Knowing What to Do

All e-retailers face some version of the question what do I need to do to make my web site more successful? How can I make it better? Where do I start?

Most experienced e-retailers have the right impulses. However, the key is using action-oriented, intelligent, consumer-driven data to turn the right impulses into the right actions.

As the fourth quarter approaches, it’s time to take a step back and evaluate your web site’s objectives, performance, and goals. If you pay close attention during the fourth quarter, you’ll have the information you need to make improvements in 2005.

Step One:

Impulse: Identify your web site’s objectives

Action: Know the role of the web site in your overall organization.

This seems basic, but it is a fundamental step that many people skip. Is your web site supposed to be profitable? Or is it for marketing purposes? Is your web site part of an integrated multichannel strategy? Or is it a single-channel strategy? Will it be used mainly for customer and technical support? Or is it an information resource? Everyone at your company from the top down needs to understand and agree on the mission of the site before you can move forward with improvements or changes.

For example, we work with a leading producer of consumer packaged goods in the United States. Even though its business is retail in nature, its strategic plan indicated that the web site be used mainly as a brand-building site. This objective drove decisions like whether products should be offered online at all, whether customers could download coupons, and whether it was worth a significant investment in online information resources to help the brand become viewed as a trusted source of reliable nutritional information. Understanding the objective was key to setting goals, measuring success, and keeping the project team accountable.

However, an online-only retailer would have to make profitability the top goal. The calculations and web enhancements would be led by that guidance, which differs vastly in scope and objective from a brand-building retail site or even a multi-channel retail site.

Step Two:

Impulse: Measure

Action: Measure intelligently—establish a baseline reading of performance by choosing precise, accurate, metrics that you can take action on throughout the development cycle.

Before making decisions about your web site, you must collect baseline metrics to assess current performance level and so that you have something to measure against once you make changes. At every step of web site development, you’ll need to have carefully chosen metrics in the following categories:

Transaction volume: How much are you selling? How many referrals do you get? Do you know how many people visit your physical store based on what they learn from your web site? How many hits, clicks, and page views are you getting? While activity statistics won’t tell you everything, they are an important baseline measurement so that you can get a sense for whether you’re improving later.

Customer satisfaction: An often overlooked metric, but nothing else matters if you don’t know what matters to your customers. Customer satisfaction metrics that are based on proven, scientific methodology are the only metrics that give you a full picture of what your users have done, are doing, and will do in the future.

An established direct brand that we work with got glowing marks on its web site from retail analysts and found its page view statistics were well above industry averages. However, its conversion rates were well below industry standards, and since its objective was to use the online channel to increase sales, the site was falling short no matter how many hits and clicks the status updates reported.

Once this retailer went beyond clickstream metrics and into more complete customer satisfaction data, it was able to delve into why conversion rates were low. With a full suite of complementary metrics that were used across all channels, this retailer was also able to measure the impact of the web site on offline channels.

You should use all of these kinds of metrics together for the most accurate picture of your web site. Choose wisely, because the metrics you put into place will guide you throughout the development process, and you will need to rely on their precision and accuracy to make future decisions.

Step Three:

IRCE 2008 Conference Multi-Media CD-ROM

Impulse: Benchmark

Action: But not just against your competitors

Once you have baseline measurements, it is essential that you use a proven methodology to benchmark your performance against competitors. Understanding what other e-retailers in your space are doing in terms of sales, hits, clicks, and customer satisfaction levels is key to understanding your own performance. Look at the top performers in your space and see what they do well. Look at underperformers and see what they do wrong. Do it all while keeping the customer in mind.

The web, unlike any other medium, pits your performance against companies not even in your field. Amazon is the gold standard for e-commerce and you can be sure your customers have visited Amazon.com and will be familiar with its ease of navigation and search when they visit your site. How does yours compare?

You may need to consider benchmarking against:

• Competitors

• Other retailers

• Other leading sites across industries. Choose to benchmark against these as your scope and budget allow.

Companies also benchmark against their own performance over time and across channels. A large multichannel electronics retailer we work with had previously used a host of different metrics for each channel and found that standardizing measurements across channels allowed it to have a better sense of cross-channel impacts and effects.

Step Four:

Impulse: Set priorities

Action: Set the right priorities, with ROI and the customer in mind

Understanding what your customers want and need can help you prioritize. A scientifically-based customer satisfaction methodology can tell you the impact various changes will have. We had one retail customer who was told by its IT department that it needed to spend $200,000 to improve page download time by a half second when in truth, that mattered little to its customers. Analysis showed that tweaking product descriptions was the thing that actually mattered to browsers and encouraged them to buy, an improvement that required much less investment. If customers complain about your product selection, you have to ask if it is really impacting their loyalty to your company, their likelihood to purchase again or recommend your site to a friend. It might—or it might not.

If you have the right metrics in place as you measure your performance in step two, you’ll be able to use your findings to identify and prioritize improvements based on what will have the biggest impact on customers and potential customers. It can be tempting to fall into the trap of listening to anecdotal evidence, angry e-mails, and highly-paid web consultants or internal gurus with big plans that will cost big money. You must use a proven, scientific method that will determine what will actually impact your customers most, not what your experts think might do the trick.

You can’t go by self-rated importance. Ask any retail customer in the world what matters to them most and they’re likely to tell you “price.” Yet when you use customer satisfaction and behavioral data to predict future behavior, you’ll find that customers are driven by a lot more than cost.

Or it may be even more subtle. Tower Records found that when it analyzed the satisfaction of first-time and regular customers, there was a gap in perceptions of transaction costs. Tower was able to test customer price sensitivity to overall transaction costs, product costs, and shipping costs. Priorities were different for first-time vs. return customers and Tower was able to hit a better pricing strategy balance that increased conversion and overall sales.

Many e-retailers have the experience and marketing savvy to have the right impulses about web development. But a solid foundation of action-oriented information is key to success. The fourth quarter is an excellent time to reevaluate your objectives, establish a baseline, and begin benchmarking because so many retailers experience increased traffic and it is often a time of “lock down” for major changes anyway. In January, it will be time to take what you’ve learned, set priorities, and put this knowledge into action in a smart, strategic way that will help your organization meet its goals.