DMNews Essential Guide to E-Commerce

guide

2008

ESSENTIAL

to

E-Commerce

A Supplement to DMNews

Feature: Zappos clicks with shoppers

by Sharon Goldman

Conversion: Quick conversion tips to overcome a bleak forecast

by Lisa Wehr

Customer strategies: Have a happy retail holiday this season

by Zain Raj

Game-changers: Social shopping: Is this a Tupperware party?

by Denise Zimmerman

Cross-channel: Reach customers through cross-channel marketing

by Stephan Dietrich

Mobile: Turn mobile commerce from a novelty to a strategy

by Bill Mirabito

Loyalty creation: Avoiding the ‘one and done’ consumer trap

by Graeme Grant

Measurement: The new metrics that really matter in e-commerce

by Jonathan Levitt

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DMNews • E-Commerce Guide 2008

Editor’s Note

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o matter what products they sell, all online retailers will have to deal with a harsh economic climate this holiday season, as consumers hunker down after months of hearing about layoffs, financial bailouts, mortgage woes and stock market slowdowns. A recent study by ComScore showed that year-over-year e-commerce growth slowed to 6% in the third quarter — down from 13% for the second quarter. The 5% growth rate recordSharon Goldman ed in September was the lowest recorded by ComScore Executive editor since it began tracking e-commerce sales in 2001. Still, ecommerce companies are faring much better than some; after all, the sector is only facing a slowdown in growth, while some brick-and-mortar retailers are hurting in more critical ways.

So, what’s a savvy e-commerce marketer to do in this environment? The 2008 Essential Guide to E-Commerce will help you with a wide variety of tips, suggestions and thought leadership about the tools and strategies available to today’s online retailers.

For example, some e-retailers are turning to coupons as a solution to their economic challenges; some are swearing by site search; others are getting back to basics. But no matter how you drive traffic to your Web site, the bottom line is that success in e-commerce is all about pleasing your customers. The articles in this Essential Guide focus on the importance of that fact and what marketers can do to make sure that customer satisfaction remains front and center.

Here’s to a happy — and successful — holiday season, and a profitable 2009 to all!

—Sharon Goldman, executive editor

EDITORIAL: Editor-in-Chief Cara Wood Executive Editor Sharon Goldman Editorial Director Julia Hood ART AND PRODUCTION: Design Director Sandra DiPasqua Art Director Robert Falcone Production Manager Michelle Chizmadia ADVERTISING: District Managers Craig Bailey, Sammy Patel Assistant Display Advertising Mgr Deborah Hartley HAYMARKET MEDIA: President/Publishing Director Lisa Kirk Chairman/CEO William Pecover SUBSCRIPTIONS: (845) 268-3156 DMNews (ISSN 0194-3588), incorporating iMarketing News 114 West 26th St., New York, NY 10001 Telephone (646) 638-6000 © 2008 Haymarket Media

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Table of Contents Feature 4 Zappos clicks with shoppers,

by Sharon Goldman

13 The online experience updated for the individual, by Mark Nagaitis

13 Five ways to increase your browser conversion rates, by Rolf Elmér

Game-Changers 18 How Apple’s iPhone affects online retail, by James Driscoll

Customer Strategies

14 For e-commerce, it’s about the steak

19 Social shopping: Is this a Tupperware

7 Have a happy retail holiday

14 What you need to know about rich

20 Turn mobile commerce from a novelty

this season, by Zain Raj

9 Pique shoppers’ interest with the joy of discovery, by Jason Meugniot

9 Live customer chat: A winning

retail strategy, by Donna Cohen

10 Moving beyond the data: Sourcing customer growth, by Bill Alberti

10 Reach customers through cross-channel marketing, by Stephan Dietrich

12 How to thrive in a world of convergent channel marketing, by Bill Nicolai

12 Practical variables to ensure e-commerce success, by Danny Flamberg

— not the sizzle, by Michael Masse applications, by David Bernstein

Conversions

party, or what? by Denise Zimmerman to a strategy, by Bill Mirabito

20 The new metrics that really matter in e-commerce, by Jonathan Levitt

15 Avoiding the ‘one and done’

21 Site search and SEO hold the keys

16 Begin with the end in mind to improve

21 Product recommendations help ensure

16 Quick conversion tips to overcome

22 How to use social shopping as an

17 Five tips for using coupons to ensure

22 Add punch and power with voice

consumer trap, by Graeme Grant cart conversion, by Pete Olson a bleak forecast, by Lisa Wehr

Mom’s loyalty, by Angela Khan

17 Looking at the real value in using

coupons as a tool, by Akin Arikan

to e-commerce, by Shaun Ryan

customer loyaly, by Lori Trahan

e-commerce driver, by Davi Ellis enablement, by John Hart

04 FEATURE DMNews • E-Commerce Guide 2008

Zappos clicks with shoppers CEO Tony Hsieh says the online retailer’s target audience is priority No. 1, Sharon Goldman reports

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ot immune to the ravages of the current economic downturn, online retailer Zappos laid off nearly 8% of its employees in early November.

But CEO Tony Hsieh tells DMNews that cutting investment in customer service is not an option.

Instead, connecting with the company’s audience is the most important item on Zappos’ agenda.

How do you feel with the holiday season in full swing?

We’re still growing year over year, and it’s good for us that e-commerce is still growing despite the economy. It’s definitely not growing as fast as before.

Our sales continued to grow — last year gross merchandise sales were $840 million and this year we’re on track to do roughly about $1 billion.

What were your biggest challenges in 2008?

[Nothing] consumer related; it was just continuing to add people to our company who fit the Zappos culture. Company culture is our No. 1 priority. We ensure that our company doesn’t go downhill as it gets bigger. There is a lot of thinking and planning on how we stay ahead of the curve. Recruiting is easier in some respects because of word of mouth among the employees. When we hold a job fair for our call center or customer loyalty team, about 200 people show up and we make offers to about 20.

You attempt to connect with your audience on many levels. Why is that so important to you?

That’s just part of our brand; what we want our brand to be about. We want customers to feel they have a personal emotional connection with the company. For example, our call center reps don’t have scripts; we encourage the reps to just be themselves. So you might call two different times and get two different types of personalities — it won’t be the exact same words they use, but what we care about is that the customers are wowed by the interaction.

ESSENTIAL GUIDE

Zappos CEO Tony Hsieh says that creating a great customer experience can help to drive repeat customers who will spend more and spend more frequently

DMNews • E-Commerce Guide 2008 FEATURE 05

What’s the marketing formula you apply to getting business?

Nothing really different — in terms of paid advertising, keyword searches are a big chunk of [our effort]. But, really, the No. 1 driver of our growth over the last nine-and-a-half years has been through repeat customers and word of mouth. Money we would have put into paid advertising, we [decided to] put it into customer experience [in other ways], like free shipping, free upgraded shipping — those things are all very expensive. We also have a 365-day return policy, and we run our call center 24/7, and run our warehouse 24/7 — all of those things cost a lot. If you look at all those expenses, a typical company would do things differently, but we view anything customer experience-oriented as being an investment. That’s really how we view our marketing — creating a great customer experience drives repeat customers and, on any given day, about 75% of our orders are from repeat customers.

In this economic downturn, will you continue that focus on repeat customers?

If anything, we’ll probably just focus more on them. We don’t need to go out and attract a huge number of new customers — we just need to make sure we take care of existing customers.

While Zappos isn’t traditionally promotions driven, do you feel pressure to be more so, given current economic conditions?

Not for the Zappos brand, b ecause we really don’t want people to buy from Zappos just because of price; it should be service and selection.

But we now have 6PM.com, and that has different service levels — there’s no free return shipping, but there are much lower price points, and that’s where we move all of our marked down inventory. Some of our customers are just more pricesensitive than others.

How did your use of Twitter evolve?

Well, originally we introduced the company to Twitter just as a way of helping enhance company culture — we’ve had lots of stories of an employee who found out through Twitter that another employee was at a bar down the street down from where they were seeing a movie, and met up.

I now have 16,000 followers on Twitter. I twitter on what I’m personally doing and it just kind of helps everyone feel more personally connected to the company. A lot of people have said that because of Zappos being on Twitter, that it makes them want to purchase from us; they feel purchasing from Zappos is almost the equivalent of maintaining a local store feel.

You’re now selling products other than shoes.

Why? Are you trying to be Amazon?

No, not really. We’re getting into the same product categories — we sell handbags and backpacks, and we’re pushing into clothing, electronics and cookware — but our focus is different. From their press releases, it seems Amazon is really focused on being the value leader or low price leader. We’re focusing on building our brand on having the very best customer service. To use a brick and mortar analogy, Nordstrom and WalMart sell the same product categories, but you don’t think they’re the same. We’re using different price points as well.

What about liscensing your software? Is that similar to Amazon’s approach to liscensing?

I actually don’t know too much about how Amazon does it, but we have a program called Powered

by Zappos, so right now we have nine Web sites running, with the brand’s look and feel. When a customer wants to add something to their shopping cart, they use their Zappos log in and password and they know that customer service is being handled

by Zappos and fulfillment is done by Zappos — with the same brand promise of free shipping both ways, and the 365-day return policy.

What was your biggest challenge in 1999? What will your biggest challenge be in 2009?

I think, in 1999, we were still trying to convince brands to sell to us, and that was the case for the first several years of our business. Now, it’s more just focused on how we do right now. We have close to 9 million paying customers — 3% of the US population. Now, the focus is more on: They know we sell shoes, now how do we get them to think about buying clothing from us, for example.

What can e-commerce retailers be doing now?

I think it’s not really specific to now, but, in general, a lot of e-commerce companies might be too focused on trying to get new customers rather than focusing on repeat customers. It’s easier to get them to shop again, then to get someone to shop the first time, and they also — for us, at least — end up spending more and spending more frequently. n

Zappos: Behind the homepage Founded: 1999 Headquarters: Las Vegas, Nevada Current stock: Over 3 million shoes, handbags, clothing items and accessories from over 1100 brands

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Number of employees: Over 1000,2007 Gross merchandise sales: $840 million

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DMNews • E-Commerce Guide 2008 CUSTOMER STRATEGIES 7

Customer Strategies CUSTOMER STRATEGIES Page 7

Have a happy retail holiday this season,

by Zain Raj

Page 9

Pique shoppers’ interest with the joy of discovery,

by Jason Meugniot Live customer chat: A winning retail strategy, by Donna Cohen

Page 10

Moving beyond the data: Sourcing customer growth,

by Bill Alberti Reach customers through cross-channel marketing,

by Stephan Dietrich

Page 12

How to thrive in a world of convergent channel marketing,

by Bill Nicolai Practical variables to ensure e-commerce success,

by Danny Flamberg

Page 13

The online experience updated for the individual,

by Mark Nagaitis Five ways to increase your browser conversion rates,

by Rolf Elmér

Page 14

For e-commerce, it’s about the steak — not the sizzle,

by Michael Masse What you need to know about rich applications,

by David Bernstein

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ith so many tools available to help e-commerce marketers, it can be hard to discern the strategies necessary to target customers, offer good service and get them to return to your site. But it’s essential to get the basics right: These articles focus on catering to customers; cross-channel marketing; and customization.

Have a happy retail holiday this season By zain raj he online retail experience is the most fundamental interaction that brands face this holiday season. It is where they will either deliver on their brand promise or not. The unique aspect of the Internet purchase is that there is a direct interaction between the brand and the customer, leaving no salesperson intermediation or store environment in the mix.

E-commerce is an opportunity for the retailer to be in total control of the shopper’s experience.

For that reason, it is more important than ever to deliver on a retail brand’s core promises — by offering great value, a simple shopping process and quality merchandise.

Once you’ve checked each of your key brand promises off the list, it is time to customize the shopper’s experience. Use what you know about your customer to personalize offers and make your product relevant to them.

This may mean offering gift wrapping with customizable wrapping paper, guaranteed free and fast shipping, or space Zain Raj for product Euro RSCG Worldwide reviews and discussion boards. Use consumer insights to meet the needs of the specific segment and make your Web site customer-driven.

During the holidays, give your business an advantage by introducing new tools to the customer experience. This attracts and keeps customers by making the site relevant and useful for them. Manage the complete customer

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experience from search through to the shopping cart, to promote sales and customer loyalty.

Another smart way to customize an online shopper’s experience is to use e-mail to alert consumers to special offers, sales or new merchandise. Internet retailers like Shopbop send e-mails to subscribers as their inventory is updated each week. Receiving this kind of information makes the customer feel knowledgeable, and like they are part of an elite group. This also opens the door for collecting additional data and insights on the customer.

Internet shoppers, especially during the holidays, are shopping on a mission. Making their lives easier is key. For example, outdoor apparel retailer Patagonia does this by allowing its customers to click through to other retail Web sites, such as Moosejaw Mountaineering, to purchase a product that is out of stock. This takes some of the search work off of the customer and encourages them to come back to Patagonia the next time they shop.

The new Internet shopper demands a unique, personalized shopping experience. But above all, the Internet offers an opportunity to deliver to consumers those things that your brand promises to provide.

This holiday season, retailers should first ensure that their Web site presents customers with a simple, seamless shopping experience and reliable product. They should then research and use customer insights to make their site relevant to their shoppers and keep them coming back for more.

Zain Raj is CEO, Euro RSCG Discovery and global practice leader at Euro RSCG WorldWide. Reach him at zain.raj@eurorscg.com.

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DMNews • E-Commerce Guide 2008 CUSTOMER STRATEGIES 9

Pique shoppers’ interest with the joy of discovery

Live customer chat: A winning retail strategy

By Jason meugniot nline retailing gets more complicated by the day. But the basic rules of retail and marketing still apply: Know your customers and give them what they want.

In March 2008, Guidance conducted a survey of online shoppers to determine what makes people return to a given e-commerce site. The top three responses reveal a preference for sites that give shoppers an experience that’s personalized and invites discovery.

While 35% said they’re most likely to return to a Web site if it makes recommendations on products or services for sale, 26% want “a unique experience” each time they shop. At the same time, 18% said they’re more likely to return “if the site solicits their feedback” on its products and services.

The key is providing a rich shopping environment.

Here’s how to make it easy for consumers to find the products they’re looking for, or discover some they didn’t even know they wanted.

Perfect the search box It should be prominent and accommodate misspellings, Jason Meugniot and include similar or related Guidance products in the results.

Offer multiple ways to find products Apparel sites might organize by men’s and women’s, or by brand or size. A secondary structure might be by lifestyle — outdoors, indoors, etc.

Create “lifestyle merchandizing zones” Help customers see multiple products in action. Make the visual serve dual purposes with a feature called “hotspotting” — which allows users to click individual elements of a video or image to get more information or to make a purchase.

Use configurator tools Help customers match various apparel, accessories and shoes into a complete outfit, or to choose furniture and decorations for an entire room.

Create a forum Allow your users to review products, to make recommendations, and to ask and answer each other’s questions.

Don’t fear negative reviews According to research studies by Forrester and Bazaarvoice, less than 20% of user reviews are negative. But even that small 20% makes your online store more credible and, at times, may even help sell ancillary products to overcome a limitation.

Use YMAL (“you may also like...”) Show customers products that they may be interested in purchasing, based on their previous purchasing, viewing and/or browsing habits.

Help people discover products Show them “purchase trends” – what other customers have done after viewing an item.

The bottom line: Don’t give shoppers any reason to leave your site before they’ve completed the purchase.

By donna cohen o matter how much time and money you spend optimizing your Web site with multivariate testing, streamlining the cart or creating more relationships with affiliate marketers, you will achieve another 10% to 30% increase quickly by providing an online salesperson.

Putting sales people on your Web site through the use of a Live Chat program will optimize the online interactions on your Web site and to increase conversion.

This involves a combination of click-to-chat buttons and proactive, behavior-based chat. The chat button is similar to summoning a sales person in a store — or picking up the phone. Proactive chat emulates the store salesperson who’s smart and offers the right helps, at the right time. Real-time analysis of consumers’ shopping behavior triggers proactive chat invitations.

Implementing a chat solution often involves picking a software solution. A good chat software — numerous vendors sell those — is a necessity, but it is not sufficient. In my experience, most live chat executions have two common errors.

A common trap is a poor launch. Chat software is akin to a blank canvas. You need to craft an integrated experience that is synonymous with your brand and your Web site. To create this experience, you need to design and test both the art and the copy of buttons, invitations and your user interface, as well as write and test the scripts. You need to develop and test the trigger rules. And don’t forget the selection, training and motivation of your agents.

The design of the chat offering begins with the invitation.

Its goal is to engage the customer in a chat conversation.

Sounds simple enough. But many implementations fail by using pictures of telesales Donna Cohen folks wearing headsets or by TouchCommerce burying the buttons on their site. The wording of the button is equally important. For example, research has shown the word “sales” in the button is a turn off. Shoppers want answers or education — not a sales pitch.

Another common trap is a weak ongoing optimization effort.

Chat can be very dynamic with access to real-time data and chat transcripts giving you insight to actual customer feedback. You can rapidly create and test your hypothesis to improve your chat uptake and conversion through A/B or multivariate tests. Agent quality is also easily monitored and controlled. All this requires more technology, such as Web analytics, and a staff that has the matching experience.

Stay clear of these two traps; it’ll be well worth it. I routinely see increases in site-wide conversion of between 10% and 30%.

Jason Meugniot is owner and CEO of Guidance. Reach him at jason@ guidance.com.

Donna Cohen is SVP, customer experience, TouchCommerce. Reach her at dcohen@touchcommerce.com.

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ESSENTIAL GUIDE

10 CUSTOMER STRATEGIES DMNews • E-Commerce Guide 2008

Moving beyond the data: Sourcing customer growth

Reach customers through cross-channel marketing

By bill alberti -commerce lends itself well to the capture and analysis of customer data. Companies track all kinds of customer behavior with all kinds of metrics. Yet most of it ends up on the floor in stacks of PowerPoint decks rather than in the hands of the CEO. Is it because the customer isn’t valued in the organization? While the contrarian may say so, it’s hard to believe that a company doesn’t value its customers. So, maybe the problem is with the data itself. By carving up customers into various metrics, companies can’t see the forest for the trees, the customers for the data.

But, data is not the source of growth for online commerce, the customer is. This simple truth is too often overlooked or overcomplicated by different departments, business units or disciplines “owning” different parts of the customer.

The customer gets fragmented, segmented and picked apart to the point where the connection between customers and any Bill Alberti actual business is lost.

Communispace When companies lose focus on the customer as their source of growth, they tend to retreat to the data or look internally for answers. The problem with this approach is that it limits thinking, reducing it to the realm of what the organization already knows and how customers have behaved in the past. It’s then further constrained by different data interpretations, internal biases and organizational politics.

Seeing customers as the source of growth needs a shift in mindset — from seeing customers as targets to involving them as partners. With social technologies, firms can now invite customers to participate in the business — to inform decisions and help companies develop better solutions to match customers’ needs.

This alignment between company solutions and customer needs is the key to growth. It puts companies in a position to create better products, innovate smarter ways to come to market and develop more effective ways to sell. The company’s solutions are inherently more relevant to customers because customers are part of the process of developing the solutions in the first place.

When companies listen to what customers are saying, they open themselves up to new opportunities for growth, and discover unmet customer needs. They find new ways to optimize how they serve existing needs. They look beyond the data to connect to more parts of their customers to serve them in more ways.

The companies that involve customers in their business, the ones that connect the dots between what customers are thinking and how the business can grow — these are companies that will hold a distinct competitive advantage over those who are just collecting data.

By stephen dietrich nline marketers understand communicating with customers using multiple channels. Few have mastered the nuances of cross-channel marketing. The difference between multichannel marketing and cross-channel marketing is not just semantics.

Multichannel implies the ability to drive marketing through multiple channels.

Cross-channel denotes the ability to drive campaigns that span across channels — same campaign, same message.

Each channel has unique communication traits that marketers must know to present consistent, coordinated information. A recent Aberdeen Stephen Dietrich Group study, sponsored by Neolane Neolane, Cross-Channel Campaign Management: Next Generation Multichannel Marketing, says the proliferation of marketing channels makes campaign performance difficult to monitor. It found that 87% of the organizations surveyed struggle to measure and compare both online and offline return.

Firms using cross-channel practices have seen higher ROI as they engage customers and prospects across multiple mediums with a consistent message. The question becomes, how can ecommerce companies achieve higher response rates and returns?

Aberdeen identified the top barriers to becoming cross-channel: disparate data systems (45%), lack of technology to centralize multichannel management (44%) and organizational silos (34%).

Firms must establish a single marketing view of customer and prospect data. Through one, up-to-date system for customer and prospect data, organizations can target and segment profiles, keep a detailed track of all past cross-channel marketing actions, personalize and automate marketing efforts across multiple channels, and accurately measure audience reaction and effectiveness.

“Industry average” marketers who look to become “best-inclass” in cross-channel should start by identifying high-value customers and market to them uniquely; standardize operational workflows around cross-channel execution; and update customer profiles based on multichannel interactions.

By establishing a centralized datamart and relying on it as a cross-channel marketing platform, marketers can create single campaigns, replicated across various channels. Content, graphics and offers remain consistent. Campaigns are coordinated across channels, and with previous campaigns.

By integrating emerging channels with traditional channels through cross-channel marketing, marketers can reach the right person with the right offer through the right channel at the right time — reducing costs and improving the effectiveness of marketing efforts.

Bill Alberti is director of business strategy at Communispace. Reach him at balberti@communispace.com.

Stephan Dietrich is president of Neolane. Reach him at stephan.dietrich@ neolane.com.

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12 CUSTOMER STRATEGIES DMNews • E-Commerce Guide 2008

How to thrive in a world of Practical variables to ensure convergent channel marketing e-commerce success

By Bill Nicolai any direct retailers still think of the Web and catalog as two separate channels, but as the marketplace evolves, it is time to acknowledge that “multichannel marketing” is a transitional phase in the development of a unified direct-to-consumer business model. However, we continue to find the persistence of “silo” marketing, in which catalog and Web are driven by managers who are not necessarily working together.

This approach often fails to optimize some of the largest opportunities — those that involve the use of catalog marketing to drive Web sales, and vice versa.

Recognize that in the convergent Bill Nicolai marketplace, success comes Lenser from exploiting the marketing strengths of each channel.

The underlying facts driving convergence are seen in three overarching observations: First, the Internet is the cheapest method of finding new customers; next, catalog is the most costeffective way of obtaining subsequent sales; and third, multichannel buyers are twice as valuable as single-channel.

Close examination of lifetime value indicates that Web-generated customers have only about half the value of those that come from direct mail. For many direct sellers, most new customers are now coming from Internet marketing. The most effective way to upgrade these buyers to a higher value status is by inducing them to buy from a catalog. This is convergent channel marketing in action — where the catalog functions to upgrade the value of the customers generated by the Internet. Though e-mail is cheap, response remains so low that catalogs remain the best way to obtain subsequent orders and build long-term customer value.

The growth of Internet sales far outpaces that of phone order sales, and catalog-centric companies will soon be getting the vast majority of their orders via their Web site. The Web will soon be the dominant order channel, but savvy marketers will continue to exploit the superior response of mailed catalog to obtain orders and build a high value customer file.

In order to thrive in a convergent world, you need to know the difference between the channel of order and the channel of origin. Matchback analysis and the “business rules” of attribution between channels are keys to success. Enable full crosschannel behavior to maximize the ability of customers to access your company in whatever means suits them at the time they wish to make a purchase. Keep the Internet and catalog management under a single overarching marketing department. Do not encourage silo fiefdoms by dividing internet and catalog. Unify branding across all channels to exploit your underlying brand equity. Shift resources to new marketing methods as they become available and are proven to be profitable.

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Bill Nicolai is senior partner at Lenser. Reach him at bill.nicolai@lenser.com.

By danny Flamberg ow that we’re more than a decade into online commerce, it still surprises me how out of synch buyers’ and sellers’ expectations are. Retailers have not universally embraced the idea that point-and-click shopping creates surgical shoppers who zero in on desired merchandise, driven by 24/7 convenience and widespread product availability at competitive and comparable prices. They still harbor fantasies that they can simply translate the store or the catalog experience onto the Web and save marketing costs. There are any number of established practical variables that can help you ensure success in online commerce.

Celebrate search Large numbers of customers — possibly more than 40% — go right to the search bar. Invest the time in tagging and sorting the merchandise. Taxonomy is destiny. Think like a customer. Enable shoppers to search by SKU number, color, pattern, cut, size, the product description, category description or product use. Do everything you can to connect them with the object of their desire as quickly as possible.

Show the goods Use pictures to overcome the absence of tactile sensations and invest in technology and photography sufficient to answer such questions as, “How will this look on me?” and “Will this fit/go with X?” Make sure to show the merchandise in context. Aggregate the items that naturally go together. Display “Shop

by Outfit,” “Shop by OccaDanny Flamberg sion” and “Shop by Room/ Booster Rocket Function” images. By meeting initial visual and merchandising expectations, you can build in a stronger, subtler cross-sell.

Leverage free shipping This is your customers’ favorite incentive. Eight in 10 online retailers have made free shipping conditional in the last few years and customers have accepted it. But don’t get carried away. Shoppers can do the math in a nanosecond and have trained themselves to walk away from bad deals.

Compare products More than 64% of customers say they want this feature. Many compare similar products from your collection. An equal number want to see how your merchandise compares with other merchants. The existence of comparative information signals a merchant’s confidence in his or her product line and pricing strategy. Don’t be afraid of customer reviews.

They have strong credibility with shoppers.

Merchandise your locations Less than 30% of online retailers synchronize online and offline shopping by offering in-store pickup or returns, and product locators. Many merchants don’t think about multichannel shopping patterns. But the best customers shop all channels. List your store locations and offer directions or a link to Google Maps.

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Danny Flamberg is managing partner at Booster Rocket. Reach him at dflamberg@gmail.com.

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DMNews • E-Commerce Guide 2008 CUSTOMER STRATEGIES 13

The online experience updated for the individual

Five ways to increase your browser conversion rates

By Mark Nagaitis he world of e-commerce is buzzing about “personalization.”

Despite the idea’s popularity, there is very little consensus as to what constitutes a “personalized” Web experience, and what methodology serves the end customer best. Several personalization schemes exist. One popular technique uses a recommendation engine to suggest complimentary or accessory items to accompany a purchase. Other sites target product offers based on demographics, statistical modeling, or wisdom of crowds (people who buy that drill also buy this teapot). Still others contend that personalization must take into account the customer’s purchase history on the current site — and perhaps throughout a network of sites, which of course brings up a host of privacy issues. Still another camp asserts personas are the way to go.

A new approach to personalMark Nagaitis izing the online experience uses 7 Billion People foundational principles from behavioral psychology and linguistic science to provide what can be described as an adaptive Web experience. This approach takes into account site visitors’ goals and motivations by determining why they are on a particular Web site at a specific time and in a specific context, how they make buying decisions, and how they prefer to have information presented to them. This allows marketers and website owners to gain valuable insight about their customers, including why users visited the site, where they get frustrated and why, how users like to have information presented to them, how site changes and enhancements will positively affect close rates and how site owners can alter site navigation/merchandising to positively impact the user experience.

Web site personalization services that include traditional socio-economic data about who a Web site visitor is, along with information about why this user is on the site at that particular moment and what they hope to accomplish is the ultimate goal.

This is analogous to the experience of dealing with an expert sales person that instantly and intuitively adapts to the customer: how they communicate in terms of language, their personal interests, details they find compelling about specific interests or topics, and how they prefer information to be presented to them.

Using a combination of personalization technologies allows marketers to gain the necessary insights into who their customers are and how best to meet their online requirements and then adapt the content, navigation, and information presentation to the user, rather than the other way around.

By Rolf Elmér he following are some my best practices for online merchants seeking ways to increase browser conversion rates: Offer real-time product recommendations based on personal buying behaviors Each shopper provides retailers with the information needed to accurately offer real-time predictive recommendations. For example, click patterns, searches conducted and products purchased are all implicit actions performed by consumers. In conjunction, explicit actions such as basket content, click stream and collaborative search results supply the intelligence needed to create behavioral data sets. Through intelligent sorting of this information, the system provides customers with personalized, real-time suggestions, assisting them in finding the products, services and promotions that best fit their needs.

Deploy technology that offers relevant landing pages for individual searches Online retailers are only too familiar with the pain of losing consumers’ interest if they cannot quickly find what they are looking for. Web sites that offer automated personalization for search inquiries are wisely leveraging social behavioral merchandizing and are the best equipped to maximize the value of online visitor traffic. Landing page optimization is a unique strategy used to increase Web site traffic.

Designed to immediately direct consumers to the landing page of the product being searched, vs. the homepage to the entire site, the technology presents the products and services most likely to appeal to a consumer.

Harness the power of Web 2.0 Rolf Elmér Online shopping has become Avail lntelligence a more communal activity.

Shoppers have come to rely on product reviews from other consumers. In fact, a recent Avail Intelligence survey reveals that 42% of shoppers seek a high volume of positive reviews when making purchasing decisions.

Offering advanced interactions, such as inviting peers to view personal gift lists, will encourage friends and family to become customers themselves.

Support mobile content Today, online shopping does not necessarily only happen in front of a computer. More and more people utilize mobile devices for on the run shopping. Web sites that work properly on these devices are sure to become a favorite with individuals seeking fast and simple shopping solutions.

Facilitate consumer interaction to reduce returns and call center workload Structuring Web sites to include features such as ratings, reviews and live chat or question and answer functionality empowers customers to take an active role in the shopping process. This limits the chances that consumers receive products that do not meet their expectations, thereby reducing both returns and the number of calls made to the call center.

Mark Nagaitis is CEO of 7 Billion People. Reach him at mark@7bpeople.com.

Rolf Elmér is CEO of Avail Intelligence. Reach him at rolf.elmer@avail.net.

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14 CUSTOMER STRATEGIES DMNews • E-Commerce Guide 2008

For e-commerce, it’s about the steak — not the sizzle

What you need to know about rich applications

By Michael Masse he Web marketing department challenges the operations department to a softball game, but operations wins soundly on the big day and vows to spread the word. The next morning, a corporate wide e-mail proudly proclaims: “Web marketing has concluded a fantastically successful softball season with only one loss. Operations was not so fortunate, having had only only win.”

Unfortunately, this distorted reality and superficial analysis is often customary for Web marketers. Superficial analysis aggregates campaigns, relies on averages, coalesces brand and non-brand paid search sales, and allows existing customers the same weight as new customers — an ambiguous approach that conceals wasteful expense and sugar-coats otherwise sour results.

Aggregates and averages are Michael Masse the great deceivers — winners Potpourri Group cloak losers and campaigns are destined to mediocrity. By evolving to disciplined and contribution-focused analysis, losing campaigns can be quickly identified and halted and budgets can be redistributed to harvest and optimize winners.

Online marketing opportunities abound, but attention should be directed only to those that create sustainable contribution. It’s imperative to understand the maximum allowable spend to acquire a new customer based on the financial landscape (P&L) of the business. What contribution do marketing campaigns require to cover the variable costs, pay for overhead and meet profitability goals?

Without an answer there’s no real reason to have a marketing budget. It’s imperative that all marketing personnel understand the financial model of the business and incorporate contribution goals in planning and verification of campaign success.

At the heart of any good campaign analysis is contribution per order (CPO). This metric accounts for variations in average order value, gross margin, response rate, conversion, and advertising costs and clearly reveals the net financial impact. There are variations of CPO, and it can be represented as a dollar amount or percentage, but typically it’s either contribution to overhead and profit (percent of each order contributed to overhead and profits, on a per order basis); or contribution to overhead, marketing, and profit (percent of each order contributed to overhead, marketing and profits, on a per order basis) Once it is nailed down, move on to retention analysis and lifetime value.

The traditional “four ‘P’s” of marketing are product, price, place and promotion; but what about profitability? It’s time to get beyond visits, clicks, and page views and be accountable for profit. Develop contribution-focused goals and reap the rewards and respect from intellectual analysis, accountability and a focus on net contribution.

By David Bernstein he ability to balance the corporate goals with the demands of the customer will ultimately determine the success of an e-commerce site. The quality of the user experience, site performance and overall cost/benefit for the online merchant are often the difference between a sale and abandoned cart. Web technologies, such as rich Internet applications (RIAs), have a direct impact on these issues and can be used to create a user-centric site design that can support an optimal user interaction that can contribute to more unique visitors, more clicks per session and enhanced customer loyalty.

RIA technologies, including HTML, DHTML, Adobe Flash/ Flex and AJAX, have their own individual benefits and drawbacks in a company’s online strategy. When evaluating what technologies to use, companies must understand their customer base’s expectations in order to make design choices that will deliver the expected value. While some merchants can get away with employing only a single RIA technology, most companies’ choose to leverage strategic mixture of these tools.

Companies most often use HTML-based approaches for commoditized products or services. Amazon.com, for example, uses text driven product descriptions and customer reviews to enable quick page downloads to quickly navigate customers through a simple checkout process. There is simDavid Bernstein ply no need for the company Sapient to devote time and resources to rich media, as it is highly unlikely to motivate a customer to purchase an item they previously weren’t looking for.

SonyStyle.com, on the other hand, uses Adobe Flash on key landing pages to reinforce its brand, advertise products and enable product page customization and personalization. Companies with specialized products tend to focus more on brand building and product discovery, and have greater success when using highly interactive and responsive interfaces to engage customers.

Finally, application designers today are using AJAX to offer creative responsive and interactive experiences. SonyStyle.com uses AJAX to speed up the payment process and reduce cart abandonment by refreshing billing information without having to reload the customer’s browser window during the checkout process.

Successful online retailers choose RIA technologies based on a combination of business, marketing, technical and customercentric objectives. An optimal combination of these tools allows businesses to leverage the benefits of each technology to create an efficient and rich user experience for customers and boost online sales without experiencing any of their limitations.

Michael Masse is VP of e-commerce at Potpourri Group. Reach him at mmasse@potpourrigroup.com.

David Bernstein is VP at Sapient. Reach him at dlber@sapient.com.

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DMNews • E-Commerce Guide 2008 CONVERSION 15

Conversion conversion Page 15

Avoiding the ‘one and done’ consumer trap, by Graeme Grant

Page 16

Begin with the end in mind to improve cart conversion,

by Pete Olson Quick conversion tips to overcome a bleak forecast,

by Lisa Wehr

Page 174

Five tips for using coupons to ensure Mom’s loyalty,

by Angela Khan Looking at the real value in using coupons as a tool, by Akin Arikan

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our Web site might look fantastic. You might be driving lots of visitors to your home page or targeted landing pages. But if you’re not converting enough visitors into paying customers, your ecommerce strategy has failed. The following articles focus on how to take Web site visitors from browsing casually to making a purchase.

Avoiding the ‘one and done’ consumer trap By graeme grant ne may believe this or not, but when consumers shop online for a specific item, they typically only go to one or two sites before making a purchase. As a retail marketing executive, you spend a tremendous amount of time and money on your search initiative to get people to visit your site. But if they don’t like what they see, they’ll leave immediately to visit your competitor’s site. It’s what we refer to as “one and done” — and it’s a problem plaguing the industry.

In order to bring a customer Graeme Grant along the entire Allurent purchase path – from browsing to buying – the shopping experience need always be compelling. Research has proven that consumer expectations for their online shopping experience are rising rapidly and retailers need to meet, if not exceed, these expectations.

There are three essential elements the marketers should keep in mind in order to avoid the “one and done” retail trap.

The first step is to entice your customers the minute they arrive at your site. What are you offering on your home page that will grab a shopper’s attention long enough for him or her to become engaged with your site, rather than allowing this shopper to simply click the back button on his/her browser?

How do you draw visitors into shopping your site? At Borders.com, for example, the home page offers a signature shopping experience — the Magic Shelf — and Amazon just launched

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its new Windowshop experience. Both are great examples of unique experiences that are designed to beckon to the shopper.

Once you’ve enticed shoppers with an online shopping experience that is unique to your store, the next step is to engage them in a selection process that will allow them to determine “the right choice for me.”

Configurators are great engagement tools, too — from the new phone and calling plan selector at Alltel Wireless to Timberland’s boot configurator to the Teamwork Athletic Apparel’s sports uniform creator. Features such as “Quick View” let customers quickly browse many products in a category, getting succinct product information that makes it easier to make a decision.

Finally, it’s time to execute. You’ve worked hard to bring the customer through the steps to reach the final decision-making and checkout process on your site. Now, the key is to make the final steps in the purchasing path as easy for the customer as possible.

Your goal should be to enable your customers to do things on your site easily. Allow them to view their cart during the duration of the shopping process, to edit items directly within the cart and even to checkout within one single page, rather than clicking through multiple steps and pages. It’s amazing how these advanced shopping tools can speed up or eliminate some of the “chores” that customers have endured over the years when buying things online, and can enable the retailer to execute the sale.

So, when it comes to avoiding the “one and done” trap, marketers should always remember the three E’s of online commerce – entice, engage and execute.

Graeme Grant is the COO at Allurent. Reach him at ggrant@allurent.com.

16 CONVERSION DMNews • E-Commerce Guide 2008

Begin with the end in mind to improve cart conversion

Quick conversion tips to overcome a bleak forecast

By pete olson Research firm eMarketer notes that nearly 59% of online shoppers abandon a shopping cart transaction. Marketing Sherpa pegs it as 52%. All signs point to a tremendous problem and a missed opportunity for retailers.

So what can marketers do? For starters, merge marketing and IT efforts. Marketing brings the customer voice and a shopper’s perspective. IT delivers on the mechanics of the transaction.

Second, marketers bring a testing mindset to the table. Pay-perclick ad copy alternatives or trying new e-mail content are two examples of this concept. Marketers constantly seek new and better ways to convince visitors to click and move through the online commerce funnel.

Apply this mindset to the cart. Test its creative elements, including flow, language and design to unlock the potential of conversion rate improvements. Together, marketing and IT can deliver gains in this difficult economic climate.

The cart is no longer off limPete Olson its. It should be the focal point Amadesa for the marketer because a 15% lift in cart conversion rates delivers a 15% improvement to top-line revenue. That’s a big bang for the buck. A 15% e-mail click-through rate lift, however, does not result in a 15% improvement in total revenue across the site.

Start with the cart — 2CheckOut.com did. A leading online commerce solution provider with more than 6,000 online merchants using its syndicated shopping cart, 2CheckOut grew annual revenue by more than $10 million on a 5% lift in conversion rates by starting at the cart and taking a more scientific approach.

The company avoided oversimplified approaches to shopping cart optimization, like adjusting button placements, colors, exit points and other variables with isolated testing, and took a fivestep, data-driven approach to shopping cart optimization.

■■Create several shopping cart experiences from the ground up; maintain the existing experience as the “control” cart.

■■Direct segments of visitors into the different shopping cart environments.

■■Track the performance of each, based on actual consumer action — not speculation.

■■Pare down the original set of test carts to the most effective options; test further.

■■Once a winner emerges, replace the control cart with the new shopping cart experience.

Only with an optimized shopping cart experience in place should marketers conduct A/B or multivariate testing on their cart. There’s no sense tweaking a fundamentally flawed experience for tiny improvements.

By lisa wehr ou’ve got a great product that people want. All forecasts for the holiday shopping season point to online sales, so you set up a Web site and your product is immediately available to the public. When traffic doesn’t flood your site, you set up a strategic search marketing campaign. Still, sales aren’t quite what you anticipated.

Why? There’s no denying that the economy will play a role in the revenue gained from this year’s holiday shopping season. But are you doing all that you can to maximize online sales, or are you working against yourself? Are visitors converting to purchasers, or leaving before they buy? Usability is a critical factor in the success of your online campaigns. Here are five quick tips for usability and conversion improvement, because the economy isn’t the only reason why people aren’t buying.

Checkout More sales are lost at checkout than at any single spot on a Web site. Obviously, if it isn’t easy to make a purchase, a customer most likely won’t make one. Take a look at the amount of traffic that arrives at your checkout page and leaves without buying anything. If the percentage of abandoned shopping carts is over 30% of the visitors to the page, you’ve got a problem that could be costing you tens of thousands of dollars.

Consistency If you’re spending money by advertising online to promote a discount on your hottest item, make sure you give your clients a Lisa Wehr fast, clear way to cash in. Ads Oneupweb should click through to a landing page reflecting the offer, and the discount should be clearly applied at checkout. Think about it: How many times have you watched people leave items they thought were on sale at the checkout counter? It’s even easier for a shopper to abandon a purchase online.

Customer reviews It’s simply human nature to feel uneasy about making a purchase sight unseen, especially if it’s a highticket item. Satisfy the curiosity of even the most cautious of buyers with real testimonials from previous purchasers.

Security Is your site worthy of your customers’ valued personal information? Be certain to display prominently all of your security icons, privacy and use policies, and a physical address and phone number for your business.

Compatibility Although Firefox cornered the market in September of 2008, with 42% of browser market share, what about the other 58% of Web browsing? If your Web site doesn’t display or function correctly across multiple browsers, your company is cheating itself out of significant sales.

Pete Olson is VP, product management at Amadesa. Reach him at polson@ amadesa.com.

Lisa Wehr is CEO and founder of Oneupweb. Reach her at lisa@ oneupweb.com.

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DMNews • E-Commerce Guide 2008 CONVERSION 17

Five tips for using coupons to ensure Mom’s loyalty

Looking at the real value in using coupons as a tool

By angela khan ost of us know that when it comes to coupons, moms are the queens of collecting and using them. But with more moms now online, retailers should take note that digital coupons are fast replacing the Sunday morning newspaper insert. If there is money to be saved, especially in this economy, bet that moms will seek out ways to save on the grocery or winter clothes bill.

In fact, in a survey by ExactTarget across different demographics, 88% of moms are willing to use personalized e-mail offers in-store, if given the opportunity.

So what can retailers do to best optimize this fact about moms?

Using this best-practices tactical checklist, here’s how retailers can leverage the Internet and loyalty programs to build strong campaigns that target moms of all generations. A successful, multichannel loyalty program should achieve three goals: increase shopper frequency; increase overall lifetime value of a shopper; and build trust and advocacy with that shopper.

Here are five tips for creating successful coupon campaigns that are targeted for moms.

Create Identify and design either a predefined exclusive offer, such as a discount to reward members on a particular day or for a volume-based offer. For volume-based offers, identify any limitations in promotional budgets, as this will determine the number of offers that can be given away.

Target Identify the audience clearly, and make your offer relevant and timely to their prior purchase patterns. Define a key performance indicator for measuring success, like convertAngela Khan ing 10% of subscribers into ExactTarget multichannel buyers.

Deliver Nearly 81% of the moms ExactTarget surveyed check their e-mail daily. Make subject lines and offers relevant to the individual shopper’s needs and wants. Determine if this should be based on season, number of children the mom has in school, the age of those children and other behavioral patterns that have been tracked online over an established period of time.

Track Tie a specific revenue goal to the e-mail campaign and track those dollars back to redemption reports. Reports should be based on a unique subscriber key, and on key geographical store locations.

Manage While tracking the purchase behavior of customers over time, the goal should be to increase shopping frequency, increase total lifetime value and increase brand and store loyalty.

By akin arikan ews flash: Times are tough for online commerce companies and retailers in trying to attract and retain customers, as we move into what Standard and Poor’s predicts to be “the most difficult holiday season in memory.” Given our fiscal situation, it appears crucial that retailers develop strategies to reach customers in multichannel environments, and measure the results and effectiveness of their campaigns.

Because of this recent belttightening across America’s households, many consultants now urge marketers to use coupons to track customer preferences and spending, and to measure online-to-offline conversion rates.

According to a Scarborough Akin Arikan Research measure of American Unica Corporation consumer behavior, 11% of households get coupons online — a number that has increased 83% since 2005. Scarborough provides the percentage of households using grocery coupons broken down by channel and location within the US — overall usage is up from New York (33%) to Seattle (23%).

Of those households using coupons, 11% typically obtain them online. With New York as an example, 11% of the aforementioned 33% of households are going online for their grocery store coupons, meaning that a maximum of 3.6% of New York households are estimated to be using grocery store coupons online.

Is this enough to be top of mind for online retailers who want to push fence-sitting prospects over the edge to purchase?

While the percentage of consumers regularly using coupons is small, there are benefits to looking at this niche. Understanding that there are some undeniable factors that could keep a coupon campaign flat, marketers should still consider the following when deciding whether to implement a coupon program.

■■Coupon use is on the rise across the US, so users will likely occupy more of your base in the future.

■■For specific promotions or products, the percentage of coupon users can be much higher and worthwhile. It depends on the value of the offer and how prominently it is presented.

■■From a measurement perspective, it is unclear without further research whether coupon clippers’ behaviors are representative of non-coupon users’ behavior.

■■Coupons represent an effective way to target customers with timely and relevant personalized offers based on past behavior.

Such personalization of promotional offers may hold the biggest secret of unlocking value from a coupon strategy.

Angela Khan is product marketing manager for ExactTarget. Reach her at akhan@exacttarget.com.

Akin Arikan is senior segment manager for Internet marketing at Unica Corporation. Reach him at aarikan@unica.com.

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18 GAME-CHANGERS DMNews • E-Commerce Guide 2008

Game-Changers GAME-CHANGERS Page 18

How Apple’s iPhone affects online retail, by James Driscoll

Page 19

Social shopping: Is this a Tupperware party, or what?

by Denise Zimmerman

Page 20

Turn mobile commerce from a novelty to a strategy,

by Bill Mirabito The new metrics that really matter in e-commerce,

by Jonathan Levitt

Page 21

Site search and SEO hold the keys to e-commerce,

by Shaun Ryan Product recommendations help ensure customer loyalty

By Lori Trahan

Page 22

How to use social shopping as a key e-commerce driver

by Davi Ellis Add punch and power with voice enablement

by John Hart

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onsumers are constantly on the lookout for new, rich e-commerce shopping experiences, and the bevy of tools and technologies available today require marketers to understand the impact of wireless and social media. This section focuses on topics such as mobile commerce optimization, social shopping sites and site search.

How Apple’s iPhone affects online retail By james driscoll he time to start thinking about mobile commerce has arrived. Consider this: The Apple iPhone will be a hot gift item this holiday season. It is the fastest-selling mobile device since the Motorola Razor. Data usage by iPhone users dwarfs that of other handsets.

Nearly 95% of iPhone customers regularly surf the Web. This is clearly an audience that is predisposed to online shopping. What does this mean for online retailers and their mobile commerce efforts?

It’s a perfect storm of mobile broadband availability, a shift in mobile customer behavior and the availability of the first mobile user interface (UI) capable of delivering the PC-like user experience online shoppers have come to know and love.

Within the next year, we will see a wave of e-commerce James Driscoll companies Demandware both experimenting with and, given the right strategy, experiencing early success in this space. The touch screen UI for the iPhone and similar mobile devices will be exploited to deliver exciting and interactive mobile experiences that are on par with, and at times even better than, the desktop. This combination of convenience and user experience will be essential in leading the way to a new era of mobile commerce.

As with Web-based commerce, the success or failure of mobile commerce initiatives will

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rest heavily on the look, feel and operational capabilities of mobile storefronts. But with a seemingly infinite variety of devices on the market, it is virtually impossible in this early stage of the market to design a UI that offers a consistent and pleasurable experience on each and every model. This brings us to our first mobile commerce tip.

Design for a specific device Consider which handset caters to your desired demographic, and design your mobile UI to its exact specifications. By focusing on one device, your mobile commerce storefront will be picture-perfect each and every time it is displayed.

Now that you’ve decided which phone works best for you, its time to refine your display.

Minimize clutter Determine what your audience needs to know now, and intensify that information with clear, bold fonts and highresolution graphics.

Personalize your content With limited space, it is imperative that the content you present to your mobile customer is customized to their unique preferences and behavior. Allow users to establish preferred settings, alerts and “watch lists” to foster an intimate knowledge exchange and drive ROI. Simplify payment and store locator One or two-click payment options will greatly reduce the number of abandoned mobile shopping carts; easy-to-find store locators and “contact us” details reduce frustration for mobile users looking for quick and dirty information.

LBS and multimedia Whenever possible, take advantage of location-based services (LBS) and multimedia capabilities, requesting a call to action to receive time-specific or locationspecific discounts and promotional items.

As with all new initiatives, your mobile commerce efforts should enhance all your selling channels, from e-commerce and catalog to bricks and mortar.

James Driscoll is the VP of marketing at Demandware.

Reach him at jdriscoll@demandware.com.

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DMNews • E-Commerce Guide 2008 GAME-CHANGERS 19

Social shopping: Is this a Tupperware party, or what?

By denise zimmerman n a recent Nielsen survey of Internet users in 47 markets, 78% cited consumer recommendations as the most credible form of advertising. E-commerce sites are evolving to meet that specific consumer need.

Social shopping moves beyond product reviews to engage consumers in active conversations around specific products and brands.

It may be peer-to-peer, or review sites and forums, or vertical sites that encourage word-of-mouth. Social networks like Facebook monetize this social fabric by incorporating the Denise Zimmerman actions and opinions of a user’s NetPlus Marketing friend group.

Like Tupperware parties of yore, social shopping sites pool consumers into unique forums to discuss common purchasing decisions. Social shopping scales

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powerful offline sales drivers — word of mouth and socialization — to facilitate buyer interaction.

Sites like Stylehive, Kaboodle and CrowdStorm offer an opportunity to connect brands to their audiences by integrating chat within a shopping community. Stylehive provides individual pages that house users and bookmarks, with a chat feature for members. Brand-owned, site-side shopping communities are growing, mostly in the teen apparel market, encouraging customers to create and share outfits and advice, and build a community around the brand, to drive brand loyalty. By its nature, social shopping impacts a number of sales drivers, including brand awareness, purchase consideration and maybe even intent, as 71% of online shoppers measured by Forrester read reviews.

As the social aspect of shopping is finally gaining a voice online, older forms of marketing and advertising are losing theirs. Consumers have a clear understanding not only of how they want to make purchasing decisions online, but who they want to guide them in making these decisions. With the grim holiday season sales forecasts in mind and the challenged success rates of traditional advertising and marketing models, it becomes even more imperative for e-commerce marketers to ramp up efforts to engage customers in a social shopping forum.

Denise Zimmerman is president and CSO of NetPlus Marketing. Reach her at dz@netplusmarketing.com.

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DMNews • E-Commerce Guide 2008 GAME-CHAN

20 GAME-CHANGERS DMNews • E-Commerce Guide 2008

Turn mobile commerce from a novelty to a strategy

The new metrics that really matter in e-commerce

By bill mirabito ith consumer confidence at an all-time low, expectations for holiday sales are in the tank. Capital budgets for technology are sure to take a hit as retailers tighten up resources.

One potential strategy that has been overlooked is mobile commerce. A few years ago when mobile technology was less advanced, retailers tried deploying interactive kiosks or “PCs for shoppers” without success – benefits were tough to rationalize and consumers weren’t interested.

Today, merchants understand that in-store technology works best when making discreet tasks, such as finding a certain item or signing up for a promotion, easier for the consumer. To help retailers bridge the gap between the store and the Web, there are a whopping 226 million mobile phones in use today, a quarter of whose subscribers use SMS text messaging each month.

Why does SMS matter to mobile commerce? Unlike PCs, phones are equipped with a mix of unique networks, operating systems and browsers. The user experience is different from one device to another. SMS is designed to bridge all these differences.

Most Web-enabled phones can send commands via text message to receive a short reply and hyperlinks to further details.

There are a number of ways a mobile phone can be used as a shopper’s “kiosk on the hip.”

Consumers can register themselves for loyalty programs and incentives, and easily find product information, ratings and reviews online via their phone just by entering the SKU. If items are out of stock, Bill Mirabito shoppers can enter SKUs and B2C Partners retailers can deliver stock status and location info to consumers on their phones. Other simple information, such as phone numbers, store hours and driving directions, can also be provided.

And why not enable teenagers to create and share a wish list while browsing the store for their friends and family to “check out” – figuratively and literally? This would alleviate many parents’ holiday shopping headaches and enable retailers to take social shopping to a new level.

Finally, it’s obvious that bargain hunters are on the rise in a sour economy. By mapping in-store browsing activity to a customer profile, promotions can be better targeted. Retailers can send each visitor in-store offers tailored just for them.

The sheer novelty of mobile transactions should not be a retailer’s only goal. The strategy should rather be to deepen affinity for the brand and to help consumers at every stage of purchase.

Retailers must begin to plan now to make the most of every dollar in 2009 — and a practical investment in mobile commerce can certainly help drive cross-channel growth.

By Jonathan levitt -commerce fundamentally is a data-driven channel, and the current boom in online sales has resulted in terabytes of data covering all aspects of online customer behavior. But without a context for determining what these clicks actually mean, most online marketers are still no closer to truly understanding their customers than they were back in the days of server log parsing. The result is that, ultimately, most online marketing decisions are still based on incomplete information and speculation, instead of on a complete grasp of a company’s customer needs and goals.

Don’t get me wrong. There are reams of useful data out there being pumped out by Web analytics vendors, ad servers or online audience measurement Jonathan Levitt firms every day. But all of these iPerceptions approaches conceal fundamental flaws — they do not account for real feedback from actual visitors in self-initiated situations. Page views, time on site, hard conversion rates — all of these are useful metrics in an e-commerce environment, but they fall painfully short of exposing the hearts and minds of real visitors.

Happily, there is a better way forward instead of merely using dry, impersonal metrics. Surveying real visitors to understand primary intent and to measure task completion is a great place to start. Not all visitors are on site for the same reason, so you can segment them by purpose to find out how well your site is catering to each distinct visitor need, and you can use verbatim pain points to help you fix critical problems standing in the way of successful visits and higher revenue.

Remember, however, that not all useful site outcomes, even in an e-commerce channel, can be measured in terms of dollars and cents. Although the current financial crisis has put added emphasis on generating ROI in the here and now, shepherding visitors to the completion of their tasks can have a valuable impact on your long-term brand proposition. In a recent iPerceptions study of more than 10,000 real online customers, visitors who completed their primary purposes were twice as likely to make a repeat visit, while 67% of visitors who completed their primary purposes reported enhanced brand opinion (vs. only 18% for those who did not). Additionally, 60% reported a higher future likelihood of purchasing, either online or offline (vs. only 14% for those who did not).

In today’s recessionary climate, businesses on the hunt for more revenue from their e-commerce channel can’t afford to pass up these critical insights on their customers. Visitor intent, task completion and open-ended insights can be wonderful allies in the battle to understand your visitors.

Bill Mirabito is founder and principal analyst of B2C Partners. Reach him at bmirabito@b2cpartners.com.

Jonathan Levitt is VP of marketing at iPerceptions. Reach him at jlevitt@

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DMNews • E-Commerce Guide 2008 GAME-CHANGERS 21

Site search and SEO hold the keys to e-commerce

Product recommendations help ensure customer loyalty

By shaun ryan roller-coaster economy certainly may dampen the enthusiasm of online shoppers — so how will you capture the attention of a cautious shopping public? Site search and search engine optimization (SEO) will most likely be 2009’s secret sauce — the ingredients that mark the difference between successful e-commerce companies and those that struggle to gain footing.

SLI System’s recent survey, Trends in E-commerce, which polled more than 300 retailers, found that 90% of online retailers rank site search, SEO and e-mail marketing as the most important e-commerce technologies for promoting online business.

The challenge for retailers is to ensure their search spending drives the most benefit from each dollar spent. So look at how your current e-commerce search is attracting buyers to your site, and keeping them coming back. Here are a few search tips.

Make site search results relevant If people can’t find what they’re looking for, they’ll move to your competitors — and possibly never come back. Search your site yourself. Does your site search deliver results that are relevant? Does it provide results for those “long-tail” terms that aren’t as commonly used but have higher conversion rates?

Put keyword data to work Have your products show up on the first pages of search engine results by creating landing pages related to a consumer’s likely search terms.

People may not know the brand names of your products, so optimize your site for the terms your visitors use — those they enter in the search box on Shaun Ryan your site.

SLI Systems Create a product finder A finder is easy to deploy and helps shoppers find products and lets them narrow their search by criteria they choose.

Optimize for high traffic Make sure your site’s infrastructure can cope with heavy traffic spikes (e.g., special promotions, during the holidays).

Site search and SEO remain effective tools. With shrinking marketing budgets, you must ensure that you’re taking advantage of all the resources and strategies available to you to lower costs, while improving your results.

By Lori Trahan onsumers rein in spending during an economic downturn, but online retailers can weather the storm by raising their game — and revenues — with personalized online merchandizing. With individually tailored product recommendations, retailers increase their chances of converting online comparison shoppers into buyers, and can re-engage loyal shoppers once they leave their stores.

Product recommendations that are based on consumer browsing and purchasing behavior are valuable to consumers when presented as cross-sells on search results, product detail, and shopping cart pages, as well as next-sells in e-mail and direct mail campaigns. Retailers should select a solution that can handle all scenarios, including when information on the user or product is abundant, as well as when there is limited data, such as for new or anonymous users, and new or long-tail catalog items.

Traditional solutions can be costly to deploy and manage, requiring merchandisers to create and maintain rule sets that govern recommendations according to their knowledge of the product lines and the customer segments. Today, online retailers can benefit from solutions that take an algorithmic approach to recommendations, automatically determining the optimal products for each user without the need to manually manage and monitor cumbersome rules.

A pay-for-performance software-as-a-service (SaaS) offering is the most cost-effective model. It eliminates the need for infrastructure investment, enabling rapid integration and automatic upgrades — allowing retailers to pay only as they realize the economic value of the solution.

An effective recommendation solution provides easyto-use controls that balance merchandising expertise with the automation benefits of an algorithmic approach. The best recommendation solutions can Lori Trahan optimize results depending on ChoiceStream evolving business goals, such as order volume, gross margin, total revenue, or inventory turnover.

Retailers should inform customers that they are receiving personalized product recommendations, as nearly 80% of consumers have expressed interest in receiving them. Those that meet this need and provide their customers with an enhanced shopping experience will enjoy brand loyalty.

An effective solution allows retailers to easily measure performance. Retailers should have ready access to reports to see the value the system is providing, which campaigns are producing the best results, and the results of changes to rules, placement, or creative assets associated with recommendations.

Shaun Ryan is CEO of SLI Systems. Reach him at at shaun.ryan@ sli-systems.com.

Lori Trahan is executive director of marketing, at ChoiceStream. Reach her at ltrahan@choicestream.com.

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22 GAME-CHANGERS DMNews • E-Commerce Guide 2008

How to use social shopping as a key e-commerce driver

Add punch and power with voice enablement

By Davi Ellis n the fast-paced world of fashion e-commerce, there is a constant struggle for market share and the coveted position of being the go-to place to shop online. With more and more players entering the landscape every day, retailers must constantly create intriguing editorial content in a voice that is respected and trusted, which can be expensive, challenging and often difficult to achieve. Enter social shopping — one of the only ways to create a lasting emotional connection via fresh and interesting content with an upfront investment that will continue to pay for itself many fold over time. The phenomenon has already proven to have draw, staying power and revenue-generating potential in the online world, with many highly successful sites such as Shopstyle, Stylehive and Thisnext.

Research has shown that the most powerful influencers are peers — not gurus, editors or even leading fashion designers.

Maybe it’s because peers have nothing to peddle, no premeditations and no agenda. Their perceived gain is also a boon to the site, as they showcase their affinity, become part of a branded community and recommend products to purchase.

While there has been much buzz around social shopping, and rightly so, there has been surprisingly little implementation on actual e-commerce sites, attesting to the challenges of creating an interactive environment that can be moderated to Davi Ellis stay true to site or brand poCreate the Group sitioning. There are, however, varying levels of implementation that can be used to enhance the e-commerce experience without investing in an all-out community.

On a more basic level, customizing content displayed based on popularity is a simple, yet effective way for people to see what others are shopping for. This creates a desire for products that might not otherwise be considered, all while lending credibility to the purchase. On a more robust level, users can play an editorial role, deciding on what products work well together to create unique looks, adding them to a library that can be browsed by all. Each look can then be purchased in its entirety, translating directly into a substantial purchase and increased average basket size. The many additional benefits, aside from generating significant revenue, include higher levels of repeat traffic, site stickiness, brand affinity and brand advocacy.

The key is not to mimic or even replicate social networking phenomena or social shopping sites, but rather to build a consumer-centric application offering only those features and functionalities that serve to enhance the shopping experience and truly make it stand out from the crowd.

By John Hart oday’s economy presents marketers with the dilemma of budget cuts but still the demand and increased pressure to deliver quantifiable returns. There are, however new marketing ideas that deliver high bang-for-the-buck services that attract new customers without increasing costs.

By deploying hosted voice and rich media services, marketers can create immediate customer contact while reducing campaign costs. By leveraging the power of hosted Voice 2.0 technologies, marketers can drive lead generation and increased sales revenues. Furthermore, hosted services allow marketers to significantly reduce the upfront cost of integrating Voice 2.0 — an argument any CFO would appreciate.

Features like click-to-call and voice blast provide a powerful, yet easy call to action for everything from direct marketing campaigns to online advertising. With a simple click, prospects can initiate a phone call with sales professionals for more information or to make a purchase. These connections simultaneously deliver clear metrics to refine future campaigns.

Voice connections can be applied to a significant number of enterprise applications including e-commerce applications, beginning with a click-to-call button available everywhere on the site. Rich media capabilities, such as voiceblast, videoblast, or even integrated SMS can expand online campaign possibilities, particularly when integrated with marketing applications and databases. Political campaigns can even use Web John Hart sites to offer voters direct ways Intelepeer to connect with candidates.

Marketers should identify vendors and service providers who can offer hosted rich media services that can easily be integrated with existing Web sites or services. The vendor or service provider should be able to offer widgets, applets, and plugins that easily adapt to existing Web services providing these features. Marketers who have more advanced Web development capabilities should ensure the hosted platform provides application development interfaces that allow them to quickly integrate the rich media functionality with their branded Web interface.

While marketing is often viewed as a cost center in tough times, marketing professionals can make the case that campaigns can yield greater ROI, maintain revenues, and increase market share. By integrating the power of Voice and rich media into marketing, they not only drive increased leads and revenue, but also gain a competitive edge in tough economic times.

Davi Ellis is director of business development at Create the Group. Reach her at delis@createthegroup.com.

John Hart is SVP of business development at Intelepeer. Reach him at jhart@intelepeer.com.

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