E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
How taking a stroll down virtual aisles could get customers to spend more.
The increased focus on improving online conversions is leading the retail industry to embrace skills that were developed offline, long before the Internet existed. Having struggled with multiple models for web stores, online marketers are realizing that if they want to achieve comparable success, they are going to have to start paying attention to what makes the offline channel work.
What do offline marketers focus on to drive business? In a retail store, the physical environment is strategically planned. For example, how a customer enters the store, what she sees first and where the cash registers are located are all planned to improve conversion. Retail designers regularly test product placement and items that are likely to cross-sell land in close proximity.
Here’s a great example. Milk is in the back of the supermarket not by coincidence. Customers have to walk all the way through the store and back again to purchase milk. And, it is not by coincidence that they pass so many other products on their way. These items are often strategically placed to increase the likelihood of a bigger shopping cart at the register.
Similarly, direct marketers produce multiple versions of the same catalog and test sample groups before rolling out the larger mailing to ensure good response. The copy, product image, page layout and order form are all variables the marketer can influence. Suppose a merchant knows his catalog is typically read by women and that they tend to start from the back of the catalog. Influence over what products are placed where becomes very strategic.
In these examples, the marketer is in control of the customer environment, the content, and the very path by which the customers access the store or catalog. Marketers are able to measure the outcome of the tests and then effect changes in the user environment to improve results. In others words, they test, they analyze, they make incremental changes, test again and so on. The process never ends. There are always improvements to be made, different aspects of the user experience to be tested, and greater ROI to be achieved.
Ball of confusion
Let’s contrast that with what we typically do online today. Technologists have built incredible infrastructure for our web sites. Retailers are dynamically producing highly personalized content and creating truly unique web experiences for users. Designers have created fantastic imagery and site layout. Navigation schemas let users go wherever they want at any time-just point and click. We set about driving traffic to our sites and many of us actually get a substantial number of visitors. Except that the number who buy is small relative to the number who visit, so it’s not so simple anymore.
Why is it that online marketers have yet to apply the science and skill learned in the offline world? We drive people to home pages that are cluttered with links to every product we sell. Imagine walking into a supermarket only to be greeted by a massive shelf, seven feet high, littered with products from all over the store. Could you find what you were looking for? Home pages generate the same response in visitors. They get confused. They don’t know where to go or how to find what they are looking for. And then they leave. Sometimes it happens right on the home page, other times they leave because they start down a path and get lost. Either way, their departure means lost revenue to a merchant.
We need to start thinking about our online channel the same way we think about our offline channels, yet not lose sight of what makes the web so powerful. Why don’t we think about orchestrating a visitor’s experience, controlling where they go and what they see?
If we are to bridge the gap between offline and online channels, we need to consider creating web aisles. A web aisle is a virtual path you create for a specific visitor to walk down and shop. You decide what items are on the “shelves” based on knowledge about your visitors, where they came from and what they are seeking. You decide what product copy to use, which promotions to test, which placement works best.
Using the concept of web aisles, online marketers can leverage the power of the online channel to increase conversions. Let’s go back to the milk in the supermarket example. Suppose Tom walks through the door and milk is in Aisle 2. Tom purchases more than just milk because of this placement. Wouldn’t the store merchandising manager want to know this? It would be great if store managers could snap their fingers when you walk through the door and the store instantly changed to meet your particular needs. One of the web’s unique advantages is the ability to virtually put milk in whatever aisle you want.
Who is it?
Marketers still face the challenge of knowing who is walking through the door of the site. The supermarket does not know whether it is Tom or Cindy entering the store. However, in the online world we can solve the dilemma of having to know who is walking through the door by creating multiple virtual doorways into a web site. These virtual doors can be different banner ads, e-mails, links or even specific keywords used at search engines.
By tracking the behavior of the visitors that come through each one, marketers can identify group trends that tell them where to place products, what copy works best, etc. In other words, if a marketer can determine that visitors coming into the site through Door B respond best when milk is in Web Aisle 3, then whenever anyone walks through Door B, the milk is located in Aisle 3. The best part is, merchants don’t have to know who is actually coming through the door, just which door the customer is coming through.
Orchestrating the search