Ecommerce Consulting.com | Experts in Online Retail

10 Reasons Why Some Manufacturers Still Ponder Selling Online

Earlier this month, I read a blog post from E-consultancy titled "Why Not Selling Online Can Damage Your Brand".   The piece covers many of the key reasons why e-commerce has become a must have for brands, and why not selling online can be more than a missed opportunity; it can actually damage the brand. 

As a long time veteran and advocate of e-commerce, I agree with all of the points in the article.  Yet, having worked with some notable manufacturer brands who have yet to take the plunge into online selling, I can offer that for many of these companies, the decision to sell online is not the "no brainer" that it might appear.

Manufacturers who sell online don't just need to become web merchants, they need to become retailers, and that presents some interesting and often sticky strategic issues.

1. Lack of in-house retail or e-commerce talent.  This means that manufacturers may not know what questions to ask or understand the complexity of what they are getting into.  It also means that there may not be a logical choice for a leader of the strategy, planning and execution of an e-commerce initiative.
2. Concern about disruption to retail relationships.  This typically tops the list of issues, as manufacturers attempt to walk the delicate line between building their brand through direct to consumer sales and cannibalizing their retail partners.  Every manufacturer selling online has faced it, and there are many flavors of potential answers to striking the balance.
3. Product offering and pricing decisions can be mired with complexity.  Manufacturers' product lines many not be "retail ready", meaning they have been assorted for the retail buyer, not the consumer.  Thus, there are key decisions to be made around the online offer. The whole assortment? An edited version? Exclusive products? Clearance items? New test products?   And then there's pricing.  There's a need to offer the consumer a competitive value,  yet the need to be sensitive to retail partner margins and not undercut.
4. Product information and assets are not e-commerce ready. Manufacturers have a unique opportunity to showcase their products online, and consumers will likely have an expectation that the best and most extensive product information will come from the manufacturer's website.  Yet, many manufacturers find that their product images and copy are geared towards product spec manuals for retail buyers vs. online shoppers.  Re-purposing and enhancing product assets for the web can be a significant undertaking.
5. Fulfillment is not set up for single piece consumer orders.  Separate processes and systems may need to be set up to effectively manage consumer shipments and returns. Ditto for new packaging. Outsourcing many need to be investigated and considered.  Similarly, managing inventory for e-commerce can be complex if the manufacturer's systems are not set up to buy and reserve inventory for the online store, or allow for easy access to overstocks.
6. Customer service takes on a whole new role.  As with fulfillment, discreet processes, systems and people will be needed for e-commerce. Whether or not to turn service over to an outsource partner can be a critical strategic decision.  Build the team and infrastructure and reap the benefits of direct communication with your customers? Or hire experts with the people and systems in place to get you up and running quickly?
7. Marketing activities have been focused on B2B relationships and broad consumer branding.  Digital direct response marketing may not be part of the company's DNA, so understanding search marketing, email, affiliate relationships, retail promotions, social media and the whole balance between traffic and conversion becomes a new skill set need.
8. E-commerce ecosystem components need attention.  While the search for an e-commerce platform will likely be part of the manufacturer's path to online selling, equally important is the suite of supporting systems (many of them possibly in "legacy" condition) that will need upgrading or readying for integration. Order management, CRM, warehouse systems, the list goes on.
9. Resources, Resources, Resources (People, Money, Time).  All of the above is a lot of work, and everyone has day jobs.  Not to mention, this sounds like it could be a significant investment.  Maybe we're just too slammed to deal with this now?
10. Lack of a deliberate process to work through #s 1-9.   It's easy to get confused and overwhelmed by the decisions and intimidated by the potential costs, especially when you're busy running your core business.   A host of manufacturers have made the transition to direct online selling successfully and profitably.  If you have not yet taken the plunge, it's probably high time that you start the investigation process to wrestle these issues to the ground.  None of them are insurmountable, but they do require some disciplined thought and decision making.  Get some help from a knowledgeable, experienced expert to help you identify the issues and opportunties, and engage in a process to work through the answers.  Your brand deserves it, and your prospective consumer customers are asking for it.

If We're so Smart About Multi-Channel Retail, Why Are Some Store Locators so Dumb?

Getting multi-channel retailing done well is not easy.  Good news for shoppers and retailers, a lot of companies are getting very good at it.   Buy online, pick up at the store.  Buy online, return to the store.  Order from the web kiosk in the store.  Check store inventory online.   Read web customer reviews in the store on your mobile phone.   There's no limit to the way customers use channels and devices to save time and get the information they need, and they are hopping across channels and devices like never before.  A couple of quick stats, in case you need convincing:

• 69% of shoppers research products online before going to a store (Source: Business Week survey 2008)
• With the economic downturn, 53% of shoppers say they use the internet more frequently to research products and prices (Source: NCR survey of U.S. consumers)

There's one multi-channel essential that's not that hard to execute, but can easily be ignored by e-commerce teams: the store locator.  Done well, a store locator can be a great resource to help a shopper  before she heads out to buy...it  might even get her excited about the shopping trip.

Here's a quick glance at the store locators of a few well known multi-channel brands, showing the best, and unfortunately the boring worst of what store locators can be.  

REI: They've been a leader in multi-channel execution since the early days of e-commerce, and their approach comes through loud and clear with their online store locator.  Shown below, I can get all kinds of information about upcoming events, the product categories carried in the store,  and I can even set an appointment to get personalized shopping help.  Love the GPS coordinates in addition to the directions, too.  

  

Nike:  While Nike's e-commerce site is frequently cited at the top of critics' lists as the pinnacle of balancing brand, engagement and utility, their store locator appears to be a long forgotten element.  After a forced zip code entry, you get in return little more than a weak Yellow Pages listing.  With an e-commerce site that's so vibrant and exciting, this makes me want to skip the store.  Surely that's not the intent.

 

Apple: It's a bit of an effort to find the store locator on Apple's site (deep in the footer), but as you might expect, the info and experience deliver above and beyond once you get there.   At the Apple locator, I can register for classes, schedule an appointment with a Genius, reserve a new item before it arrives in the store, even watch videos of past store events. I can sign up for email from my store to keep updated on upcoming events too.

 

Best Buy: This retailer has set many examples of the importance of involving store team members in just about everything.  The Best Buy store locator shows promise but could be so much more.  I love the personal note from the store manager and the ask for customer feedback, but the events area is blank (of course it should be coded so that the events header does not appear if there's nothing there) and I don't get the sense that there's much going on here.

 

Whole Foods:  Ok, so this site does not qualify as an e-commerce site, but it's a great example of what a store locator can be when you let the employees take ownership.  Note the store calendar, ability to download a PDF of the store's specials, get an RSS feed of events,  and the Twitter feed of the store manager's Tweets!

 

Let's face it.  I've lived in Seattle for 25 years and I already know where all of the stores near me are located.   But there's something cool going on in just about all of these stores every week that I usually don't know about. 

If you're not convinced that making your store locator worth visiting is worth the time, here are a few more stats you might want to consider:

46% of shoppers say that they want to receive product information, coupons, promotions and store sales information online. (Source: NCR survey of U.S. consumers)

26% of shoppers say the weak economy is causing them to make more frequent shopping trips to take advantage of sales and promotions (Source: NCR survey of U.S. consumers)

Film Review: In 'We Live in Public', an Internet Star of the Past Predicts a Disturbing Future

Ever since there has been an internet, there has been a dark side to the internet.  But, I'm a technology optimist.  While some were warning early online shoppers of fraud and privacy concerns, I embraced e-commerce with enthusiasm, buying whatever I could online.  While many feared that the internet would ruin personal relationships and de-humanize our social structure, I viewed  digital communication as a new and effective way to connect with family, friends and and customers.

Not that I don't appreciate the whistle blowers.  Some of them not only warn of the very real dangers of technology, they help us see  what the future could be if we don't act responsibly and intelligently.  Maybe that's why I liked this movie so much.

As regular readers of this column know, I am a passionate supporter of the Seattle International Film Festival, even though it takes place at just the time of year that the sun starts to appear in Seattle.  Every year for the past several years, there has been at least one film in the festival focused on retail, e-commerce or internet technologies, and I always look forward to seeing and writing about the films.  Even when they paint a picture of the internet's dark side like this one did.

This year's selection, We Live in Public, is thought provoking and well constructed.  If you are intrigued by the dot com boom/bust, the fascinating people at the center of it and social media's impact on our lives (good and bad), don't miss this film.

We Live in Public is a documentary centered on a social outcast and internet pioneer that you've probably never heard of: Josh Harris.  Those of you who've been around a while might recognize him as one of the founders of Jupiter Communications, and later Pseudo.com, a strange early days pre-cursor to YouTube, Facebook and other forms of internet broadcasting.  Harris became a rich man at a young age in the dot com boom, but what happened after Jupiter and Pseudo is the real story.

The majority of the film focuses on two bizarre and sometimes disturbing events in Harris' life:

a) a social experiment called Quiet, which took place in 1999, in which Harris and dozens of fellow "artists" lived in an underground bunker commune while dozens of cameras recorded their every act, and

b) a subsequent experiment in which Harris and his girlfriend filled their New York apartment with over 30 cameras and streamed every intimate detail of their daily life over the internet 24X7 while observers chatted and commented on their every move.  (Hardly shocking in today's world, but keep in mind, this was well before Facebook and YouTube.)  No shock, the relationship crumbled on camera and ultimately Harris' fortune was gone too.

Footage in the movie spans 10 years of Harris' life and boils over 5,000 hours of film into a tight, fast paced 90 minutes.  What you get is an intensely compressed view of Harris that will leave you wondering whether he's a visionary genius, a drama queen or a disturbed social misfit.  You also get a glimpse of how Harris viewed the future, and how very frighteningly close to right he was.

Regardless of how you feel about Harris in the end, it is hard to watch this movie without seeing eerie parallels to the behaviors we see regularly on social sites today, a decade after Harris' online broadcasts of his life.   As we watch Harris and his girlfriend withdraw from one another in favor of their collective online audience, we see Harris' self worth increasingly defined by the number of people watching him as he goes about the mundane activities of living.   Anyone out there ever felt the addictive rush of Facebook updates or proudly watched their number of Twitter followers ratchet into the triple digits? If so, you'll squirm in your seat.

In the end, as I watched Josh disappear from the online world that he so passionately helped to build (he's now living in Ethiopia of all places, in just about as unplugged place as possible), I was reminded of the "too much of a good thing" cliche'.  I wished that he had been able to find a balanced, productive way to channel what he had learned in order to keep going.  But then, I also wondered if he had chosen to quit and go to Ethiopia for dramatic effect, knowing that the cameras and voyeurs would eventually find him.  Like I said, you're never quite sure if you're watching a genius or a drama queen.

I'm still a technology optimist. I still love the internet, e-commerce and social media.  But the 90 minute trip to the dark side was an entertaining reminder of how intelligence and practicality need to prevail.  We can't let the bad guys win.

If you want to read more, there's a great interview with the director here.

Keeping up with Your Customers: 5 Fundamentals for Tackling the Multi-Channel Monster

This morning, two very good articles about multi-channel retailing popped up from Twitterers that I follow.  With way too much to read already, I hesitated to click but I am glad that I did.  This is a topic I have long been passionate about; and with the changing dynamics of customer behavior in a recession and mobile moving like a high speed train, more and more retailers are becoming equally passionate about aligning channels and devices to capture demand.  First, a bit about the two articles and then my take.

Both articles are well worth reading.

The first, in How to Fit Into Your Customers' Multi-Channel Lives, Peter Merholz of HBR does a great job of setting the historical stage for multi-channel services.  Long before e-commerce or the Internet, Kodak helped customers and built loyal relationships by breaking up the process of taking pictures an developing film, letting each step be managed by the people and places best suited to the task.  Apple followed suit with the iPod decades later by separating the music purchase and management from listening.  Good multi-channel food for thought for any  retailer or service provider.

The second, a new blog post at X-Channel Retail provides a good overview of recent multi-channel studies from Aberdeen and Retail Systems Research.  You'll find plenty of stats indicating that multi-channel initiatives are alive and well in most top-tier retail organizations, with improved visibility to inventory across channels and coordinated marketing efforts high on the priority list.

It's hard to argue that investing and executing well on a multi-channel strategy is a smart thing to do.  But achieving the elusive "seamless experience" is easier said than done.  With mobile adoption on a fast and furious pace, the need for retailers to orchestrate the research, shopping and buying experience not only across channels but devices (and devices within channels) means that execution will be more complex than ever.  While many retailers are doing it well, many are simply not prepared for the cultural, technical or organizational challenges that come with tackling the multi-channel monster.  Having spent a good portion of my career and consulting life in the multi-channel world, here are my top 5 fundamentals for taming the beast:

1.  Focus on the unique strengths and uses of each channel and device.  Multi-channel is about more than having the website available in your store or on a mobile phone.  It's about each channel bringing unique value to the customers' shopping and buying experience along the way. Think about the Sears curbside pickup program; customers receive a text message when their online purchase is ready for pickup at the store curb.  The cell phone didn't process the transaction, but made it a more convenient experience.

2. The decision to integrate across channels and devices must be deliberate.  Most retailers today are multi-channel in at least some sense.  Most have some level of channel synergy, but often that synergy has happened organically or accidentally.  Despite the clear customer demand for multi-channel convenience, many retailers organize and incent team members to behave like silo channel operators.  According to the Shop.org 2008 SORO Report, 85% of multi-channel retailers say that their website's highest priority is to drive online sales and profit.  If that's the case, multi-channel initiatives are unlikely to be at the top of the priority list, with online conversion drivers taking precedent.  If the decision is to integrate (and it should be), giving it the appropriate priority and resources will leapfrog internal silos and organizational boundaries.

3.  The technology essentials must be defined and planned.  Those in the know on multi-channel will tell you that transparency to inventory and pricing across channels, centralization of customer data and flexible access to product content are key. None of these are small things, so a clear road map will need to be created based on priorities and anticipated ROI.

4.  Multi-channel integration requires clear ownership and teamwork.  An executive mandate to integrate is critical, but so is "on the ground"  leadership.  Often, multi-channel initiatives lack a clear owner or a dedicated cross-functional team to focus on execution.  According to the SORO study, only 37% of companies surveyed reported having a cross-functional team to design and roll out cross-channel features.  Consistent accountability for multi-channel programs vs. treating them as "side projects" outside of normal business will go a long way.  You'll need a great knowledge source from each channel, someone from customer care, someone from IT and likely others, depending on the initiative.

5.  Objectives and incentives must be aligned around customer scenario success.  Teams tasked with multi-channel issues need to map the "end to end" customer experience, carefully planning how each channel or device will help the customer achieve their goals.  If performance metrics are focused on customer success, the right decisions will follow.  Chances are someone on your e-commerce team is skilled in scenario design: tap into them for multi-channel experience design.

Finally, pace yourself and don't expect overnight success.  Most multi-channel initiatives by their nature are hard to do well.  Be sure roll outs are carefully planned and tested before wide release, and have mechanisms in place to gather customer and employee feedback early.  You're going to have a long relationship with the multi-channel monster.

E-commerce History as Teacher: The Brands Have Changed, but the Lesson Lives On

I don't have a hoarding problem.  But when it comes to e-commerce, I admit I am a pack rat.  When I read a report or an article about selling online that hits the mark I tend to save it and refer to it multiple times over multiple years.  Yes, this industry moves fast and changes frequently, so sometimes dumpster diving through old files is good for little more than amusement (about a month ago I found a box full of mouse pads that e-commerce companies used to send me as "gifts" when I ordered online in the mid 90's....almost all of the companies have since flamed out).  But many times, I come across something that I'm really glad I kept. 

Earlier this week, I re-surfaced a Forrester report from (get this) 2000. I saved it because I was working at Eddie Bauer at the time and was unbelievably proud of this statement from the report:

"Style-obsessed retailers like Williams-Sonoma and Banana Republic will continue to jump into online sales with sites that deliver flash over substance, exciting and then disappointing potential customers.  Unable to resist force-fitting their offline branding campaigns into their Web boutiques, they will fall further and further behind retailers like Eddie Bauer that understand that the core of online branding is serving user needs"

Ok, so that was a long time ago.  Williams-Sonoma, Banana Republic and Eddie Bauerall now have great e-commere websites that are a true pleasure to shop and reflect and enhance their brands.  But it wasn't always that way.  And for a good many brands today, it's still not that way.  Top tier retailers and manufacturers frequently struggle with how to make the best of the e-commerce channel and strike the delicate balance between immersing visitors in the richness of the brand while still creating a focused shopping experience that results in a transaction.

Recently, I did an in-depth shopping audit across e-commerce sites at 15 brands (all recognizable names).   It became clear early in the audit that this issue of balance between brand building and a useful commerce experience is alive and kicking, a good 9 years after the Forrester article first hit my desk.  Only the names have changed.   Here's a quick summary of some of the most common mis-steps:

1. Long, slow, heavy flash intros (yes, they are still out there!) 

2. Links to my account, service , search and other critical functions are hidden in favor of gorgeous photography

3. Navigational categories that reflects the retailer's nomenclature instead of the customer's language (i.e. The Market Street Collection)

4. Search functionality that brings up null results for common terms like "suede shoes" or "hiking boots" (search was broken on just about all sites I visited!)

5. The ability to sort the category thumbnail page alphabetically by product name (who cares?) instead of basics like color, size, price. 

6. Avoidance of customer reviews and ratings due to fear of a negative review (see my previous post on this one!)

7. Customer service, return policies and shipping information buried deep on a "FAQ" page instead of surfaced at critical decision points in the shopping process.  Most service pages did not list call center hours or set expectation about when email inquiries would be answered.

8. Points of real value, like free shipping offers not surfaced until late in the shopping process instead of on a home or category page.

9. Product pages that "show" but don't "tell":  great photos but little or no copy that answers real consumer questions or highlights benefits.

 10.   Overuse of icons and symbols for technical features that are hard to decipher and de-code.

So, how does this happen? Obviously any one of the above situations does not reflect well on any brand.  Yet they occurred frequently across numerous e-commerce sites for top brands during my shops.  I think it happens for a number of reasons:

• Executives and employees at many companies rarely look past the home page of their e-commerce sites.  Approvals and creative reviews are limited to visual appeal and adherence to a style guide vs. the delivery of critical shopping functionality. 

• Agencies hired to lead or assist with site design are hired for their experience with the brand's other media or for their ability to grasp the brand's visual essence vs. their expertise in e-commerce interaction design.

• Brand managers and creative directors shy away from advocating helpful customer tools like reviews and sort/filter tools for fear of becoming to "sales" vs. "experience" focused.

• Brand terminology (The Market Street Collection, etc.) works for store signage and print media (and even in e-commerce promotional space), but fails as navigational
  nomenclature, something rarely thought about during product development.

• Many companies under-invest in copy writing and content development specifically focused on web user goals.

I think Forrester said it best back in 2000, but I'll say it again. Enhancing your brand's image online means paying attention to more than the visual integrity.  The nature of the e-commerce channel requires that we pay equal (at least) attention to the customer actions the site must deliver. Otherwise, the brand experience is eroded.

While many e-commerce sites have clearly figured this out and found the delicate balance between form and function, it's clear from my recent experience that as an industry, we're still seeking guidance and answers in this critical area.   Good thing I'm a pack rat. But I don't have a hoarding problem! (Anyone want to buy a sock puppet mouse pad?)

 

From B2C to B2B and Back: 5 Tips B2B Sites Can Take From E-commerce

Back in January, Brian Walker posted a short piece on some of they key cultural differences between B2B and B2C organizations, and how those cultural differences drive differing approaches to web site requirements and technologies.

Over the last year, I have seen an increase in the number of B2B clients seeking help with their web strategy, and I've had the opportunity to work with quite a few of them.  While initially it might seem odd that a retail/e-commerce consultant can offer insights on how to make a B2B website work, I have found that there are many strategic concepts rooted in retail and e-commerce that can catapult B2B websites from the bland brochure-wear of the '90's into vibrant and effective marketing and selling tools.

First, it's important to acknowledge that B2B is a different animal.  Sure, it's selling stuff to customers just like e-commerce, but the customers and the way they buy are dramatically different.   The critical differences that need to be considered are:

• The selling cycle is usually longer:  Depending on the product, it may take weeks, months or longer from the initial research to the purchase.
• The decision process may cross from online to offline numerous times: from initial web search to phone conversation to more web research to a sales call, etc. The information gathering and decision making takes many twists and turns and touches.
• There may be many people involved:  And, those people may float in and out of the decision process over time, gathering different pieces of information along the way.
• Products and services (and their prices) are more likely to be negotiated and tailored to the client: this means that zeroing in on specifically what products and services to cover on the website may be a very complex undertaking.

These differences cause many B2B clients to ask "is my website even worth the investment?" I think the answer is absolutely yes.  If you need convincing, download the Enquiro B2B Survey that was done in 2007 (it's free).  Ok, it's a couple of years old, but I suspect that the findings have become even more pronounced.   The entire study is worth reading, but most notably, across the entire B2B purchase cycle, from awareness through purchase, company websites and search engines are the most used resource by B2B buyers.   That means if you're a B2B company and your website is bad (and, I must say, many of them are), you're likely missing significant opportunity.

So, here are my top 5 e-commerce concepts that translate well in making great B2B websites:

• What's on the menu?  E-commerce sites are typically very good at telling you what they sell.  There's a defined product assortment, usually categorized.  Not so with many B2B sites.  In fact, many B2B companies don't think about their business in clean categories the way retailers do.  Spend some time on this ; how do you expect customer to understand what you offer? What do they call it? If a lot of your phone calls start with "Do you do____?" , start there, and develop a framework for your products.
• Show it off and make it move: Ask any top tier e-commerce leader and they'll tell you that video and interactivity, done well, can pump up the sales volume.  Yet, most B2B sites are a sea of stasis.  A nice video about your operation or a demo of how your product works can make it real and bring credibility to your company. Ditto for professional images and larger & multiple views (if applicable).  
• The power of proof: Customer reviews have become one of the key decision tools for customers on e-commerce sites.  While there may not be a direct translation to your B2B site, especially if products are built to order or highly customized, testimonials can be a great substitute. Well placed testimonials from high profile clients can help the customer turn the corner and pick up the phone.  Client lists and case studies are also great proof points.  If you're worried about your competitors seeing who you do business with, get over it. They probably already know, and they're already calling them.  Holding back info that your customer needs because you're afraid of a competitor is not likely to help your business. He who is transparent (within reason) and can prove (not just talk about) greatness will likely win.
• Clear and ever-present call to action: On e-commerce sites this is the "add to cart" or "buy now", of course.  Not so clear for B2B, particularly if the transaction takes place offline.  So think about it. What do you want visitors to do? Most likely, you want them to call you or email you, or request a quote on a job.  Sounds obvious, but I am amazed at how many B2B sites have the contact information buried in the "contact us" section vs. making it readily available on every page.  Your customer can have that "moment of truth" on any page.  Have the number there when they're ready to pick up the phone.
• Tracking the transaction path: That phone number we just talked about that you're going to put on every page? Make it a track-able phone number so that you can measure how well your website is achieving it's goal of driving people to contact you.  Bonus points if you add call recording as well, so that you can go back, listen to calls and coach your sales people on how to handle these important inbound leads.  Be sure salespeople know that the phone number is on every page and that sending those calls to voice-mail is not an option.  Tie phone activity to your web analytics to see the full picture of visit through "conversion", even if you define conversion differently.

 The good news here is that in many industries, the B2B bar for websites is set very low. A few simple, and likely not too expensive changes can have you towering over your competitors and helping your customers get the information they need.  And don't forget to track the results. Then, you won't have to trust me when I tell you that the investment is worth it. You'll know.

Why CRM Matters More Than Ever in Tough Economic Times

Everywhere I go, someone is trying to save me money.  The grocery store.  The department store. Restaurants. And of course e-commerce sites.  It's everywhere: coupons, signs screaming "sale", huge percentages off.  It's like every retailer in the world is dolling out virtual dollar bills.

No question, we're in a nasty economic situation and no question, it's taking more incentive than ever to get the register to ring.  As a retailer and as someone who has spent the better part of her life trying to crack the code on getting customers to buy, it pains me to no end to see these genuinely well-intentioned efforts by retailers executed in a way that is costly and ineffective in achieving the desired result.  Here's my latest example:

There's a spa/salon not far from my house.  It's fantastic and I've been going there for years.  Actually, as I've aged, I find that I go there more frequently as there's a lot more work that needs to be done.  Brows, nails, toes, hair, the occasional facial when the wrinkles get too hard to hide.  You get the point.

I am a regular, to say the least.  Every 3-4 weeks for haircuts and brow waxing.  Typically every 4-6 weeks for pedicures and periodically, a manicure for an important meeting or occasion (too much typing to get them on a more regular basis).  While the economy is tough, and I, like everyone else have found things to trim back on, my hair and nails will not stop growing.  So it's doubtful that my spending habits at this salon will change much in the months or years ahead.

This salon has my appointment and purchase history for the last however many years.  A lot of years.  They can probably predict when I need an appointment better than I can.  The technicians all know me by name and are always pleasant to deal with. We have a nice relationship.

So, here's the kicker.  I have right now, sitting in front of me on my desk, the following:

• A letter from my hairdresser offering me $10 off my next haircut
• A gift card from a nail technician offering me $15 off my next service combo of $65 or more
• 5 (count them) $5 off coupons good on my next service or retail purchase now thru April.

So, what's going to happen?  I'll use all of them.  But, as you've probably figured out, I would have made appointments and paid for services whether or not I had this pile of discounts.  I have no doubt that business for this salon is probably not what it was a year ago (hardly anyone's is, after all).  But, they are now making their business worse by spraying discounts far and wide, giving many of them to customers like me, who show no slowdown in their purchase activity.  They'll be making less money on me without the benefit of any extra business.

I know, implementing and executing well on CRM is not an easy task, but if this one anecdotal example is any indication, the payoff would certainly be there.  What if the salon only mailed coupons to those customers that they hadn't seen in 6 months? Or those customers whose spend over a certain period of time had slowed by a certain amount?  The really painful thing here is that they HAVE the data.  I know.  Every time I call for an appointment, the service rep diligently types the info into a computer and verifies my contact and credit card information that they have on file.

Managing customers is about more than having a nice relationship, it's about having a smart and profitable relationship.  In these times, can we afford any less?

E-commerce Help Wanted: Retailers Need Not Apply?

Today is Darwin's 200th birthday, so what better time to reflect on the evolution of e-commerce leadership.  

A recent article about e-commerce executive recruiting  in Times Online reveals that retail experience is among the least important attributes that retailers now seek when hiring someone to lead their online effort.   While at first I was surprised, some quick memory checking made me realize how much the e-commerce leader's role has changed in the last decade, and how very different the skill set requirements have become.  Still, when I thought about the important perspective that a seasoned retailer brings to the online channel, I'm nI decided I wasn't necessarily willing to push retail experience to the bottom of the pile.  Here's why:

In the years following my graduation from college, I spent a lot of time on the selling floor of retail stores.  It was the early 80's; there was a recession going on (sound familiar?) and jobs were scarce.  It wasn't glamorous. My feet hurt,  it didn't pay well, and the customers were demanding.  I was glad to leave.  But, 15 years later, as a pioneer in the early days of e-commerce, I drew from that selling floor experience in a big way.  When I had to think through how to present a product online, what information a customer would need to make a decision, how to communicate helpful service information without a human, I thought back to those days when I had to look the customer in the eye (not in the email address) and tell them that the item they wanted was out of stock or that the sale didn't start till tomorrow and I couldn't honor the price today. I remembered that sick feeling in the pit of my stomach when I had to walk a customer because I didn't have what they wanted.  To this day, when I am getting a website ready to launch, I think about how I had to be sure that the selling floor was "ready for showtime" every morning, with the best selling products front and center, the right signs on the fixtures and my brain up to speed with what specials were running and what new items had just come in.  Today, as an e-commerce consultant, I can always tell when the client I'm working with came from the retail ranks.  They are typically the ones with an intuitive sensitivity to the customer experience and a maniacal sense of urgency about every customer facing detail.  I never ask, but I suspect they have that same sick feeling in the pit of their stomach when the customer isn't happy.

Of course, e-commerce has grown up, and with it, the expectations of the e-commerce leader. In the beginning, retailers had no choice other than to choose a passionate person from the inside.  After all, when an industry is only a few years old, there are no seasoned veterans to choose from.  Early stage e-commerce leaders relied heavily on their offline institutional knowledge  and internal company relationships to get things done.  They found insight and validation from their peers at other companies through Shop.org and regional/local networking groups springing up to share information.  They became evangelists in their organizations, and were often the catalyst for channel coordination and integration; and who better to do this, they were the ones who had a view of what the future retail experience was going to be.

As the online business matured, these e-commerce leaders became a very special breed: seasoned execs who not only had an extensive background in traditional retail or catalog operations, but who now offered a bonus layer of expertise in how to get it done online.

But, sometimes evolution happens very quickly, as it has in e-commerce. The demand for seasoned e-commerce leaders has outpaced the supply.  E-commerce businesses and technologies have become more sophisticated and complex.  E-commerce now represents a substantial portion of many retailers' sales and profits.  For most retailers, e-commerce represents one of the few bright spots of growth and innovation. 

Retailers eager to make the most of the online channel may no longer have the luxury of putting a good store/catalog person in charge of e-commerce and letting them "figure it out".  The learning curve has gotten steep and the e-commerce leadership job now comes with c-level expectations and demands.   When seeking an online leader, the Times Online article points out, retailers may cast a wider net for talent.  That net may include top tier talent with little or no experience in retail.

In the wide net, you may find someone with the right leadership and vision to drive e-commerce, but before you leap to hire someone without retail chops, think about these questions:

• Who else on the e-commerce team can be the retail voice? Is their voice loud enough and respected enough to be heard?
• Is the boss of this potential new leader someone with a strong retail mindset and can they provide mentorship in this area?
• How critical are cross-channel and multi-channel initiatives in your organization? Will this potential new leader understand the complexities and cultural challenges in executing these initiatives without hands-on retail experience?

And finally:

• Has the potential new exec spent any meaningful time dealing directly with customers, and in what capacity?  In other words, have they had to look the customer in they eye (not in the email address)?  And what gives them that sick feeling in the pit of the stomach?

There are consequences to taking retail out of your e-commerce gene pool.  Be sure you're ready for them.

Nudge Your E-commerce Customers and Grab the Low Hanging Fruit

Often, I'm asked by clients or prospective clients to look at their e-commerce websites and identify low hanging fruit.  Usually, that means unearthing opportunities to improve the customer experience, and thus, improve conversion.

Here's one way to grab some low hanging fruit: give your customers a nudge.

In any given e-commerce shopping and buying experience, customers are faced with a large number of choices to make.  I'm not just talking about selecting the product to buy. It's all of the various configurations of choices that come after you've found the item that you want:

• What color and size do I choose?

• What shipping method do I want?

• Do I want to sign up for email, and if so, do I want HTML or text?

• Do I want the item shipped to my billing address or a different one?

• Do I want to save my personal info or create an account for next time?

• What credit card do I want to pay with?

• Do I want to donate extra dollars to a good cause?

The list goes on.  Depending on the nature of the product, there can by a myriad of custom configurations of a product (like the Timberland boot builder) or options for receiving a physical product vs. a digital version (such as an airline ticket or software product).  As many online shoppers have discovered, on some websites, it's all too easy to make the wrong choice.  In fact, some websites make matters worse by having the wrong choice "pre-selected", causing frustration, abandonment, or worse, an erroneous order followed by dissatisfaction and returns.

By dissecting all of the places on your site that your customers need to make choices and gently "nudging" them towards the appropriate choice, you can make your customers happier AND improve your e-commerce business results.  

Fortunately, some great brains at HBR have written an article and created a useful decision tree methodology for those of us who lead e-commerce efforts.  The article, Nudge Your Customers Towards Better Choices is a must-read for any information architect or designer faced with getting customers through the online decision making process, and for e-commerce business leaders wrestling with the pros and cons of making "default" choices for customers, either with the intent of achieving a business results (such as getting more email sign ups) or improving customer satisfaction (such as presenting personalized selections).  Note: you will need to pay for this article on the HBR site, but it's only $6.50 and, in my view, well worth the investment, as you'll probably refer to it again and again and put the decision tree they've created on your bulletin board.

Fundamentally, the HBR authors divide the world into two key types of "default" decisions that can be presented to a customer: a) mass defaults, where a retailer "pre-selects" the option that a majority of users will likely choose and b) personalized defaults, where implicit or explicit information about a customer is used to "pre-select" the best option for them. 

Both of these default types come in a variety of flavors, all of which are described in detail in the article, with examples of appropriate usage based on the business objectives and customer information available.   But, to quickly make they point on how useful nudging can improve the customer experience and business results, here are a few examples of my own: 

First, an easy one.  A typical illustration of an e-commerce  mass default is below.  When it's time for the customer to choose a shipping option, pre-selecting "standard" shipping makes sense.  It's the least expensive option, and if I have special circumstances that cause me to need expedited shipping, I don't expect the retailer to know that.  Of course, if they can highlight messaging about shipping deadlines here around key gift-giving holidays, all the better.

  

In the above example, specific info like the anticipated date of delivery would go a step further to helping the customer make the right choice.

Now, let's look at an example where the wrong mass default is a likely source of frustration.  On the Allen Brothers site, notice that the default quantity choice is set to "0".  Why not set it to "1", since customers ordering will order at least one, and must choose a quantity in order to add to cart?

 
How many customers do you think mistakenly hit "add to cart" without choosing a quantity?

Personalized defaults, when well executed can lead to increased conversion, loyalty and reduced returns.  Consider myShape.com, the women's apparel site that "pre-selects" the right size for the customer based on the extensive body measurement information she provides.  Assuming they have the right data, this saves customers the hassle of determining the right size, and reduces the risk of returns.  This is a form of personalized default HBR calls a "smart default".  I agree, it is smart.

Then, there are those mass defaults that would be so much more effective if they were personalized. I'm a petite.  I've stopped growing (at least vertically), so that's not likely to change. Yet, every time I shop online from my favorite stores, I have to "override" the default "regular" size setting. Sure, most women are "regular", and while most stores probably don't know enough about me to recommend a specific size, they could easily get enough data from me, either in my profile or in my purchase history to pre-select "petite".  Incidentally, when I was rushing through some shopping last holiday, I mistakenly ordered "regular" from two websites (see eddiebauer.com below) and promptly returned them, I was too aggravated to make an exchange.

    

After reading the HBR article and doing a quick drive by on a few sites, I've concluded that paying close attention to key points of customer choice and applying the right form of defaults is an area of untapped opportunity for many. If you're under pressure to improve your business results through low hanging fruit (and who isn't these days?), try this:

Buy and read the HBR article. Identify all of the decision points on your site where defaults are used or could be used. For each, ask yourself:

• Is this the appropriate form of default?
• Is the appropriate choice pre-selected?
• Are there areas where we're using mass defaults when personalized defaults would be more effective?
• What customer data could we gather or what data do we have that would help us offer a truly helpful personalized default?

Then, set up some A/B tests, and gently "nudge" your customers to the right choice.  Chances are, you'll see that a well placed nudge might just push them over the "buy" threshold, and allow you to pick some low hanging fruit.

 

 

 

 

 

 

 

E-commerce Freshman: Is Your Shopping Cart Before the Horse?

If  launching a new e-commerce site is on your list of New Year's resolutions for '09, here's what you should NOT do first: start hunting for a shopping cart solution.

While most of my clients are established online retailers, recently I have received a number of calls and emails from e-commerce first timers.  The recession has prompted some pure brick and mortar retailers to seek growth in the online world. Or, sole proprietors are starting e-commerce businesses with hopes of  pursuing a dream and ditching the need for a day job.

Inevitably, the conversation starts with the client inquiring about what e-commerce platform or shopping cart software they should use. There are so many out there, it's confusing, etc. 

Well, it IS confusing.  But one of the reasons it's confusing is that you may be putting the shopping cart before the horse. 

If you are looking at e-commerce solutions before planning the kind of business you are going to run and how you are going to run it, odds are that a) your quest for the right software solution will be frustrating and painful and b) you'll probably pick the wrong one.

Here are ten signs that you've put the shopping cart before the horse.  If any or many of these describe you, don't even think about the shopping cart yet.

1.  You haven't decided what you'll be selling in your online store.   The products, how many of them you'll carry, how frequently they'll change, how complex they are to sell, all of that stuff really matters.

2.  If you have decided what to sell,  you haven't looked at how competitors are doing it , or

3.  You aren't absolutely sure as to why someone would buy from you vs. a competitor. Let's face it.  Just about everything is being sold online already.  Chances are a more established player is already a jump or two ahead of you.  What will make your e-commerce site a more attractive option to customers?

4.  Speaking of customers, you don't have a clear picture of your target customer or a  plan and budget for attracting the right visitors to your site.  Don't think that the search engines will just find you.  It takes money and work to get qualified traffic to a website.

5.  You're not sure how you'll get the photos and product descriptions for the products you'll be selling, or who will be doing the ongoing merchandising and updates.  Doing this part well can mean the difference between a professional site and one that looks and reads like an afterthought.  If you're planning on carrying a wide assortment of products, don't underestimate the workload here or the tools you'll need to handle it efficiently.

6.  You don't know how you'll handle customer service inquiries, who will take the calls and answer emails or how you'll keep track of them.  Many early stage e-commerce efforts overlook the need for human contact with web orders.  It happens, so figure out how you will make it easy for customers to contact you and what you will need in terms of resources and infrastructure to deal with it.

7.  You're up in the air about whether you're going to fulfill orders yourself or outsource the function.  If this is you, you may want to skip ahead to point #10 below and let that start your decision making process.  Think about the volume you'll be doing and what you need to be able to manage, process, and fulfill orders, both at the start and as your business grows.

8.  You haven't thought through your polices and cost structure regarding shipping and returns.  This is a highly competitive and rapidly evolving area of e-commerce.  Flat rate shipping, expedited options, pre-paid returns, shipping promotions, the list of options and logistical issues is significant.

9.  You don't know who will be designing or developing your website, and/or you're not certain about all of the content and features your site will need.  While you're at it, think about how frequently you plan to make cosmetic and technical changes to your site and how those will get done.

10.  Saving the most important for last: You don't have a plan for how much business you will do, thus you don't know how much you can afford to spend on your e-commerce site.   The key here is to start with a plan.  Even if the plan is wrong, you'll be better off than if you had no plan at all.  Start with the fundamental metrics: How much traffic will come to your site?  How many of those visitors will place an order? How much money will those visitors spend and how many units will they buy?  This should be the basis for answering many of the questions above (like whether or not it will be feasible to handle fulfillment yourself, or what kind of budget you need to attract the right number of visitors to your site).

You'll probably find that working through these issues will cause your thinking to change regarding what you need in an e-commerce solution and who you need to help you along the way.  Chances are, you'll need more than just a shopping cart behind the horse.