Basic eCommerce Terms revisited

When you work in the digital and eCommerce consulting industry, there's the tendency to assume that the person you are speaking to always has enough experience to be able to understand what your saying and act accordingly. However, this is not always the case (e.g. when the person has just been moved or promoted into a new role) and sometimes it takes time to cover the basics with a client, even though you don't always want to make it too obvious.

I therefore thought I would revisit some of the more common eCommerce terms used. Not just in case a current or potential client was reading this blog, but also to help anyone else who may be venturing in the world of online transactions, etc.

Acquisition

The processes and tools used to get new customers to start using / visiting any digital company touch-point (e.g. website, app, social media presence, etc.). Acquisition rates can be increased by using different marketing techniques (e.g. paid advertising or search engine optimisation).

Example KPI = Website visitors

Conversion

The amount of people who complete a required online goal (e.g. a booking or a purchase) divided by the total number that visit. It is sometimes called the 'look to book' ratio and in some markets / companies it is one of the most protected (e.g. Secret) of figures.

Typical average conversion  rates by industry:

http://www.marketingsherpa.com/article/chart/average-website-conversion-rates-industry

Retention

The number of customers who come back to the digital channels and book/purchase again within a given time period (sometimes set as the entire customer lifetime) .
There are no recognised benchmark figures on digital customer retention that I'm aware of and this depends considerably on industry, product, customer type, etc.

AOV:

Average order value is typically the sum of revenue that has been generated divided by the number of orders taken. Again, there are no standard measures for this, as the range of products and prices vary from company to company.

You're not focusing on digital retention? Why?

So, even in these austere times... Companies still seem to be focusing more on customer acquisition than retention.

Perhaps it's because retaining customers is seen as less interesting and 'glamourous' than the various customer acquisition processes and tools out there. Or maybe it's because the tools and techniques for retaining customers have now reached a decent level of maturity (e.g. Email is usually the main eCRM tool and best practice around: creative, delivery and measurement are all understood pretty well).

Either way, I think there needs to be a shift in the marketing priorities of a lot of companies and away from acquisition. The race to be top of Google via PPC and SEO techniques can put a big dent in marketing budgets. These £'s spent might be palatable now... but maybe not when compared with the pence to retain customers.

Please note that I'm not completely advocating a radical diversion of all your marketing budget across to retention activites. What I am suggesting however is that if it costs many times as much to get a new visitor compared to getting back an existing one... That companies should balance their marketing spend accordingly.

Customer retention with email - things to consider

It's still the case with most business sectors I work in that retaining an existing customer costs less than getting a new one. Customer relationship marketing, eCRM, marketing automation and a bunch of other industry approaches and technologies are all there for one thing... To retain the (profitable) customer and stop them switching to other competitive services or products.

Recent statistics [see above] support my own findings that organisations are increasingly using email  as a customer retention tool, rather than one for finding new customers. Although Social Media is constantly grabbing the headlines, the less glamorous subject of email and eCRM is becoming more and more useful in keeping the customers a company already has.

But doing retention marketing sensibly isn't as easy as you might initially think. In the modern world of SaaS email marketing systems and freemium eCRM tools, its relatively simple to dive straight in to a package and start spamming your existing customers left, right and centre.

However, it might be that by weighing-up the following you make your retention campaigns easier for you and more cost-effective for your company..

1. Ensure you've correctly set-up your digital analytics (e.g. your Google Analytics tags)
2. Make sure your email service provider can track everything you need (bounce rates, site visits, conversions)
3. Check that you have the above two points integrated (e.g. that you can also see what emails are delivering converting visitors in you digital analytics package)
4. Build a schedule for your communications, hopefully covering a calendar and also driven by events (e.g. by all means send out a 'Valentines Day' email a week before the 14th February, but also remember to send a 'Please renew your product warranty' or similar message the week before the anniversary of the product purchase).
5. Test your messages on all devices, including mobiles and tablets
6. Clearly place an unsubscribe link at the bottom of all your emails
7. Understand the deliverability of your emails and what proportion of your messages end up in the 'junk' email folder (where possible, work with a premium ESP to measure and improve this)

Multi-channel retail meets Shopper Marketing

For many of us who come from the digital world, the mere existence of a whole area of retail analysis called Shopper Marketing is a bit a surprise.
http://en.wikipedia.org/wiki/Shopper_marketing

And even those like me who are aware... but talk, write or generally think about multi-channel retailing, tend to focus on digital first and in-store second.

But if the statistic in that above Wikipedia article that '70% of brand selections are still made in stores' is to be believed... then online needs to get realistic about the influence it really has at the point of sale. Now I've no actual evidence to contradict this figure, but it does feel a rather high percentage... given that a lot of people will already have made their choice up about the brands they want before they get to the point of purchase.

Over the last few months I've built up my understanding of Shopper Marketing, having worked alongside an agency that specifically does that sort of thing. I actually have to admit I am actually quite impressed with some of the outputs of their work; producing empirical results from their in-store analysis which puts a lot of website testing to shame. For example, heat maps are carried out on different product aisles in various stores from a selection of viewer angles.

In short, digital user experience practitioners could learn a lot from the effort that goes into store planning (where to put products and how customers get to them).

So it does raise the important issue of how these two disciplines come together to:

• Understand the roles that in-store and online now have
• Map the Paths to Purchase (both Digital to Store and Store to Digital)
• Grow customer loyalty and retain existing customers

In short, multi-channel retail / eCommerce and shopper marketing now need to merge into a single area of specialisation... Multi-channel shopper marketing.

Retention Marketing : working out the value of your efforts

We are currently working on a project to improve the retention marketing efforts for a client. But before we are able to sit down to finalise the deliverables, the client has asked us for some Key Performance Indicators that they can expect to measure our work against.

 

This is a sort of 'chicken and egg' situation, as until we have worked out what we are specifically trying to achieve and how we are going to do this, we can't decide on our actual goals and what the success criteria are. However, given I've done this sort of thing before I felt I could 'short circuit' the process and pulled together a few examples of some of the metrics I would expect to measure as part of a digital customer retention plan. Based on the assumption that the digital marketing activity is mainly going to be via email, the ones I gave were:

1. Bounce rates (site visitors and emails)

2. Share of overall website traffic
3. Conversion rates
4. Share of total conversions

 

And finally... I suggested measuring ROI (return on investment) from this activity as calculating the cost per site visit and cost per conversion generated.

 

Can anyone else suggest anything else?

Retention optimization

Building an ecommerce site is just the beginning of a long optimization process. It doesn't matter how much thought and effort you put into the initial planning of the user experience & design.....You then have the task of tuning your site to get the most out of it.

All this work is typically focused around the transaction path (also known as the 'booking funnel'). Visitors journeys are scrutinised and optimised in an effort to squeeze the most revenue out of each individual visit.

However, building a site that just takes the money (and let the customer run off) is an incredibly short-term approach to ecommerce that gives no consideration to the longer term customer lifetime value.

So ask yourself:

How are you calculating lifetime customer value?

Where's your email communication plan beyond the latest transaction?

Where's your overall customer segmentation and customer journey planning?

In essence, isn't it time you looked at the ways to retain your customers, rather than just trying to get new ones?

--
Hayden Sutherland
www.idealinterface.co.uk
Digital Strategy - Website Delivery - Online Marketing
+44 (0)780 1341955

Digital customer retention

You've no doubt read my previous postings on digital customer acquisition, via a complex toolkit of PR, marketing and conversion. However, I've not really mentioned the online tools for retaining customers once you've got them.

My original thought for this posting was to list and explain them all, as I've done for other stages within the customer acquisition lifecycle. But after thinking through this subject in more depth, I came to the conclusion that there really is only one main digital retention tool ..... email.

Well, if you think about it, how do you typically get contacted by an online retailer to suggest another product from their new range you might like? How do you find out your favourite band is touring again (if you're not already browsing their website, most likely during work hours)?

Sure, you have other methods.... (and I need to ponder subsequently the value of social networks such as Facebook for creating customer loyalty) however in my mind the principle digital tool for customer retention is email.

Does anyone disagree?

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