Groupon says its focus is on the bottom line, rather than top-line growth.
When multi-channel apparel seller The Territory Ahead ventured online, web marketing manager Eric Petersen could have used a compass like the one suggested in the company’s logo-in 1997, there weren’t many guideposts for e-retailers. The admittedly rudimentary initial effort offered a customer experience fraught with unintended frustrations for shoppers. With more enthusiasm than experience, the 12-year-old company quickly found that the demands of web selling went beyond anything it had tackled in its successful catalog and store business.
Here’s a sample: Online customers entered their orders into software that was designed for phone sales. Once the customer sent the order to The Territory Ahead, the company printed the orders so that call-center customer service reps could re-key them into the operating system between phone calls. The result was duplication of effort, an order entry error rate of 5% to 10%, and most seriously, a lack of real-time data on inventory levels. Customers would order an item, wait for delivery, then find out days later that the item was out of stock. The checkout process was cumbersome-it was easier for shoppers to abandon carts than to fight their way through the online process with special requests like multiple ship-to’s. “It wasn’t pretty,” acknowledges Petersen. Web sales limped along at well under 5% of sales, as too many frustrated customers bailed out.
Like other e-retailers in the same fix, The Territory Ahead struggled with what to do first. Faster downloads? Live chat? “There was a lot of pressure for sites to add bells and whistles, some of which weren’t really panning out, to the detriment of sales,” says Mark Carmody, co-president.
Three years later, The Territory Ahead is shooting up in the customer satisfaction rankings-from a 20th place to a respectable 6th-of web retailer ratings service Gomez Advisors of Lincoln, Mass. It’s no surprise that customers are more satisfied now than they were before: The Territory Ahead based its improvements in customer satisfaction on what its customers told it to do.
The Territory Ahead spent more than a year analyzing competitors’ web sites to figure out what customers liked and didn’t like at the “best
of breed” apparel sites. It gathered feedback from some 200,000 web customers of record as well as shoppers who registered but didn’t buy. Direction fairly flew out of those findings, and a next-generation plan took shape. Among other things, customers wanted real time inventory tracking across channels, easier navigation and a streamlined check-out.
The customer feedback was the framework for a 15-month-long overhaul of the web site. The company acquired new hardware and software to integrate order entry into the operating system. That move provided real time inventory data to customers on every product. It upgraded shopping cart functionality, allowing shoppers to move more easily with the cart around the site and providing customers with a list and running total of shopping cart contents. And it added more detail to product images while managing to speed up downloads by spreading the workload from one server to five.
After the site relaunched in September, it wasn’t long before the effort began to pay off. Unique monthly visitors have nearly quadrupled to 120,000 from average 32,000 earlier in the year; conversion rates rose to 16% from 11%.
The customer-driven site improvements are providing a powerful boost to sales by unleashing new cross marketing opportunities with the catalog and driving new affiliate and portal deals. Some 100 web sites now feature products from The Territory Ahead, while products are uploaded to the shopping areas of Yahoo! Lycos, Excite and AltaVista through the company’s deal with Catalog-City.com. At the same time, The Territory
Ahead is stepping up email marketing campaigns. “We had already laid the groundwork for these activities but didn’t actively pursue them until relaunch,” Petersen says. “We didn’t want to promote our perfectly average web site. We wanted to wait until the new one went up.”
Service shines online
As web retailers move into third, fourth and fifth generations of their web sites, e-retailers like The Territory Ahead are finding that the customer’s experience is the factor that makes success online. “Because we couldn’t create the same presence we have in our catalog in the environment of the Internet, we figured we’d have to step up the customer experience to give people a reason to go to the site,” says Matt Cooper, company co-president.
The maxim that the customer is always right takes on a whole new spin today for web retailers battling for sales. For smart e-retailers, it means going beyond simply being responsive to individual customer’s concerns to searching them for patterns and using the data proactively to direct site development. The focus now is not on just driving traffic or developing a brand online but on how to turn all those visitors into buyers. But while focus is one thing, coming up with a viable plan that delivers results is another. The total customer experience online is about more than simply customer service. It touches wide-ranging e-retail operations from merchandising to customer support to IT. Improving the customer experience online requires e-retailers to mesh the actions of diverse departments into a unified strategy and execution.
Yankee Group retail analyst Christine Loeber compares devising an Internet retailing approach to a wheel, with each component of an online customer service strategy an interdependent spoke. “The wheel is only going to run strong and fast if all of those spokes are holding the wheel together,” she says. “It’s important for companies to understand who their customers are, mine their data and ask what they want.”
Despite strides forward at some e-retailers, many research analysts say web merchants have far to go as a class in improving customer satisfaction online, a factor that links directly to low conversion rates industrywide. “Internet retailers have not done a particularly good job of being customer focused. The genesis for most sites was driven as much by what your engineers could do as by any intensive research to understand how consumers use your site. It’s getting better, but there are still some fundamental things that don’t work,” says Seth Geiger, vice president of professional services at Los Angeles-based BizRate.