Target and Toys R Us posted overall sales declines during the holidays.
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Dartek applied analytics to test theories about the reason for the higher bailout rate. It first checked to see if the problem was one of trust among new customers by featuring a new customer assurance program on the site. But analytics revealed that the change produced only a 1% lift in conversions among new customers.
The company next tested free shipping as an incentive, seeing a 4% to 6% increase in completed sales among new customers who started a shopping cart. But that test also showed up one of the limitations of analytics-they can identify the problem but not necessarily figure out how to solve it. The results of the experiment are so new that Dartek hasn’t calculated yet whether the boost in conversions is worth the expense of free shipping.
Apart from the issue of free shipping, however, Dartek broke even on its initial investment within the first six months, McNeely estimates. Dartek pays WebSideStory a quarterly fee based on traffic. “We are beginning a concerted push from catalog prospecting to online prospecting. We wanted to make sure first that we could track what was successful and what failed so we could properly direct our dollars and effort,” McNeely adds. “We didn’t look at software because it was too cost-prohibitive.”
Applying the same test-and-measure method to chart the effectiveness of e-mail offers, Skechers.com got a bonus in the bargain: merchandising intelligence that provides a preview of trends to direct future e-mail campaigns, vice president of direct marketing Geric Johnson says.
Shoe manufacturer and retailer Skechers selected 10 products for women and 12 for men for an e-mail promotion to clear inventory on end-of-year styles. Customers received a discount offer applicable within the same session on other merchandise if they opened the e-mail, clicked to the site, and purchased one of the promoted items. The discount is automatically generated by a code in the URL link provided in the e-mail from Skechers.
Analytics tools from WebSideStory showed that the e-mails were being opened at the expected rate, but also provided the information that some 20% more units were being sold in this e-mail blast than with other e-mail campaigns. “Being able to track the performance of a given ad campaign right through to the sale and getting the ROI numbers related to it have been a big help,” Johnson says.
The data already are shaping future campaigns. “The analytics let us pick up on what is hot or what might become hot,” Johnson says. “There are other ways to capture a glimpse of where your business is, but not the relationships of the data. With this tool, I can think out where our business is going to go.”
Searching for reduced spending
At Northern Tool, Miller applied analytics tools to validate click-through rates as tracked by its search engine optimization vendor. That intelligence ultimately allowed Northern Tool to reduce spending on and increase sales from search engine optimization.
“We use Coremetrics’ ASP to measure every online campaign we do,” Miller says. “Any link or banner we have out there has a unique identifier attached to it. We measure click-throughs all the way through the site to sale, and then we use that information to make future campaign decisions.”
As a result of the close measurements, Miller realized that ad dollar spending was higher than gross margin realized from the search campaigns. Investigation revealed that rather than counting each unique visitor as a single click-through, the search engine optimization provider counted any click on any product from the same user in the same session as an additional click-through. “We were paying on a per click-through basis, so sometimes we were paying multiple times for the same customer. The analytics helped us to identify that,” says Miller.
Northern Tool used the data to leverage more bang from its search engine optimization buck. The two companies worked out an agreement in which Northern Tool still pays under the cost-per click model, but the optimization provider upped efforts to increase revenues for Northern Tool with better marketing.
The new measures were implemented this summer and the ratio of search-engine-optimization ad spending to sales dropped by 10% from July to September. That, says Miller, amounts to a 10% increase in revenue. Northern Tool pays Coremetrics quarterly based on the number of page views. “We might entertain the idea of software in the future, but now, we make good enough use of the service that it pays for itself,” Miller adds.
Making the investment
Although the application of detailed analytics to web traffic is a relatively new phenomenon, some retailers recognized the value a few years ago. Unable to find analytics on an outsourced basis or that could give them the highly specific detailed results they wanted, they bought software and modified it to measure what they thought was important. Some say that the returns from the intelligence they’ve gained over the years was worth the investment.
In the case of Djangos.com, a web retailer of music, it sparked an overhaul of the company’s business model. Three-year-old Djangos was set up as a web site aggregator of inventory in stores that Djangos owned. Djangos tapped the stores to forward ordered titles to Djangos headquarters in Portland, Ore. There, it maintained a warehouse with 60 employees to pick, pack and ship orders for customer fulfillment.
But using analytics software acquired from WebTrends-now NetIQ Corp.-Djangos quickly discovered by tracking customers’ ZIP codes 40% were within 15 miles of a store.
Djangos deduced that central shipping was redundant and store ownership an unnecessary expense. As a result, Djangos last year sold its stores. It then signed those stores on as affiliates, and began using its web site exclusively as a storefront that lists inventory in affiliate stores.
Instead of centralized fulfillment, Djangos fulfills orders out of whichever in-stock affiliate is closest to the customer and takes 15% of the sale. Djangos has 40 affiliate partners and is growing that number across the country.