Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
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Other ways to measure the potential ROI on any technology is to ask the vendor to show how much sales for other clients increased after implementation and to request before and after versions of those sites.
Doing so can help retailers determine how much of a boost in sales they are likely to experience. “A retailer with a sound business model but a poorly designed site is going to experience a greater boost in sales from new technology than a retailer with a not so great business model, but a well designed site,” says Americaneagle.com’s Svanascini.
Grilling the vendors
Experts also recommend asking vendors for a proven track record of meeting clients’ needs. One way to find such a vendor is to identify web sites that offer the features the retailer wants to emulate and contacting the owner of the site about the vendor. Doing so can also provide an objective reference about how smoothly implementation went and satisfaction with the technology itself.
“Retailers should not feel embarrassed to do this, because there are a lot of platform providers out there that create beautiful sites that have more technology than the retailer can effectively use or that were rough to implement,” says WebLinc’s Hill. “There is no reason to pay for technology that is not needed or to have a painful integration.”
Experts also encourage retailers to ask vendors what services they provide beyond supplying and supporting their technology. Many small and mid-sized retailers have limited marketing and merchandising staffs and can use help in those areas or with analyzing performance metrics. Subsequently, many vendors provide consulting services to help retailers fill these holes.
“Whether a vendor can provide consulting services is becoming as important to retailers as the vendor’s technology and ability to integrate it into their business,” says Hill. “Many times a small retailer may have a marketing position that is unfilled and can use help in that area. Vendors are no longer proving their value solely on their technology and ability to integrate it.”
Choosing an e-commerce platform or application does not mean the platform will stay current with the retailer’s needs for several years. E-retailing technology is evolving rapidly and the pace is only expected to quicken as online sales become a larger portion of total retail sales. Retailers that do not constantly refine their platforms will fall behind.
“The longer a platform is stagnant, the harder it is to make meaningful improvements later,” says FitForCommerce’s Wu. “The risk of making changes is always present in technology, but it must be weighed against the risk of not keeping up with those changes.”
Wu predicts that retailers will replace or make major upgrades to their systems every two to four years. “It can take up to a year to implement new technology and that means starting another evaluation process as soon as 18 months after a re-launch,” she says. “Even though the process appears to always be shifting, it is deliberate in that the retailer has planned for it. By keeping up on the latest technologies, retailers can make the decision whether to implement them faster.”
When adding any application, retailers need to make certain it can be integrated without disrupting the flow of information between other areas of their business. Multi-channel retailers must be especially mindful of this problem when introducing personalization features that build customer profiles using data from all sales channels.
“A lot of multi-channel retailers will extend systems that are built for other sales channels, but don’t necessarily leverage the core competencies of the online sales channel,” O’Neill says. “That can lead to problems when it comes to personalizing the web store.”
One solution is to link data about customer behavior from each sales channel, and from customer service interactions, to create a customer profile that resides in a central database, rather than to manage multiple profiles built using information from such applications as e-mail and site search.
“In a multi-channel environment retailers want a platform that can pull customer behavior data from all channels, store it in one place, and provide a single view of the customer,” says O’Neill. “Having a single customer profile makes cross-selling and upselling strategies more effective. It is a lot tougher to cross-sell and upsell using multiple profiles created using behavior patterns pulled from different applications.”
Platforms that use algorithms within specific rule sets to weight customer behavior are more effective than rules-based applications. “With algorithms, retailers can dig deeper to create customer profiles, such as the time of the day they like to shop and how they move through the site, and apply it to the individual’s profile to make more targeted recommendations,” O’Neill says.
With this deeper level of information retailers have more options in personalizing the shopping experience. “The rule sets can be used to personalize the shopping experience to customers on which there is no profile,” O’Neill says. “It’s a blend of art and science.”
In addition to having a platform that can create a single customer view, retailers need platforms that allow them to apply analytical tools in their market strategies. This is especially helpful with e-mail marketing.
“Without this kind of metric capability, retailers are just making assumptions when it comes to creating offers for their e-mail marketing campaigns, rather than engaging in effective campaign management,” says Solid Cactus’s Younger. “Implementing tools to market smarter is the name of the game.”
Solid Cactus recently added an e-mail marketing management solution to its online marketing management services that uses advanced real-time analytics to provide retailers with visibility into what happens after the message is sent. In addition to tracking basic performance information such as bounce rates, delivery rates, and whether the message was opened, the application tracks shopper movement through the site after the shopper arrives on a landing page. The solution can track any and all key performance indicators, such as conversion rates on an item to further segment future mailings.
“Without this kind of metric capability, retailers are just making assumptions when it comes to creating offers for their e-mail marketing campaigns, rather than engaging in effective campaign management,” says Younger. “E-mail is a communications tool, so being able to finely segment the promotion and messages sent can provide a significant boost in conversions.”