Rising to the Challenge of Capturing Customers in 2009

This year promises to be one of the most challenging in recent memory for online retail. The strategies and tactics that online retailers have relied upon in the past will not work in this harsher, new consumer climate.

This year will clearly separate winners from losers. Winners will have the wisdom and discipline to eliminate distractions and focus their resources in a limited number of areas. They will prioritize these key areas to the top of their agenda and push all others aside.

While these ideas may not be the newest, sexiest, or trendiest topics at the next industry conference, they are proven to drive results. Here are five priorities for driving results in 2009 and positioning your business for success in 2010:

Priority 1: Drive Engagement With Your Existing Customers

A plethora of research over the past two decades compellingly shows that capturing incremental “share of wallet” from current customers is one of the most effective investments a company can make. Intuitively, this makes all the sense in the world: an existing customer has already demonstrated a propensity and willingness to buy from you — they find something of value in your offering — wouldn’t it make sense that they are a better bet than a net new prospect? In 2009, we must leverage these high-potential customers. A couple of places to start:

• Feed the Loyalist: Analysis of any customer base consistently yields almost the same finding: that 20 percent of your customers — the high-value customers — drive 80 percent of your sales (and even more of the profits). Some simple data analysis can help you identify who these high-value customers are. The analysis can then serve as a basis for additional research into what makes them behave the way they do. What do they need? How do they shop? What do they value? Armed with these new insights, we can develop a better online experience tailored to the needs of our most important customers rather than designing the experience around an “average” customer as most retailers do today. Understanding your best customers provides a way to maximize your investments by focusing on customers that yield the highest return. These new insights not only allow you to build stronger, more profitable relationships with your current customers, but also focus your marketing efforts to attract new “look-alike” prospects who will become high-value customers over time.
• Trigger Marketing Tactics and Dynamic Email Campaigns: Relevance is the key to marketing. But how can we be relevant when we know little about a customer given limited data based on a single purchase? Trigger marketing tactics such as dynamic email campaigns are ideal in this setting because they allow us to deploy relevant marketing messages based on customer behaviors despite not having deeper insights about the specific customer.

Priority 2: Let Your Customers Help You Focus

If you listen to your customers, they will tell you exactly what you’re doing right, what you’re doing wrong, and where to invest your money. Some ideas to consider:

• Usability Testing: There’s no better way to get a new perspective on your site than to watch a group of real customers shop it. This isn’t expensive and almost always yields actionable insights that can help drive sales.
• “Voice of the Customer” Programs: Customer feedback mechanisms can be and should be deployed at every customer touch point to help you understand what’s working and what’s not across the customer experience. This can be done relatively quickly and cost-effectively. Email surveys, site intercept surveys, call center monitoring, and any number of feedback collection mechanisms can be implemented and monitored to gauge the pulse of the customer. Two things to keep in mind:
  1. the best insights typically come from the freeform comments rather than cross-tab data, and
  2. you can only find these insights if you invest the time and resources to read the comments and actively attempt to draw themes and trends.
• Customer Valuation: All customers are not equal and should not be treated equally. Some inexpensive data analysis will quickly allow you to determine the relative value of different types of customers. This analysis will help with the loyalist engagement strategy mentioned above and help you identify which customers types to listen to the most (e.g. if 60 percent of customers say they don’t like the navigation schema on your site, but the 20 percent of customers that drive most of your sales say they do, you should probably leave it alone).

Priority 3: Maximize the Value of Every Customer Interaction

You can’t afford to waste or squander even a single customer interaction; yet most online retailers routinely do so. A recent survey showed 36 percent of online shoppers suffered roadblocks when attempting to buy during the past holiday season. Every part of the customer experience — from marketing email to site experience to fulfillment and customer service — should be flawless and optimized for maximum impact.

• Continuous Experience Optimization: A combination of web analytics, mystery shopping, and other site analysis should be utilized to scour your site experience for problems and issues. Why is the home page bounce rate so high? Why can’t I easily find the exclusive item featured in the TV ad? This constant optimization process yields rich results and helps to maximize every consumer visit.
• Upgraded Email Programs: The research is pretty clear on the benefits of more sophisticated email techniques. Segmentation, targeting and testing, along with a robust dynamic campaign arsenal, all lead to exceptional results. Yet few adopt this approach because of the work involved, thereby squandering a golden opportunity and a valuable customer interaction.
• Call Center Programs: When you have a live customer or potential customer on the phone, make sure you don’t waste the opportunity. Consider upgrading your call center practices and operations to ensure every customer has a great experience when they call and every live interaction is viewed as a value-added sales opportunity.

Priority 4: Energize Your Multichannel Programs

Discussions of multichannel as the Holy Grail of online retail have been ongoing for several years, yet few retailers have aggressively moved to capture this opportunity despite its massive potential. In many of the cases, this has little to do with technology obstacles or access to investment and resources. Instead, it has everything to do with organizational silos and corporate politics. Tough times might allow for radical changes that challenge the status quo. This is the year to make the charge and attempt to break through those walls.

• Integrate Multichannel Marketing: Every single piece of marketing should prominently highlight every way to shop, from circulars and direct mail to signage and display. No more multimillion dollar TV campaigns with a nanosecond flash of the URL in eight-point font at the end.
• Deploy Associate In-Store Ordering: It will be critical to capture every potential sale both offline and online. Deploying and heavily promoting online ordering from within your offline stores helps customers find what they need, when they need it.

Priority 5: Seize the Opportunity With Your Executive Team

For many organizations, the online channel was the only area of positive growth this past year. Seize this opportunity to convince your executive team that investing in online is one of the smartest investments the company can make. Before you make this play, make sure you have done your homework since you might not get a second chance.

• Make Sure Everything Is Working: You won’t receive additional resources if you can’t manage what you have today effectively. Not only should everything be working, but you’ll need data and reporting to prove your case.
• Develop a Polished Vision and Plan: Few executive teams will give you a blank check — they need to be sold. Make sure you present a compelling vision as well as a comprehensive plan. Spend the time to compile the research, get the case studies, and create comps to show where you want to take the online experience. Show them the compelling business case for online driving online, offline, and brand impact.

Better Results in 2009, Success in 2010

There’s no doubt this year will present challenges for everyone in retail, online and offline. But there is a silver lining if you look for it. If you have the discipline to focus your efforts as described above, you win in more ways than simply driving better sales than your industry counterparts — you will have stronger relationships with a larger base of existing customers, better customer insight that leads to improved decision making, a structured approach to optimizing the customer experience, a stronger multichannel footprint, and the support of an executive team who finally sees the power of the online channel.

All things considered, not a bad year.