Measuring the return on web initiatives is crucial--but tough, CFOs say
CFOs by their very nature look at the costs and benefits of everything a company does. Thus it’s no surprise that attendees at eTail 2003 East in Boston this week took advantage of the presence of three CFos on a panel to probe the financial justification for a range of initiatives. Audience members were interested in ROI on web site investments, the returns on e-mail and other types of marketing, the impact of sales tax on sales, and the implications of customer satisfaction.
Unfortunately for those looking for a formula they can apply to their web investments to calculate returns: “There is no clear calculation to measure how your investment on the web is doing because there’s so much cross-channel integration and there’s just not a perfect delineation,” Lands’ End CFO Don Hughes said. “Customer satisfaction is the key. The customer wants a multi-channel environment and that drives our investment online.”
At the least, said Christine Aguilera, CFO of SkyMall Inc., look at the web investment as part of a company’s total strategic direction. “You’ve got to get the organization to look at the big picture,” she said.
On the marketing front, all the speakers agreed that e-mail spam is a problem and that banner advertising doesn’t work very well. But when an audience member asked, “Are you taking a pro-active role in making sure spam filters don’t block out e-mails that your customers want?” there was silence from the stage. No one from the panel or the audience could answer the question. Finally, panel moderator Larry Freed, president of ForeSee Results, observed: “This is an important question because this problem threatens e-mail as a tool across the board, not only in marketing, but in service communications as well.”
Search engine marketing is effective, all agreed, even with as well known a brand as the National Hockey League. “We market to a core group of passionate fans,” said Kenneth Nova, vice president, revenue and administration of NHL.com, the third panelist. “It’s a niche vertical market. You have fans who know you, love you but don’t know how to find you. Search engine marketing brings in all the hockey fans.”
Banners ads generally got a thumbs-down. “The jury is still out,” Hughes said. While Nova said NHL has rendered a verdict: “We spent a lot on banner ads in early days and it didn’t work very well,” he said. “We can’t bring in new customers through ads. It just doesn’t bring in new fans.”
Just having a site is a good marketing tool, at least for the NHL, Nova said. With a glut of sports-related advertising and sports coverage all over the media, a website helps target customers. “The web site is profitable, but more important it’s an important marketing tool in a very, very crowded sports media market,” he said.
All agreed that their own experience bears out the research on sales tax: Consumers don’t care. “The customer is not shopping with us online to avoid tax,” Hughes said. “Customers are looking for quality products and customer service.” He noted that as a subsidiary of Sears Roebuck and Co., Lands’ End now must charge tax on almost all sales. “In the past we collected tax only in six states where we had nexus,” he said. “Now we collect tax in all taxing jurisdictions expect the District of Columbia where Sears has no stores. It has a very low impact on web sales. Over the short term there is a small impact that goes away in about six to nine months.” Nova and Aguilera agreed that their own operations had experienced no impact from collecting sales tax.
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