell campaigns on its site. On certain product detail pages, recommendations are limited to products that cost less than 50 percent of the price of the product in view. When a shopper’s gender is identified, recommendations are limited to items only for that same gender. When a shopper is browsing in certain categories, recommendations are focused on that category, or from like categories; when a shopper is looking at a sale item, recommendations are limited to other sale items. In all of these campaigns, out-of-stock products are excluded automatically, and some high-inventory products are pushed more than others. Clicks, conversions and cart values resulting from each campaign can be analyzed to optimize results.

Another retailer is using its recommendations engine to automate its online best-seller and gift-guide sections. Sophisticated, automated merchandising campaigns instruct the engine to select and display the best-selling products or gift suggestions most relevant to each shopper. If I were shopping on this site, I’d see best-selling products and gift suggestions more tailored to my tastes and needs, while you would see products tailored to yours–making both of us more likely to find and buy the right product or gift. In addition, the site’s merchandising team has more time to focus on data analysis to make sure its assortment and gifts are relevant to customers.

If implicit personalization, micro-targeting or automated recommendations are on your list for 2010, you understand the value and importance of differentiating your online store by personally engaging each online shopper. As you begin your evaluation, keep an eye out for solutions that don’t just automate, but which also give you the power to control and guide that automation to align with your strategies and meet your business goals.

Ryan Hoppe is the director of marketing for ATG’s e-Commerce Optimization Services. He can be reached at rhoppe@atg.com.