Keeping Track

A word of caution: this overview of ten insider secrets for long-term success in online retailing will disappoint you if you’re expecting to see the tools, technologies and techniques used by the biggest and best-known names from traditional retail. That’s because brand name leadership in the traditional retail market does not always translate automatically to a parallel presence online. Despite their apparent similarities to traditional retail, online storefronts require a new approach for maximum effectiveness.

Whether online or in a physical store, retail growth and market dominance are driven by the shopper’s experience. Is that a profound revelation? Hardly. But believe it or not, some of the best-known retailers in the world have mastered and maximized, measured and manipulated their physical retail environments in a quest for maximum volume and margin, but they have missed the point in their online stores. As different as the online world may seem by comparison, a fundamental truth remains: if you make products hard to find, customers won’t buy them.

Things change

While “retail is retail” no matter where it happens, things have changed in the online world. In an incredibly short time, online buyers have matured. They have had enough online experiences to form discriminating value judgments about your brand and your product quality, often on the basis of your web site, and they usually do so in a matter of just a few seconds.

This means e-retailers of any size and scope should not merely take comfort in the often-reported predictions of big annual increases in online spending. Certainly a rising tide lifts all boats, but it has no bearing whatsoever on whether your ship will come in if customers decide you’re not up to the task. Growth that until now has been fueled by a steady stream of new online shoppers will be increasingly generated by existing buyers. For organizations that seem to be indifferent to their customers’ online experience this situation will become even more dire when, as recent research predicts, by 2010, half of all offline, in-store purchases will be influenced by buyers’ online research. Uh oh.

To ride the coming wave, retailers need to assess their online readiness. While too many retailers rely on subjective self-assessments or anecdotal evidence that their site is better or worse than another, today’s category leaders are more demanding. They expect superior performance of their online storefronts and they plan to succeed. They go well beyond the usual subjects—availability and response time—and turn their attention to delivering consistency for users in different locations and with different connections. They examine additional components of the entire end-user-facing business processes that online shoppers unanimously cite as key to their experience and their impression of an online provider’s goods, services, and brand. These leaders want to ensure that their products can be found, seen, carted, and easily purchased quickly and enjoyably—every time.

Full circle

All of this brings us full circle to fundamentals of retail: how is customer loyalty secured, how is the shopping experience optimized, and what can be done to make the entire process more efficient? Surprisingly, the answers are fairly simple. They will sound familiar to anyone steeped in the traditions of managing a brick-and-mortar retail store. And yet, these practices are not well-known or routinely implemented online. Why? Because in some cases, even the most recognized e-retailers don’t know these solutions exist.

In some cases, they claim their online site is competitively appropriate because it “looks” like other sites in their sector. And, in other cases, these logical online retail experience checks are rejected because they would force organizations to align line of business managers, web site designers and developers, and operations professionals around a shared set of end-user performance goals and considerations. If that hits a bit too close to home, have no fear. Employing the following performance practices may represent the best chance any organization, regardless of size and market presence, has to gain alignment and win more than its fair share of the online market opportunity.

1. Know your strengths … and weaknesses

For years, traditional retailers have visited competitors’ stores to benchmark themselves. But in the online retail world, it’s rare to find organizations that routinely take a walk through a competitor’s site from a performance perspective. In the absence of empirical comparisons, how can an online retailer know whether its online store performs better than competitive sites or whether it lags the pack? Today’s benchmarking technologies enable any online retailer to quantify where its site ranks against its competitors, understand gaps, and take steps to improve. Smart retailers benchmark early and often.

2. Know your users

Where do they live, from which networks do they visit, what connection speeds do they enjoy, what are their peak usage times and patterns of site visitation? These are critical questions for performance leaders. Knowing these things puts retailers in the best position to make decisions and can eliminate a long list of items that “could” be the culprit. (“Could” costs retailers a lot of money.) Retailers who know their users can improve their overall performance and online experiences. Internet performance measurement technologies can put hard metrics on these experiences and let e-retailers recoup lost revenue opportunities.

3. Test the entire system

Just as you can’t know a person’s health from a single data point such as blood pressure, the vitality of an online retail site can’t be determined by looking only at a handful of IT metrics such as server CPU utilization or network quality of service. Tests that exercise the entire application infrastructure, from the “outside-in” and across all relevant systems should be put in place. An internal-only view of performance can miss problems that impact the customer experience and lead to abandonment and damage to the brand.

4. Monitor what matters

IRCE 2008 Conference Multi-Media CD-ROM

Over many years, traditional retailers have developed a wide range of sales-related incentives and other programs to encourage offline store appeal, customer loyalty, higher average orders, repeat business, word of mouth referrals and so on. Warranties, discount coupons, gift certificates, customer services and seasonal specials are among these popular techniques. Many retailers often focus on the effectiveness of the buying process, to the detriment of the other business processes that the web site supports. Today leading retailers use comprehensive testing methodologies that go well beyond the front door of the home page. They can test every important business function on the site; for example, whether the store locator works as expected, whether gift certificates can be redeemed with ease, and whether product warranty language is accessible online. Modern e-retail environments do much more than bring in top line revenue; they feature many end-user capabilities that can save retailers money. All of these processes must be managed with a critical eye toward their performance.

5. Keep third parties honest

Few online retailers, even the biggest ones, deliver their entire online store on their own. Third party providers generate advertising, produce virtual models, manage credit card payments, and perform other functions. All too often, it is assumed these operations are efficiently and seamlessly bolted into the customer’s browser. Many online retailers have yet to put these functions to the performance test. That’s why there’s such a tremendous reliance today upon Service Level Agreements. But without monitoring and tests, an online retailer can’t know whether third party partners are performing well. Some e-retailers find out how poorly their performing partners are doing when customers complain—and at that point it’s too late.

6. Seek internal alignment

Product line marketing managers, webmasters, interactive programmers, traditional information technology professionals and operations executives don’t necessarily share a common language or a set of shared beliefs. On the surface, some would argue that they have departmental imperatives and incentives to favor certain behaviors. But when it comes to an online retail presence, these silos can result in a communications disconnect that takes a tremendous toll on a site’s principal goal of providing the best-possible customer experience. One example: marketers love to show large images of the newest products or promotions. Operations teams grumble over ballooning page weights. Few things can do as much damage to a site’s responsiveness and visitor experience as misalignment between design and delivery. Leading online retail organizations create shared performance metrics that align every group around end-user goals and considerations.

7. Take a geography lesson

It is considered very bad in traditional retail when a shopper’s experience in a store on the East Coast is significantly different from the experience of a shopper in San Francisco. The same is true of the online experience. But many e-retailers don’t realize how different their web site experience can be for far flung users. Worse yet, others feel that this is an unadressable problem related to distance and that the inevitable latency and data packet are just too bad. Fortunately, that’s not entirely true. Testing can determine whether data center redistribution, data aggregation, content delivery networks, and additional site optimization—among many other things—can shrink those geographic differences. Retailers shouldn’t let geographical performance issues lead to lower conversion rates for remote shoppers.

8. Link application performance to business performance

Intuitively we know high-speed, highly available online retail web sites are good for business. We also know that slow, inaccessible sites are not good for business. But many people don’t know or don’t quantify just how bad for business these conditions can be. Beyond a dip in online sales as punishment for bad performance, costs can increase with additional volumes in the call center; channel switching can erode margins; alternate channel efforts and other programs and problems can crop up when a site is not optimized. Leading retailers connect the dots and make informed decisions about the experiences they deliver for maximum result.

9. Manage change aggressively

What do traditional retailers do when same store sales decline quarter over quarter? They investigate, make a change, and then test to see if the change worked. It’s the same with online retail sites except changes online can be tested well before they go live. Aggressive online retail operations use continuous metrics that help isolate potential problems, make changes, measure the effect of those changes in advance, go live with the appropriate choices, and then validate that these alterations are having the desired outcome. They gain confidence in the positive change for online shoppers before placing the new shopping experience at risk.

10. Evolve the metrics over time

Online site measurement and management is no more a one time thing than physical exercise. Online retail health hinges on ongoing checks, constant tunings, and vigilance to guarantee that as users evolve, the site evolves in lockstep. A retailer who is brand new to online performance can follow a progressive, predictable path. First make sure the lights are on …site availability. Next, confirm that the checkout lines are short …site response time. Finally, ensure that the experience is consistent. Focus first on increasing application performance to serve the top line and then increase manageability of the online store to serve the bottom line.

The good news is that e-retailers who routinely monitor and benchmark their online experiences suffer from fewer costly disasters. Those who make the transition have a strategic advantage when they put a portion of that firefighting budget to better use.