7 Habits Of Successful Ecommerce Companies
This edition published 2004 Imano plc 198 High Holborn London WC1V 7BD United Kingdom Telephone: 020 7632 6930 Email: experts@imano.com www.imano.com Copyright © 2004 by Imano plc “The right of Ravi Damani, Chetan Damani & Neil Sait to be identified as authors of this work has been asserted by them in accordance with the Copyright, Designs and Patents Act 1988.” All rights reserved. No part of this book may be reproduced, stored in a retrieval system or transmitted, in any form or by any means (electronic, mechanical, photocopying, recording or otherwise) without the prior written permission of the right holders. No responsibility can be accepted by the publisher for action taken as a result of information contained in this book. Readers should take specific advice when dealing with specific situations. A CIP catalogue record for this book is available from the British Library. ISBN 0-9549055-1-2
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7 habits of successful ecommerce companies
Table of contents
Contents
5
Introduction
11
Habit 1: Conduct ROI Marketing
15
Search Engine Marketing and Optimisation Paid Search Engine Listings AďŹƒliate Programmes Online Advertising Email Marketing Viral Marketing Social Networks 5 Things to do now
17 20 22 24 25 26 27 28
Habit 2: Measure, Analyse and Optimise
31
Pathways Customer Lifetime Value Funnel Analysis Customer Satisfaction Campaign Analysis Order Value Operational Metrics Revenue Per Pixel Business Intelligence Predictive Analysis Key Performance Indicators 5 Things to do now
33 34 35 37 37 39 40 40 41 41 42 43
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7 habits of successful ecommerce companies
Habit 3: Value the Customer Relationship
45
Customer Focus Personalisation Multi-Channel Grow Customer Lifetime Value Customers in Control Understand who your Customers are 5 Things to do now
47 48 49 50 51 51 52
Habit 4: Go beyond the brand
55
Get in Touch with your Senses Partner with the Customer Stand for Something Be Transparent and Open Understand that the Customer has the Power Evolve Value the Future Brand 5 things to do now
57 58 58 59 59 60 60 61
Habit 5: Eectively convert site visitors to customers
63
Home Page Navigation Product Mapping Scenario Analysis Product Information Product Photographs Promotions and Oers
65 66 68 70 71 71 72
Table of contents
7
Order Process Help Accessibility 5 Things to do now
73 74 74 75
Habit 6: Help Customers Help Themselves
79
Stock Availability Customers Help Customers Real Time Customer Service Order Information Returns Email Agents 5 Things to do now
81 82 83 84 86 87 88
Habit 7: Invest in Technology
91
Security Availability Functionality Integration Ecommerce Platforms
92 94 95 96 97
References
103
Introduction
Introduction
11
Introduction With annual ecommerce growth at double digits and new global emerging markets, ecommerce expansion has become a focus for many businesses. As companies have grown they have discovered through an approach of trial and error what works for them and what fails. We understand that there is no onesize-fits-all strategy but rather a structured approach. We have taken our 8 years experience working with some of the largest multi-national ecommerce businesses to some of the smallest operations, from global brands to husband and wife stores our cumulative knowledge has identified seven complimentary habits that have produced the greatest growth and profitability increases for these organisations. We believe that focusing on these seven complimentary habits will not only help organisations improve revenue and profitability but will increase market share and enable these companies to leverage their success in the face of adverse competition. We have found that there is no single technology, strategy or marketing plan that differentiates the successful from the not so successful, rather a set of habits that compliment each other. The seven habits are: Habit 1: Conduct ROI marketing Habit 2: Measure, analyse and optimise Habit 3: Value the customer relationship
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7 habits of successful ecommerce companies
Habit 4: Go beyond the brand Habit 5: Effectively convert site visitors to customers Habit 6: Help customers help themselves Habit 7: Invest in technology We hope you enjoy reading this book but more importantly we hope that it makes a difference to the success of your organisation. We know you won’t be disappointed.
Habit 1 Conduct ROI Marketing
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7 habits of successful ecommerce companies
Conduct ROI Marketing Any successful business needs to market its products and services to grow online. The most successful ecommerce sites use detailed measurement to ensure that they are focusing on the profitable campaigns and media. This allows a company to not be burdened by annual budgets, rather focus on Return on Investment (ROI) marketing to ensure that the best campaigns recruit customers at a cost that is profitable based on the customer’s lifetime value. This focus on ROI marketing enables successful ecommerce companies to grow in a structured manner and calculate the value generated from their advertising investment. We believe that many of the dot com failures would have probably succeeded if they had structured their organisations around a longer term 10 year plan rather than their short term “land grab” strategies. By no means do successful ecommerce companies focus purely on online campaigns, they have integrated their online with their offline campaigns including TV, Radio, Press and Billboard. Offline campaigns offer a lower degree of measurement, for instance an online advertising banner can tell you if someone viewed it; and even if they didn’t actually interact with it or click on it, report on whether a particular customer actually purchased, whilst measurement of a comparative billboard campaign isn’t able to tell exactly which customers viewed it and then made a purchase. This higher degree of measurement for online campaigns lets successful ecommerce companies get
Habit 1: Conduct ROI marketing
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the maximum return from their marketing investment. In this chapter, we will cover major online marketing channels and how successful ecommerce companies are achieving significant results through these channels by investing in ROI marketing.
Search Engine Marketing and Optimisation Search engine marketing falls into two broad groups paid for listings (covered in the next paragraph) and organic search engine marketing. The term “organic” is often used to differentiate between the paid for listing variety. There are also two main types of engines: indexers that build results by sending a virtual robot around the Internet pulling in pages and secondly, directories that are often generated and managed by humans like Yahoo!, the Open Directory Project (dmoz.org) and About.com, as well as smaller directories. Often regarded as a ‘black art’ search engine marketing is about being at the top of the non-paid for listings that form the core part of the search result for a particular set of keywords. As this forms the largest part of the search engine and has no advertising cost associated with viewing or clicking a link, it tends to offer the greatest ROI and therefore the greatest focus for ecommerce companies. The majority of users rarely go past the first page of search results and tend to focus on the top few and hence these are the most sought after positions. To
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7 habits of successful ecommerce companies
consistently achieve top positions on search engines requires what we have called alignment. This strategy is about aligning yourself with the goal of a search engine. That goal is to provide the most accurate and reliable information that their search customer is after. Understanding this goal enables successful ecommerce companies to reach the allusive top positions on search engines on a long term basis and ensures a significant amount of traffic irrespective of updates to search or ranking algorithms. The most successful ecommerce companies align themselves with the goal of the search engine, namely to provide the most accurate and reliable information for the search customer. For a search engine to achieve its goal it needs to trawl through as much of the Internet as it can and use complex algorithms to calculate the highest relevance of any page to a particular search keyword. These algorithms although complex are no match for the human capability to understand the relevance of a piece of information. The highest ranked search results have two elements in common, firstly, the details of every page and secondly, the relationship between each one of the pages. In looking at the details of each page, a search engine looks at: • The propensity of a particular keyword in a page – generally more is better. • The location of the keyword and its adjacency to other keywords.
Habit 1: Conduct ROI marketing
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• The title of the page – accurate titles with the keyword repeated appear higher. • The format of the keyword – headings are better. • The keyword in the URL – is the keyword in the domain name i.e. makeup in www.makeup.com and is it in the path www.makeup.com/makeup/makeup1.htm scores well for makeup. • The amount of traffic the page gets. • The global location of the page – is it the region that the user is searching. • Date/Time – the newer the better. • The type of page – static pages score higher than dynamic database driven pages. Look at the relationship between each one of the pages: • Number of sites that link to this page – more is better as is the relevancy of the link. • The keywords and images that link to this page on other sites – keywords in the links that match the content of the page are better. • The traffic, content and structure of the pages that link to this page – the higher their ranking the better.
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Newer search engines are now taking into account user preferences and the number of people that click a particular link to increase their search accuracy. This alignment strategy ensures that successful ecommerce sites are consistently ranked the highest they also don’t suffer when the search engines change their algorithms, as they often do. In particular, search engines have become smart to those hackers, specialists and search engine spammers who are artificially trying to boost their ratings, hence as soon as they spot such tactics, changes are made and offenders are removed from the engines listings. Last year, Google made sweeping changes and imposed an over optimisation penalty to combat such activity. These changes led to many of the offenders being dropped from their previous high rankings in Google's listings and consequently had to go through the entire process in order to get listed again.
Paid Search Engine Listings Paid for search engine listings are the fastest growing segment in online marketing. Paid for listings are content sensitive and appear based on the keywords that a user types into their search engine or the particular content on the page. It involves advertisers bidding on how much they are willing to spend on a click for a specific keyword or groups of keywords. This bid price
Habit 1: Conduct ROI marketing
21
is often combined with the popularity of listings to determine positions. With the majority of people starting their online purchase through a search engine, this paid for listing service has been a major revenue booster for the search companies that have been looking for a revenue stream since they were established. For instance, Google generates over 90% of its revenue through paid listings4 and another key player Overture was purchased by the legendry search engine Yahoo!. Each paid listing consists of the keywords that it should appear for, a title that appears as a heading for the search and a short description text that appears under the heading and of course the amount of money that the company generating the advert is willing to pay for each click. All paid for listings are billed on a cost per click basis (CPC) therefore have a direct relationship with the number of people clicking the listing and purchasing at the site. The most popular searched upon keywords tend to have the highest bids and cost the most per click, for instance ‘travel’. Whilst groups of keywords like ‘travel to Barbados’ would have a lower number of companies bidding on it and therefore a lower cost per click. The paid listing tools not only suggest popular terms to bid on but also provide the number of people that typed in that particular set of keywords into the search engine, giving companies an understanding of the popular search terms. The bidding systems that the major search engine companies provide are sophisticated tools that automatically alter bids based on the maximum that you are willing to pay. Hence, a company that wants to achieve number one position for the lowest
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7 habits of successful ecommerce companies
cost need only enter the maximum that they are willing to bid and have the system automatically alter the bid so that it remains at just one pence above their number two competitor. Successful ecommerce companies bid on a wide range of keywords that are specific to every product they sell therefore reducing their average click costs. Successful companies often upload huge sets of keywords and often include actual prices of products to ensure the best conversion from click-through to order. With paid for listing campaigns consisting purely of text, successful companies test and write the most compelling copy to ensure the highest click conversion. Above all, by utilising all of the tracking data that is available, successful ecommerce companies never forget to focus on a clear ROI.
Affiliate Programmes Affiliate marketing is where an ecommerce site recruits a group of partners that promote and send potential customers to a particular site. These affiliates get paid a percentage of the revenue spend per customer that they send to the site. Affiliate programmes have been tremendously successful due to the direct relationship between the revenue that is made by the company and the percentage paid to the affiliates. Affiliate commissions often vary based on the margin a shop makes and are either percentages e.g. 2.5% on electronics or 6% on books or flat fees
Habit 1: Conduct ROI marketing
23
per customer order. Successful programmes often have a scaling fee structure for example 5% on first 50 orders, 6% 50-100 orders, 7% on 100 orders or more per month. Originally, conceived by Amazon the affiliate programme has evolved from simple links and banners to advanced web services that allow partners to have virtual shops with all the product data and functionality of the partner shop on their own site. For instance, a personal web site on photography could include products and prices on the latest cameras. Programmes often have restrictions on where a partner can advertise to prevent devaluation of the offer and increased advertising costs. For instance, companies often prevent affiliates from spending on paid for search advertising due to the bidding required on these adverts increasing costs for everyone. Whilst Amazon has its own affiliate programme, many companies have opted to use third party affiliate companies that provide the tools for tracking the sale and managing the payments to partners. In return, they take an ‘override’ fee which is an additional percentage on the sale on top of the percentage to pay the affiliate themselves. Whilst affiliate programmes are popular, successful ecommerce companies use ROI marketing to make sure that they are providing the maximum incentive to affiliates whilst still achieving maximum profitability.
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7 habits of successful ecommerce companies
Online Advertising Popular sites with a fair amount of traffic often run advertising to generate revenue. Previously, these advertisements were often simple graphics and text but have now evolved into interactive full screen, TV like advertisements. Online advertisers have had difficulty in working with this new media due to its interactive nature. This interactive media is unlike TV, Radio and Press where there is no audience interaction with the advert. Whilst early campaigns with flashing graphics and text achieved good click-throughs, the nature of the advertising industry to provide set graphic sizes for commoditization quickly led do declining click rates and falling advertisement recall. The more people saw of these adverts, the more they sub-consciously ignored them leading to a term called ‘banner blindness’. Online advertising is traditionally booked on a Cost per Thousand (CPM) and this is the cost for showing one thousand impressions of the banner. The latest fully interactive and full screen advertisements often overlay the screen as the page loads, lasting for around ten seconds. These campaigns use animation and interactivity to get the brand message across. In our experience, whilst these overlays cost a few times more, their flexibility for communication provides substantial improvements in click-through rates and recall, of often over 100 times traditional banners. Key metrics are not only the amount of clicks but the post impression revenue, which is the number of users who viewed the advertisement and did
Habit 1: Conduct ROI marketing
25
not click it but later made a purchase on the web site. Online advertising advocates say that post impression revenues are four times greater than post click revenue.
Email Marketing Communicating with email has become one of the most significant forms of communication. It is used at work and play to help people keep in touch. The nature of email means that there are little in terms of cost for sending out emails anywhere in the world. This plus has also led to the downside of it being abused as a form of mass communication to send out bogus and non-personalised campaigns that have been called spam. The inclusion of graphics into emails through the use of html emails has increased its significance to the marketer. Successful ecommerce companies realise the nature of email and use this to send personal offers and campaigns to their customers. Many companies are generating over 50% of their revenues through email marketing. Great email campaigns are concise, consistent with existing marketing campaigns, are personalised, have the customers name in the email and subject line, offer a text version for those that cannot see html within their email systems and have a call to action. Whilst security concerns have restricted the usage of advance animations and TV like advertisements this is unlikely to remain in the long term, further increasing the power of email. Issues that face email marketers are spam filters that use
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a rating system to mark the likelihood of an item being spam. These systems are becoming further advanced and learning for themselves. New systems being implemented by ISPs will charge to guarantee delivery of an email preventing the spammer from misuse of the system. This can only help with the success of legitimate email campaigns for successful ecommerce sites.
Viral Marketing The allusive viral marketing campaign is one that reaches huge groups of people in a similar way to the spread of a virus. Any campaign can be viral, if it has a great offer or is sufficiently entertaining that people want to share it with their friends. Videos, games and promotional offers are passed from person to person, with the ultimate campaigns reaching every Internet user in the world. The significant issue with a viral campaign is its ability to generate bottom line results. Many campaigns are successful in building databases of users. For instance, a popular holiday company sends out a competition invitation for a free holiday with three of your friends and you have to enter your friend’s details to qualify. This forwards an entry to your friends who can also enter their friends, creating a virus like spread for the promotion. One of the issues for online marketers is that of privacy and data protection regulations to protect the data that is collected on consumers. Successful ecommerce companies create
Habit 1: Conduct ROI marketing
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compelling campaigns that are passed to friends on a regular basis.
Social Networks A new wave of social networking services represents a potentially massive new online marketing trend, on the business to business side of the industry users of these new services are already bragging about the size of their networks. Although the industry is still unclear about how the providers will make money these do oer a unique approach to assist people to connect, communicate and build communities across a variety of interests. Examples include Friendster, Blogger (owned by Google), Tribe and Linkedin, with many of the sites still in beta mode and by all accounts reasonably well funded by VCs, the business models are more than likely going to depend upon subscription fees and advertising revenues. Keeping an eye on the take-up of this new trend now as it transitions from free to fee should be a good indication of its long-term viability. At the very least the providers have enabled us to have an up-to-date address book on our desktops to keep track of those friends, colleagues and contacts that are constantly on the move, on the bigger scale however if these new social networking groups take o they could deďŹ nitely become one of the next mass marketing platforms in the online world.
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5 Things to do now 1. Implement analysis tools to measure the effectiveness of your marketing spend. 2. Align your site with search engines by being the definitive source of information for the products you sell. 3. Invest in regular and personalised email campaigns that show you really care about the customer. 4. Create a partnering affiliate strategy that makes sure you and your affiliates generate revenue from their work. 5. Make every communication compelling; if you don’t have anything to say don’t say it.
Habit 2 Measure, Analyse and Optimise
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7 habits of successful ecommerce companies
Measure, Analyse and Optimise Measurement of business data is the habit at the core of successful ecommerce businesses. In the retail environment, it is diďŹƒcult to determine whether a customer had been in the store before or if they had looked at 3 or 20 items before they made their purchasing decision or perhaps more importantly, did they visit another store before. With the Internet this has all changed a wealth of accurate data is accessible from measurement of visitor patterns, customer usage, operational capability and even competitor information to give a full 360 degree view of the organisation and its surrounding eco-system. Within this chapter, you will see that this data is often compiled into clear graphs and charts that over time, illustrate successful and problematic areas. Companies deďŹ ne key performance indicators (KPI) which are combined measurements or ratios that are in line with the organisations overall growth and performance strategy. A typical ecommerce KPI would be site visitor to customer conversion ratio or number of clicks to place an order. Executive dashboards combine a set of these KPIs to provide a level of intelligence that can be used to view the status of the organisation and make enlightened business decisions. The tools and technology exist for organisations large and small to implement these measurements to gain a real insight into their business and customers. Metrics are essential for successful ecommerce companies. What are you waiting for, make measurement your habit.
Habit 2: Measure, Analyse and Optimise
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Pathways From opening their browser a typical user takes a number of steps online, right through to when they close their browser and switch off their computer. Within these steps a user may make a purchase or research a product that they may buy later. This is a pathway and provides valuable insights into the process that a typical user takes in making his or her purchasing decision. A user may start with a search engine, an online advert, hyperlink, email, type in a web site address or use a bookmark from their browser. Analysis of these pathways gives a great deal of insight into visitors and the process that they go through to making their purchasing decision. You can see the keywords that a customer types to get their search results, or how many other sites a customer looks at before and after yours. This information gives insight into how price sensitive potential customers are. In particular, airlines can clearly see the competitor airlines for flights to every location. On a particular site this detailed information shows how the customer accomplishes their purchase and what kind of visitors are coming to the site. It is almost like putting a camera, microphone and tracking device on to a customer as he or she wanders around a shopping mall. Using this pathway information successful ecommerce sites address problems and fine tune their promotions, message and offerings to ensure that they have the highest conversion and lowest visitor drop-off.
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7 habits of successful ecommerce companies
Customer Lifetime Value Customer lifetime value is the revenue that a customer brings to an organisation over their lifetime, this includes the value that the customer brings to the organisation not just through the orders they place but also through positive recommendations. Successful ecommerce businesses don’t just rely on average values they segment their customers into groups defining the least and most valuable customers. Companies use segmentation to calculate the lifetime value of customers that have been gained from various different sources as well as the amount of money to spend on customer retention to gain the maximum return. There are four primary customer segments based on whether customer acquisition or retention costs are high or low. Firstly, the casual customers that have low acquisition costs and low retention costs. These customers tend to make up the majority of customers in the company’s database as there is often a bias to acquire these customers due to their lower acquisition costs. The second group are those that have high acquisition costs and low retention costs, these low maintenance customers tend to be the most profitable. The third have low acquisition costs and high retention costs these are high maintenance customers. Finally, the fourth segment are those with high acquisition costs and high maintenance costs. Looking at the typical customer segmentation there is a distinct difference between the amount of customers in each segment and the profits that the segment
Habit 2: Measure, Analyse and Optimise
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High Maintenance Customers
Royal Customers
Casual Customers
Low Maintenance Customers
Low
Retention Cost
High
brings to the business.1 Successful companies realise that after a certain point any increased spending on customer retention results in diminishing returns.
(largest segment)
Low
Acquisition Cost
(tend to be most profitable)
High
Funnel Analysis Funnel analysis looks at the eectiveness of a particular process. For a given goal, such as making a purchase, a typical site visitor needs to go through a number of steps from selecting their product, adding it to their basket, creating a customer account
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and finally entering their payment details. Funnel analysis looks at each of these steps and at the number of visitors that progress through to the next stage of the process. At every stage, a certain number of people will dropout and not continue to the next stage. Funnel analysis is particularly useful where there are a large number of steps to complete a process like online insurance applications. This analysis lets successful ecommerce businesses easily identify any major areas which are causing customer dropout and to look at ways in which to minimise dropout. A wider funnel shows a greater flow just like you would expect with a real funnel. Successful ecommerce businesses look at ways to improve the funnel flow, with simpler and fewer steps. In a typical ecommerce site removing just one step can make a significant difference in the bottom line results. You can see this in action on Amazon’s new single page checkout for returning customers. By removing the large number of steps to placing a repeat order Amazon has improved their funnel flow. 3648 (100%) 1342 (76.98%) 448 (64.58%)
Visit Site Viewed Product Added to Basket
287 (52.31%)
Login Page
153 (45.72%)
Register Page
114 (37.82%) 53 (24.75%) 24 (17.57%)
Payment Order Confirmation Returned to Site
Habit 2: Measure, Analyse and Optimise
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Customer Satisfaction Successful ecommerce sites keep a track of how satisfied their customers are. This is often a difficult metric to measure. Asking the customers if they are satisfied doesn’t have a strong correlation with their real satisfaction. After a two year long study it was concluded that the strongest indicator for a customer’s satisfaction is whether they would recommend the company to a friend. 2Due to human nature we are careful to only recommend organisations that we really are truly happy with and trust. Many ecommerce companies have taken this on board with a simple post order online questionnaire and have this as one of their KPIs.
Campaign Analysis Successful ecommerce companies have tried many different campaigns online and offline. Detailed campaign analysis allows them to determine the marketing methods that provide the best return on investment. With so many permutations when a typical campaign is run on TV, billboards, press, PR and online there needs to be a methodology for determining the strongest performing media and the strongest performing campaign. Each campaign can be analysed for immediate revenue, profitability, customer acquisition by customer profile, customer retention and effectiveness. A matrix style detailed in the diagram below
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7 habits of successful ecommerce companies
enables a company to see the relative performance for the media relative to costs as well as the success of a particular campaign over another. Campaign Analysis Campaign Channel Cost Reach Cost per Thousand Clicks % Clicks Order % Orders Avg Order Value Revenue Profit per Order Total Profit Customers Acquired Customer Lifetime Value ROI Initial ROI Longterm
Free Gift Email £2,790 175,438 £16 4.8 8421 3.8 320 £89 £28,563 £45 £14,282 305
Free Gift Banner £36,210 1,254,877 £29 2.6 32627 2.7 881 £97 £85,635 £49 £42,817 845
3 for 2 Offers Banner £42,151 1,745,214 £24 2.2 38395 2.9 1113 £102 £113,683 £51 £56,841 1091
£59,893
£180,713
£245,060
1024% 2147%
236% 499%
270% 581%
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Order Value A graph on the number of orders for every order value will give you a graph like the one below. You can clearly see the mode average at the £34 mark. In this scenario, taking an incentive like free shipping or a free gift at the £50 mark will help push the average order value to over £50. This will increase the average revenue for every order by £16 and in turn at 50% margin, profitability by £8 per order. For a site that takes 4000 orders a month this would translate to a £32,000 increase in monthly profits. Another incentive at the £100 mark would also help push the average order value up. A word of caution though too many offers and you may overwhelm the customer with choice and end-up not selling anything.
Number of Orders
Average Order Value Graph
10
20
30
40
50
Order Value
60
70
80
90
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7 habits of successful ecommerce companies
Operational Metrics Metrics built around the operational nature of the business show a real dimension in illustrating the priorities of a company. Organisations with customer at their heart will furiously measure on-time deliveries, average ship time, product availability, support requests and cancelled orders. Organisations that have been able to get these basic numbers right have seen a dierence in their bottom line. For instance, companies that increased their ontime delivery to over 90% saw their customer churn rates reduce by 50%.
Revenue Per Pixel In retail environments, you have a common metric that is revenue per square foot. This metric helps retailers calculate the most successful areas of the store and allow them to change their layout based upon successful areas. The same methodology can be used online. With revenue per square pixel you can calculate the most successful product areas, brands, colours, categories, promotions and merchandise. Have you looked at the bar underneath the tabs on Amazon, this is one of the top clicked areas on Amazon. Successful ecommerce sites know the buttons, banners and links with the highest conversion and use this information to focus on the best performing promotions.
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Business Intelligence Using the latest data mining and analysis techniques, successful companies can get a real insight into their business. A typical representation can consists of a grid or a graph where different parameters like customer location and payment type can be plotted against each other in real-time. The real advantage of business intelligence tools are their ability to add and remove parameters from both of the axis and drill into data to see its constituents. A business intelligence tool has the advantage that it can be used to analyse data without a specific goal, so that patterns can be uncovered in the underlying data.
Predictive Analysis The latest statistical predictive tools use a set of data to create a model that determines the strongest relationship between collected information and a particular goal. For instance, taking a company’s customer data through a statistical modelling tool to determine which piece of customer information collected would be the most likely indicator of the most profitable customer. For instance, Otto Versand, the largest mail order company in the world can predict with an 80% accuracy rate whether an individual will respond to a particular mailing. In, 2003, this knowledge grew Crate & Barrel, its US subsidiary by 12% to $865
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million and its joint venture with Spanish retailer Zara by 70% in a difficult retail climate.1
Key Performance Indicators With every organisation having different goals and strategies it becomes a complex task to look at each of the thousands of measurements and bring meaning to them. Where as one company may be looking to have maximum market penetration another may be looking to achieve maximum profitability. In line with an organisation’s goals it can create a group of KPIs that let the company and specific people easily see how they are performing to pre-specified target. For example, companies that want to minimise on-going support requests would use a KPI of orders to support requests. A company that wants to maximise profits would use a ratio of Revenue to Costs. A company that wanted the greatest online market penetration would combine metrics of unique visitors to online population. KPIs can be any number of combined values or ratios that help the organisation understand and benchmark its success. Together with the creation of these KPIs specific digital dashboards can be created with the important KPIs for each department from marketing to sales on a single easy to visualise screen. With the most important KPI being a simple fuel gauge that can show how on, above or below target all of your KPIs are.
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5 Things to do now 1. Create your own KPIs based on your corporate goals. 2. What is your revenue per pixel? What are your best performing links and buttons? 3. Analyse your customer’s pathways. These will give a major insight into your customers and their needs. 4. Measure your order funnel. Clear up any drop-out issues and invest in strategies to widen your funnel flow. 5. Generate your order value graph and push it out to improve your profitability.
Habit 3 Value the Customer Relationship
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7 habits of successful ecommerce companies
Value the Customer Relationship Successful ecommerce companies aim to own the customer relationship, for the life of the customer. These companies have a strong customer focus and everything from marketing to call centre support is orientated around the customer. Not only are they logging every customer communication, every enquiry, every purchase and every support request to provide a complete 360 degree view of the customer but they truly value the customer relationship and want to give the customer a delightful experience. They use the captured information to better predict their customer’s needs and improve their customer lifetime value. Successful ecommerce companies realise that their customers want to interact with them through multiple channels whether it is online, retail, post, mobile, email or telephone. A customer may place an order online, check something by email and call to confirm delivery date and they expect the same high level of service and customer focus irrespective of channel. This customer focus and a level of constant improvement raises the expectations of all customers and leaves behind those companies that are not constantly improving their customer service levels. In practice, we have seen that this focus on the customer relationship is a key habit of successful ecommerce sites. We have specifically avoided the abbreviation CRM as it causes confusion and often means a different set of processes or software,
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based on who you talk to.
Customer Focus Many organisations claim to be customer focused. They say that they have systems and technology that helps them understand and respond to the customer’s needs. They say they care about the customer relationship. But none of these systems focus on the real way to enhance the operation of a company based on the customer. Successful ecommerce companies know that customer focus is about delighting the customer through every interaction from finding a product, placing an order, receiving delivery to making a customer support request. Every interaction is stored and audited to improve customer satisfaction. Many different departments and disparate systems in an organisation, often lead to a fragmented view of the customer interaction. For example, does the purchasing department look at the searches their customers make for products they do not currently sell? Is the ecommerce site orientated around customer goals? Does fulfilment know how important it is for a customer to receive their delivery on a particular date? Does the support department know all the alternatives the customer looked at before choosing this particular product and how the level of support was marketed in the initial advertisement? Recently established ecommerce companies have the advantage of not having to worry about
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legacy processes and systems, which have to be transferred to this customer centric approach but this does not preclude them from having the customer’s interest at their core.
Personalisation Personalisation is about really caring about what the customer wants, and not about a piece of marketing that has your customer’s name on it. With all the data that is stored, successful ecommerce sites go further than just welcoming back the customer with their name. How many companies ask you to fill in questionnaires and surveys, yet don’t use that information when they communicate with you. Banner views, to product searches and items added to the basket are stored for every customer so it is a wonder that many ecommerce sites still have the same few products on the homepage when they know so much about the consumer. Using predictive statistical modelling successful ecommerce companies also know the correlation between the success of an offer and a particular customer’s profile and can with a high level of accuracy predict the likelihood of a particular customer opting for an offer. Successful ecommerce sites ask questions and then use that information to personalise every communication. They use the site they came from to personalise the promotions just for that user. If you visit Amazon, you will notice the ‘My Store’ tab and if you have bought from them you’ll see your name on the tab
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Paul’s store. This is real personalisation and customer focus. A complete store made just for you. As the typical consumer gets inundated with options and variety it is clear that they’re not after five hundred stores, rather just one store that has everything that he or she wants to buy.
Multi-Channel With multi-channel customers spending 20 to 30 per cent more money on average than single channel customers it is clear that successful companies are responding to the customer demand for even more channel choice.3 They offer their employees a single view of the customer whether on or offline but when it comes to additional, potentially expensive services they need to understand their value to the customer before making commitments. For instance, how important is it to a customer to return an online order in retail stores? With as many as two-thirds of offline purchases being researched online before being purchased offline, this channel transparency is something companies that value the customer relationship continually invest in.
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Grow Customer Lifetime Value Successful ecommerce companies know the customer lifetime value for all of their customer segments, by every source and by every product range. They have three primary methods to increase the lifetime value of their customers. Firstly, to get customers to spend more with you on each purchase. Secondly, to get the customers to spend more often with you. Thirdly, to stay as your customers for longer. Successful companies have leveraged their customer relationships, selling whole new ranges of products to the same customers, with Amazon now selling a whole host of products from its initial range of books. Increase customer lifetime value by selling additional product ranges £900
Books
£2400 CDs
£1200 £4600
DVDs
£700
Electrical Homewares
£1800 £500 Customer Lifetime Value
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Customers in Control The best ecommerce companies have put their customers in control. They not only let their customers add content to the site through their own reviews, photos, videos, shopping lists and groups, they also provide support to other customers through forums. With successful sites letting customers manage their complete relationship through their self service site. These customers are the biggest advocates of the site.
Understand who your Customers are To get a better understanding of their customers successful ecommerce companies use data warehousing. This is where multiple sources of data from dierent parts of the organisation are integrated into a single repository. This provides easy access to valuable business intelligence information about your customers that would otherwise not be available. Data warehousing is not a new habit that is exclusive to ecommerce, the ďŹ rst organisations to draw real value from a data warehouse were retail superstores such as Tesco and Wal Mart who use it to understand the demographic segmentation of their customers such as spending power and culture based on their postcodes. Using demographic data provided by third parties such as CACI with e-types and Experian with Mosaic, organisations are able segment and
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proďŹ le who their customers really are as if they knew each one individually. This enables an organisation to better plan their marketing and product development strategies.
5 Things to do now 1. Put the customer at the core of your organisation by creating a centralised view of your customer interactions. 2. Show customers you care by making sure that every communication is personal and rewarding. 3. In a multi-channel environment make sure that every employee whether in retail or online support has an access to the centralised view of the customer. 4. Use your strong customer relationships to sell in additional products and oerings. 5. Raise the benchmark on customer experience.
Habit 4 Go beyond the brand
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Go Beyond the Brand Tell me, why you buy one product rather than another. Is it the price? Is it value for money? Is it because it is fashionable? Does it have a better smell, taste, feel, look or sound? Do you like the logo? Is the packaging nice? Have you bought something that you liked from this brand before? There are many reasons for making one choice over another but with this proliferation of choices; customers are focusing on the brands that they love. Customers seem to have a sense for the brands they love even though they aren’t always able to rationally deďŹ ne why? It could be that they had that particular cereal when they were a kid or that they love the design, but this connection goes beyond mere product attributes. It is based on a feeling of friendship, loyalty and love for that brand. These consumers become the strongest advocates and tell everyone, from friends, families, colleagues practically anyone they can ďŹ nd. Take Amazon.com which has thousands of purchasers, recruited as practical employees, writing detailed reviews and ratings on their products. These customers are partners and give the successful ecommerce companies the ability to take their organisation into adjacent product areas. Successful ecommerce companies go beyond their brand and actively develop this emotional connection with their customers.
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Get in Touch with your Senses Sight. Touch. Hearing. Smell. Taste. These are the five senses that successful ecommerce brands use to engage with their consumers. It is more than just strong logos; successful brands touch the consumer through more of the senses. Certain brands have an easier time of this than others. Where food products obviously reach all the senses, online brands have a difficulty in reaching the taste, hearing and smell, although it is not impossible. At a subliminal level, maybe you imagine the rain forest when you hear Amazon or chickens when you use the financial services company Egg? The typical consumer gets inundated with brands and it becomes even harder for brands to differentiate themselves. If you can build this connection through all the senses you can have an emotional connection that is so strong that you no longer have to even put the name to the advert for customers to recognise it. You can see this with the latest adverts for the Economist where the style and red colour clearly identify the publication and FCUK again where the font and style identify the fashion retailer. It has become the time of the anti-logo. Have you tried removing your logo from your website? Can people still recognise whose site it is?
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Partner with the Customer The separation between consumers and suppliers is blurring. Successful organisations are taking their consumers as partners. They let the consumer work with the company. The consumer takes the role of advocate or partner selling the organisation to his peers. This level of partnership is what all successful companies need. The consumer has the power of choice when spending their hard earned money so why not give them the power to choose the products you sell. Are your consumers proud to be associated with your company? Would they wear your logo on a T-Shirt?
Stand for Something Be the cheapest, the most fun, the most reliable, the fastest or the best value for money but above all else stand for something. Let the consumer know what you stand for and stick with it. Hagen Daz is known for oering luxurious ice creams. Virgin is known for being the consumer’s champion. Wal Mart is known for oering the cheapest prices. These companies understand what they stand for even though not everyone agrees with it. What do you stand for?
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Be Transparent and Open Honesty, trust, fairness and reliability are fundamental for the success of ecommerce businesses. The days when it was OK to fool the customer with fake offers and unrepresentative photographs are over. The consumer may be fooled once but not twice and with profitability resting on retaining the customer over a long period, half truths are not part of the game. If there is a problem with your product, delivery, quality or reliability be open and your customers will respect you for it. Good news travels fast bad news even faster!
Understand that the Customer has the Power Everyone knows the story of how Coca-cola, to counter the Pepsi taste challenge made the drastic measure of changing the taste of Coca-cola. In blind taste tests the new Coca-cola tasted better but consumers just didn’t care they wanted the Coca-cola that they grew up with. This story demonstrates the power of the consumer. The consumer has the power and the brand owner is often regarded as the brand steward. Customers are the biggest advocates of your brand. Who wouldn’t want to have customers as loyal as Apple’s? These loyal customers can be regarded as
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fans that are better than any salesperson or advertisement. They are the biggest advocates relentlessly selling the benefits of the product to everyone they meet.
Evolve The World changes. Where one day something may be fashionable and have loyal followers, the next, the tide has turned to the next new fad. Whether it is the cyclical nature of the market, advancements in technology or changes in popular culture it is important for brands to understand that they will need constant updating to retain that emotional connection with their customers. The changes in people’s attitude towards health have severely affected McDonalds’ fortunes in the last few years and where a great brand may take years to step up the ladder of awareness, it takes very little time for them to fall.
Value the Future Brand Companies that build this emotional connection with their customers realise that not only does this differentiate their organisation now, it builds value for the future. This future value, even though it doesn’t appear on the corporate balance sheet, is
Habit 4: Go beyond the brand
the company’s biggest asset.
5 things to do now 1. Talk to your customers and understand their emotional connection with your brand. 2. Understand that you are the brand steward, the customer owns the brand. 3. Stand for something, even if not everyone will like it. Your most valuable customers will love you for it. 4. Be open and transparent with your customers. Share your successes and failures. 5. Keep an eye on technology, popular culture and fashion trends to ensure your organisation and its values are evolving to meet the customer’s needs.
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Habit 5 Eectively convert site visitors to customers
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Effectively Convert Site Visitors to Customers The thought that goes into the development of a successful ecommerce site is clearly visible. The look, navigation, product information, promotions and order process enables successful sites to clearly differentiate themselves from their competitors. This focus on converting visitors to customers shows. The best sites achieve visitor to customer conversion rations in excess of 7% whilst the worst have conversions of lower than 1%. To judge the effectiveness of customer conversion four questions need to be answered: 1. How easy is it for the online shopper to find a product they want to buy? 2. When they find the product do they have enough information to make a buying decision? 3. What options are there to sell additional items to a customer? 4. Once they have decided to make a purchase, how easy is this process? Successful ecommerce sites use a process of defining typical scenarios for a customer on the site and then see how easily a customer can could achieve that goal. This scenario analysis allows them to optimise for the most common requests on the
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For instance, if a large proportion of site visitors are looking for a particular brand then a special shop could be created for that brand. Successful ecommerce sites build a relationship with the customer and understand that the customer interacts with the organisation using the ecommerce site as an interface. The best sites appreciate that there needs to be a real culture flowing through the organisation that has its sights set on helping consumers, this then filters through to the marketers, the developers and the designers. In this chapter, we look at everything from the layout of the homepage to accessibility allowing us to see how successful ecommerce sites effectively convert more site visitors to customers.
Home Page Often the first page a consumer will see is the home page of a site. The home page needs to make a lasting impact and it needs to set the mood for the rest of their experience as they navigate through the site. The best ecommerce sites all have the same common feel and follow these basic rules of home page design: • Make the homepage look like an ecommerce store. The user must know the minute they see the page that they are at an ecommerce store. It should show products and if possible prices.
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• The homepage is your most valuable piece of virtual real estate so use it to promote your best offer. • For returning consumers welcome them using their names and recommending products based on their previous visits. • Keep the page size small so that it downloads fast. The most common entry point is the home page and it can also be the highest exit point. If the page does not download with some content in the first 8 seconds you are likely to the lose the consumer. • The design of the homepage is vital, keep it clean and clear. This means using white space with a clear readable font. The images are also very important and any product images should be professionally photographed.
Navigation Once the consumer is convinced that the site is somewhere that they want to shop they need to be able to navigate easily through the site and find the products they are likely to purchase. It is also important to remember that online shoppers are still shoppers and they are not only looking for products but they can also be promoted to and if the right product is available they are likely to make a purchase. In terms of navigation, the customer must
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be able to get to any product within 3 clicks. There are 4 ways consumers will navigate to a particular product: 1. Via a link on a site or email. This is the easiest form of navigation and only involves one click 2. Via the search page, this is the retailer’s opportunity to help the consumer find a product they are likely to purchase. The search needs to work like a real search engine with more than a simple key word search. It should include misspelt words and also provide the closest matches. 3. Straight forward tree based navigation. This is where the online shopper uses the method provided on the ecommerce site to find a product. To make it easier for the customer the top ecommerce sites have multiple routes to find a product ensuring the customer has a better chance of finding what they are looking for. The best ecommerce sites also place top level navigation along the top bar, this has been made famous by Amazon’s tabs, and sub navigation menu down the side bar. 4. Using product maps. (described on the following page)
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Product Mapping The majority of sites are effective at utilising conventional navigation methods such as searching for a product or using a tree based navigation to allow consumers to find what they are looking for but these methods don’t allow you to manage the route through your site or allow cross selling or up selling of products. The best ecommerce sites use product mapping to help cross sell and up sell, helping the consumer to actually select the right product. Product Maps are navigational systems which link products together using content and product descriptions. Some examples of how Product Maps could be used would be related items on a product display page or a link next to an authors name to view all products written by the same author of a particular book. A Product Map is a representation of the relationship between any group of products A visual representation of a product map would allow you to view a relationship between any number of products using any combination of parameters. A typical example would be a site selling power tools that would show all drills capable of drilling 15MM holes in to steel or show all drills which are ergonomically designed. Integrating a product map on to an ecommerce site will add an additional navigation route through to a product and help increase sales by easily promoting cross selling and up selling. Amazon have utilised product maps to their fullest extent a look at a single product page will show links to 30 or 40 other products which are related either
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by buying patterns like ‘Customers who bought this product, also bought...’ or product groupings.
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Scenario Analysis An important form of analysis, used by leading ecommerce companies, to improve a site is to make some assumptions on the typical interactions a consumer will make when navigating through a site to complete a particular goal. Every consumer coming to an ecommerce site typically will have one of 3 goals: 1. Research a product or company before making a purchase. 2. Try to purchase a particular product or group of products. 3. Return to make a query about the purchase. Once you have a clear understanding of these goals and how they relate to your ecommerce site, you can map out some assumptions that highlight typical scenarios customers go through to achieve those goals. Some examples would be, to add an item to their shopping cart, contact the customer services department or ďŹ nd out where a current order is. Now that you know exactly what the typical consumer is trying to achieve on your ecommerce site you can optimise each scenario to make the process as easy as possible for the consumer. You can measure the improvements by plotting the time and success rates of the scenarios before and after alterations made to the site.
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Product Information Once the consumer has found the product they are likely to purchase the best ecommerce sites tend to make it as easy as possible for the purchase to be made. This is all about presentation and providing the consumer with the right tools to make a decision. The best of which are highlighted below: • Multiple product shots, as well as the ability to enlarge images and video, if possible. • One-click ordering using details already held in the database. • Customer ratings. • Customer reviews with videos and images of the product • Incentives to get the customer to let the retailer know they are interested in the product with the use of ‘email a friend’, ‘add to wish list’ and ‘add to your basket you can always remove it later’ links.
Product Photographs A great product photograph is going to make a difference in convincing a user to make a purchase. Presentation is everything. If there is one thing that an organisation must invest in when launching an ecommerce site, it is beautiful product photgraphs.
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Customers need to feel and touch a product to build some emotional attachment to it, this is what makes them buy the item even more than the price, and it’s the sheer desire of wanting that item that makes the consumer eventually purchase it. In the offline space, the product packaging and the product itself can achieve all of this, whilst in the online space it’s the representation of that product that is going to achieve the same result. The best ecommerce sites make an investment into getting all product images professionally shot with great lighting and if required in an environment that will improve the presentation of the product. For example a sofa, would be shot in a real living room or a lipstick shot on a pure white background.
Promotions and Offers The best way to get anyone to make a decision to buy something is to provide them with an offer they can not refuse. The best ecommerce sites use the following promotions and techniques to do this: • Offer great discounts on the products. This is the easiest and most popular way of getting customers to make a purchase but it is also squeezes margins and may not be the best way for the retailer to close the sale. • Provide 3 for 2 offers or buy one get one free offers to increase
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the likelihood of the consumer making more than one purchase. • Offer money back guarantees. Even though the distance selling law requires ecommerce sites to offer at least a 7 day cooling off period, sometimes promoting this can help the consumer make the decision to buy. • Great merchandising is also important, if the consumer is not happy with the product provide them with an easy option to find a similar product or easy access to a product of greater quality, thereby up selling the consumer. • The best ecommerce sites also provide special offers to loyal customers, this helps keep customers loyal and ensures that the customer is likely to return. • Generate a buzz around the product with statements such as ‘limited time offer’ or ‘only for the first 50 customers’. This can help boost sales for a particular period or product which is great for moving stock fast.
Order Process At this stage, the consumer has decided to order the product, The order process is the most likely time for the consumer to dropout. This is the main area of your ecommerce site that needs
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to be as simple a as possible, the less you have here the better. The best ecommerce sites will capture the minimum amount of data to accept the order and if the customer is returning their details should be remembered from the previous visits. The best ordering process is kept to one page and captures the minimum amount of data with clear and large buttons.
Help You can try to make your site as easy to use as possible but consumers will always need help and this needs to be as comprehensive as possible and easy to find. The more help that is available the less the requirement to answer queries via a customer support request and the greater the chance of closing the sale on the customers first visit. The best ecommerce sites know when users are going to require help and place the help text within that area so they are less than a click away.
Accessibility The Internet has a vast array of customers, varying from those in different countries speaking different languages to those customers that have accessibility requirements such as the blind
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or partially sighted. Making any ecommerce site accessible to these users not only makes good business sense but there are often legal requirements in many countries to do so. It is important to get a deep understanding of accessibility issues as doing so will help increase your sales and improve your relationship with that particular community. Highly successful ecommerce sites have translated their sites for every language, in every country in which they operate. They understand that each customer group is different and has different needs. They offer different versions of their site for the blind that reads out information, for the partially sighted that has larger fonts, for the colour blind that has high contrast colours and for the deaf where all audio is converted to text.
5 Things to do now 1. Conduct a simple survey observing 5 different users as they navigate through your site and ask for constructive feedback. You will be surprised at the information you find. 2. Take a look at the location of all your buttons and make sure that firstly they are larger than any other text on that page and secondly that they stand out. This is usually the simplest item that needs to be changed. 3. Implement a tracking tool so that you can see what users are
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actually doing on your site. This is simple to run and you can even monitor your conversion rates. 4. Consider introducing simple offers that require no technical updates to your site, such as buy one get one free or a free product with every order and measure the benefits to see if it makes a difference to your bottom line.
Habit 6 Help Customers Help Themselves
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Help Customers Help Themselves A quick look at the customer services area on any major ecommerce site will show you the investment a large ecommerce company makes on providing superior customer service to their users. The biggest failure of any ecommerce site comes when they stop answering emails in a timely manor, but the problem does not need to be solved by increasing customer support sta so that your organisation has enough resources to answer any number of questions. The answer comes by reducing the number of questions posed via email and the telephone so that sta can focus on improving processes and making the whole experience better for the customer. The way the best ecommerce sites have done this is by empowering the customer to answer their own questions using a rich set of online self help tools so that they are able to log on and get to the answers themselves. Customers want to be made to feel special. They want to be made to feel that they are your most important customer, so oering a personalised online service or an area for them on your site will turn a normal shopper into a loyal shopper who will shout about your services to everyone they know. Successful ecommerce sites have implemented interactive help systems where customers can ask questions and get answers in real-time. With the advent of the Internet came the advent of the megaphone that can be heard in every corner of the globe. There are review sites such as BizRate and Epinions which provide anyone who wants to the
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ability to voice their opinion on your ecommerce site, hundreds and thousands of users come to these sites. So it is important to remember every customer has the power to bring on board your next thousand customers and the power to take them away, so oer the best customer service you can as there is more at stake than simply the sale alone. Successful ecommerce sites make it a habit to help customers help themselves.
There is a limit to the amount of information you can make available online for any product or service, so naturally anyone purchasing online may have additional questions such as, how soft are the cushions on the red sofa you have on your site? Or will the shoes you have on your homepage still be available next year? ecommerce sites can not avoid these types of questions. A recent survey by Forester indicated that 50% of online shoppers have contacted an ecommerce site to ask questions about products before making a decision to buy the product.5 Whilst a recent Jupiter Survey showed that 46% of sites failed to answer email in less than ďŹ ve days or never responded at all.6
Stock Availability Even simple information such as how long an item takes to ship, the cost of shipping and how much of that particular item you
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have in stock is valuable to the online shopper when making a buying decision this can make the difference between gaining and losing the sale. A highly successful ecommerce site would make all their shipping and stock information transparent to the user including: • Number of items in stock. • Expected delivery time to the online shopper, if order placed now. • Alternative shipping times and methods if available. • If an item is out of stock when will it be back in stock, with the option to be notified by email/sms when item is back is stock. Again any questions which are not answered on the site will be directed to a dedicated shipping department and answered within 24 hours. A recent survey by Channel Intelligence stated that online shoppers deemed shipping rates, methods and information as the 4th most important factor when making a buying decision.7
Customers Help Customers There are many ways in which ecommerce organisations can help online shoppers, a highly successful ecommerce company would
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allow customers to help each other by offering functionality such as: • Discussion forums – to allow customers and clients to talk to each other about products. • Product reviews – to allow customers to read reviews created by other purchasers • Public wish lists – to allow users to find products of interest to other users. More and more successful ecommerce companies are looking for customers to be able to help each other, this builds on the community effect and creates the feeling of going into a real store and asking someone what they thought of a particular product.
Real Time Customer Service Real time customer service is providing a link on your site which enables a site user to speak directly with one of your customer service representatives. The majority of high traffic ecommerce sites have avoided offering real time customer support simply due to the number of requests online shoppers would make. They fear they would need an army of staff to manage such requests. However, using real time customer service is an option for certain sites for example if you are selling high value items such as furniture the site could use a real time tool that would
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be able to answer a customer’s queries on the spot. Another way of using real time customer support is by only offering it to loyal customers, these are customers who have either bought multiple times or hold an account with your organisation. Often underutilised call centre staff are perfect for online queries and can manage more than one online conversation at once.
Order Information As soon as an online shopper places an order they become a customer. Depending on the level of service they get until the order arrives they are likely to become either a loyal customer who recommends your ecommerce site or an unhappy customer who is likely to let everyone they know exactly what they think of the site they have just bought from. Highly successful ecommerce organisations want to avoid the volume of calls and emails sent from customers requesting information so they have tools and processes in place to manage this automatically. Usually, by providing a ‘My Account’ area on the site which details the customer’s records, all order details including the progress of orders and details of after-sales support. Typical requests which are catered for on the My Account area include:
Habit 6: Help customers help themselves
Customer Request
Self Service tools
Have you received my order? Order conďŹ rmation page, with order numbers, times and dates Order conďŹ rmation page detailing order and information on when the order will be shipped When will I receive my order? Detailed information on where the order is in the delivery process ConďŹ rmation email when an order has been dispatched The order is incorrect can I change it?
The ability to change or cancel orders until they are dispatched
The products received are incorrect or damaged, what do I do?
The ability to schedule a return online using a specially built tool that allows users to indicate the issue and select an appropriate time for a courier to collect/replace the incorrect item
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Returns One of the biggest logistical issues in any mail order or ecommerce company is the ability to manage returns and deal with incorrectly shipped orders. Highly successful ecommerce companies have unique processes that enable them to automate the majority of the tasks and only need a courier company to get involved to collect the items. Getting the returns process right is vital to ensure the smooth running of the whole organisation. If the returns process isn’t right it could start to utilise all of the organisations resources. The best ecommerce companies use online tools to automate the customer facing aspect of the returns process. An online application that allows the user to log on and register the return, signaling the courier company to pick up the item at the selected time. Once the item has been collected and delivered back to the warehouse, a dedicated department is able to deal with the returned item. Even in the returns process the customer will be kept informed at all times and the account area on the ecommerce site will keep track of the progress at all times. One thing common with all the major ecommerce sites is that they treat returns as integral part of the buying process.
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Email Agents Agent technology is a very simple concept and is being used throughout organisations to improve business intelligence knowledge and to keep abreast of changes happening within an organisation. Agents are basically a piece of software that can be set to do a number of tasks and report back to the user who triggered the agent. The most popular example of this on the Internet is the way we use search engines to find what we are looking for. The search engine agent trawls through its list of sites to locate the best sites related to the search. The same technology can be used to manage email based queries. Agent software can be used in any number of ways and utilising it to answer emails automatically can speed up response times from the usual 1-2 days to 15 minutes or less. For example, an agent can be set up to query the internal databases to find out what is holding up a particular delivery, the process would be very simple; first a ‘reading agent’ reads the email and picks out key words to understand the customers queries, once it understands the query it will trigger a ‘database agent’ to go and retrieve the data, once the cycle is complete a user would get a response. This is just one example for using agents, there are many possibilities and ecommerce companies utilising these in a proficient way can offer superior customer service to their online shoppers.
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5 Things to do now 1. Track the most popular service requests. How can you enable the customer to answer these requests themselves? 2. Reviews, shopping lists and forums help customers help each other. 3. Could your existing call centre staff be cost effectively deployed to provide live online help? 4. Returns process. Automated and handled online. 5. Is the information available to your employees beneficial to your customers? This is the exact exercise Federal Express went through before they started making tracking data available online to customers.
Habit 7 Invest in Technology
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Invest in Technology A key habit of successful ecommerce site is their investment in technology. These successful organisations use the best possible technology hardware and software to manage their operations. They integrate their systems. They provide the best on-site functionality and they use their technology to increase their competitiveness. On average, a UK household spends ÂŁ260 per year on their Internet connectivity this shows the public’s commitment to technology8 and they do not expect to see a message that the site is down for weekly maintenance. Technology is often the most invisible element of an ecommerce operation, yet is one of the most signiďŹ cant. In this chapter, we consider the security, site availability, integration and ecommerce platforms used by highly successful ecommerce companies.
Security One of the biggest hurdles facing ecommerce companies today is to get Internet users to start shopping online and calm their fears of credit card fraud. Internet users have two fears when shopping online. Firstly, they are worried they will be on a fraudulent site that has no intention of shipping them the products. Secondly, they are worried that if they do get the right goods that their details are not safe in the hands of the retailer. Successful ecommerce
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sites work hard to show that they are worthy of the customer’s trust. They implement a security policy that protects them from unauthorised access, by using the following: • A Firewall. A network tool that blocks unauthorised access to the site. • Intrusion Detection. A network tool that actively looks for unauthorised access. • Encryption. Sensitive information is encrypted and secured using multiple passwords • Security updates. Hardware and software is patched with the latest updates. • Encryption in transit. Data from the customer to the server is encrypted in transit. • Application Integrity. Tools that inform technology teams of any errors on the site at the same time as the customer experiences them. • Training. Ensures that everyone is trained to not disclose sensitive information however real the person asking the information appears to be. There are a number of new technologies that help combat credit card fraud, in particular this includes fraud detection services that use complex algorithms to detect and warn of card fraud. Visa and Mastercard have also launched their own fraud prevention
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methods such as Verified by Visa9 and Mastercard SecureCode10 that provide a fully trusted system between the customer, merchant and bank. These systems have the added advantage of offering full protection to merchants against credit card charge backs which occur when a customer reports that his or her card was incorrectly used.
Availability You can not make sales if your ecommerce site is unavailable and if it takes longer than 30 seconds to download it might as well be unavailable. The largest ecommerce companies in the world generate over 1,000 sales every hour and can have up to 10,000 customers on their site at any one time. They can not afford to be down for even 0.01% of the time, they need to be up 100%. An often used solution to high availability is to create a redundant environment. This is where there is at least two of everything from power grid supplies, air conditioning units, Internet connectivity, server hardware, databases and firewalls. To prevent issues in particular locations such as fires, the hosting equipment is spread across multiple global locations. This can be achieved with Load Balancers that transfer user requests to multiple server locations therefore even if one server fails or an Internet link goes down all the traffic is directed to the other server. This is also an ideal environment to ensure zero downtime when site enhancements
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are made. All the traffic is redirected to one server whilst the other is being upgraded. In addition, disaster recovery and backup strategies further ensure that any failures are rectified in a timely manner or better still, not noticed by the customer.
Functionality The best ecommerce organisations spend millions of pound every year improving their sites. There is a long list of the different types of functionality improvements that can be built into an ecommerce site. Each one of these differs in importance to the customer and provides a level of advantage over competitors. To offer the best user experience compared to any other site, the best ecommerce companies use bespoke development and flexible systems that will allow them to keep ahead of the game. This way they are able to implement their own processes without having to rely on the processes of the ecommerce developers. Each of the top 100 ecommerce sites on the Internet today have built their sites on a bespoke and highly flexible ecommerce platform. These companies extract more out of their existing technology investments and create innovative ways to improve the customer experience. The possibilities are endless. Successful ecommerce companies use technology as more than just a platform to provide a service, they think of it as a tool to provide them with real competitive advantage and they know that any long term advantage can only be gained by using technology to create
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innovations that will help boost sales. A typical example of this is utilising Macromedia Flash movies to improve ecommerce sales. Flash is a great tool for presenting a product and with the advent of streaming video in Flash even more is possible, such as the ability to provide links on products within a video that allow consumers to purchase that product.
Integration In order to have a smooth running ecommerce process it is a requirement to have an integrated site that runs through to the internal systems. Large ecommerce sites that deal with 10,000+ orders a day have invested in an integrated system to run the ecommerce site. The importance of this is obvious, every company wants to keep their sta overheads down to a minimum, if the organisation is taking as many as 10,000 orders a day then the less work they have to do to progress an order through the order process the better. The best ecommerce companies treat the whole ordering process through to returns handling as part of their ecommerce site. This way everything is automated and computerised and no integration is required. If organisations are looking to expand into ecommerce from another retail channel, this should be treated as an extension to existing systems rather than separate. A fully integrated system provides more than smooth processes, it provides management with the ability to
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bolt on analytics systems that will help draw out increased levels of profit from each section of the order process. Such analytics tools will give an overall picture of how the organisation is performing, not just how many sales are being achieved. Many successful ecommerce companies are focusing on their core capabilities whether that be marketing, distribution or delivering value from technology and outsourcing all the other activities. You can clearly see this with the number of companies that have moved their ecommerce operations to Amazon.
Ecommerce Platforms There are three primary choices open to organisations looking to select a suitable platform to run their ecommerce sites. These are an ‘off-the-shelf ’ solution, a totally bespoke solution and a new model called Application Service Provider (ASP). These are described on the following pages along with the benefits and weaknesses of each one.
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7 habits of successful ecommerce companies O the shelf
Bespoke
ASP
Info
This a prepackaged ecommerce system.It provides an out of the box catalogue based solution that allows organisations to upload a database of products.
A bespoke system is either completely written from the ground up, or utilises one of the huge range of pre-built object based tools that are available. Either way it is a fully customised solution that can be built to any speciďŹ cation required.
This is a new model that is becoming increasingly popular. It provides organisations with the same option as leasing a retail space rather than buying one. In this model, organisations are able to semicustomise a solution based on their needs but all the technology is managed and owned by a third party provider.
BeneďŹ ts
Fully tested solution that has been deployed multiple times
Completely customisable to the needs of the organisations
Customisable to an extent
Can be fully integrated into the organisation
Integration is possible
Fully supported Rapid deployment times
Changes can be made as and when required
Requires little understanding of Technology owned technology by organisation Low cost. It can be up and running in 2-3 days
Based on best practice ecommerce
Rapid deployment usually 4-8 weeks Updates are available and fully supported by a third party Always built on cutting edge technology No in-house technical capabilities required everything is outsourced
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Weakness
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Off the shelf
Bespoke
ASP
Little or no customisation is available
Usually takes between 3 -18 months to set up a bespoke system.
Not as customisable as a bespoke system
Low End - £99 per Low End - £30,000 month High End High End - £5000 £500,000+ one off payment
Average costs of £3,000 to £4,000 per month.
All technology is owned by third No competitive advantage as any All technology costs party organisation can must be borne by organisation have the same system Running costs can be high If the provider stops making Longer test cycles solution updates as the system is the support can completely new be limited Requires good inIs usually stand house technical alone and can not knowledge be integrated Payment page is not integrated Estimated Costs
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Technology in its nature is ever evolving, it is important to remember that online consumers have growing expectations of what they want to experience and how they expect to be treated. All successful ecommerce sites are evaluating and evolving their oering every second of the day. This way they are either providing a better experience than the users expect or in most cases matching the consumer’s expectations. It is vital that any organisation looking to be successful in ecommerce keeps their technology up to date and really starts to utilise it to provide better and improved customer service. In order to do this they must either have a good outsourcing partner who has proven capabilities, and is active in improving their technical capabilities, or they must have a dedicated and competent technical director with board level access. We know that technology evolves and every few years a new and radical approach has developed. Over the next few years with the increase of available bandwidth and the evolution of PCs we are looking at new operating systems such as Microsoft Longhorn to change the way customers shop online. These new technologies will try to replicate more closely the experience of shopping in the real world. A typical example includes uploading an image of yourself and using that image as an online model so you can try out clothes and dierent types of lipstick without going into the store or uploading an image of your living room to see how a new sofa would look in your home. The top ecommerce
organisations trial new technology and innovate to gain and retain a competitive edge.
5 Things to do now 1. Ensure that you have a clear security policy that covers not just hardware and software but internal policies. 2. Make sure you are available 100% of the time. 3. Get the best ecommerce platform that you can afford. Customer’s needs are going to evolve and you have to move with them. 4. Offer functionality that differentiates you from every other ecommerce site. Like video reviews. 5. Integrate your systems to improve efficiency.
References
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References 1. Getting the Most Out of All Your Customers Publication Date: Jul 1, 2004 Authors:Jacquelyn S. Thomas , Werner Reinartz , V. Kumar Type: Harvard Business Review Article www.hbr.og 2. The One Number You Need to Grow Publication Date: Dec 1, 2003 Authors:Frederick F. Reichheld Type: Harvard Business Review Article www.hbr.og 3. Steering customers to the right channels McKinsey Quarterly Authors: Joseph B. Myers, Andrew D. Pickersgill, and Evan S. Van Metre www.mckinseyquarterly.com 4. Google investor.google.com 5. Forrester Research Online Retail Europe January 2004 Data Overview: Covers Retail and Online Buying Behaviour Publication Date: Jan, 2004 Authors: Reineke Reitsma, Dr. Therese Torris, Joost van Kruijdijk www.forrester.com 6. Jupiter Research Internet Commerce Vision Report Author: David Schatsky Jan, 2001 www.jupiterresearch.com
References
7. Channel Inteligence www.channelintelligence.com/ Spring 2003 Online Questionnaire May 2003 8. IMRG Date: Aug, 2004 9. VeriďŹ ed by Visa www.visaeu.com/acceptingvisa/veriďŹ edbyvisa.html 10. MasterCard Securecode www.mastercardmerchant.com/securecode/
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