I finally experienced it – the inevitable reality of staying in Delhi – a power cut! Sitting in the darkness, waiting for the generator to pickup, I thought – imagine you are asked to play a game of darts in a room that is pitch-dark. You throw the darts in all possible directions, hoping that at least one of them will hit the bullseye. When the lights are switched on, you find out that although a couple of darts came close, most other ended up far away from the target. This sounds like a pointless exercise – however, the reality is that a lot of companies do this to their customers every day.
Most of the online retailers continue to focus on a "one size fits all" approach where they throw all sorts of offers and promotions at the customers, hoping that the customer will accept atleast one of them. This approach certainly works to some extent and can result in some moderate sales however, this is like throwing darts in different directions and then, later drawing bullseye around them, to feel good about one's actions.
Retailers can significantly improve their effectiveness by really understanding how their customers are interacting with their website and other channels, and then targeting the offerings based upon these insights. The best part about an online environment is that these insights are available online – visitors are leaving these cues every single second. However in most cases, this information does not go anywhere. For more sophisticated retailers, this information probably finds its way into logs or the database or some kind of analytics engine. However, even in those cases, this information does not get effectively acted upon. This is even worse, because, taking our darts analogy further, this is like playing the game of darts in a well lit room, however keeping the eyes closed during the whole time.
OK – enough with the darts analogy, lets look at what an online retailer can do to effectively collect and act on the information that is being collected in the online environment. The first thing an online retailer must do is to implement a good web analytics engine. The web analytics engines are fairly easy to implement and can offer significant insights around how customers are navigating through the site, what they are looking for and exactly where they are leaving the site. Comparing this to a physical store environment, this is like having a team of observers who are following all the customers in the stores at all times and literally observing each single move the customer is making to evaluate their buying options. Some of the revised tools actually let you generate a "heat map" for the site, where you can visually see how much revenue every single link or Ad on the site is generating. There are a number of options available for a web analytics platform – however the two good options are Omniture or Webtrends . If you are not ready to make a financial investment, Google Analytics offers an excellent alternative to its paid counterparts.
Once you implement an analytics platform, you will immediately start seeing a wealth of information. However, now what? The information alone does not mean anything, except it can be acted upon. I consistently believe in fact based decision making, and therefore I would recommend that every single decision about what promotion or Ad or product placement on the site must be based upon the relative revenue potential of these assets. Home page is the most prime area of the site and every single inch of real estate on this page should be optimized and allocated to the highest revenue generating assets.
One capability that all online retailers must implement is to use the concept of A / B or multi-variable testing. For marketers, this is not a new concept and really means the champion / challenger technique to measure various marketing promotions. The idea is to run two versions of Ads or promotions at the same time and measure customer's response to see which one generates higher conversion or revenue. This can greatly help in quickly testing new Ads, promotion concepts etc. and then rolling out the best concept based upon real time feedback from the customers. Offermatica offers a good and a cost effective way to perform A / B testing.
Once you have started to collect and use these insights in making business decisions, it is then time to augment this information with something even more powerful – customer profile. I am not talking about the basic profile which most retailers keep track of – eg customer's billing address, shipping address etc. I am talking about an enhanced profile which provides psychological and demographic information about the customer and can be used to understand customer's desires, needs and motivations. Imagine that a customer calls your call center to make some changes to an order and inquire about a digital camera. A sophisticated customer profile engine will keep track of the fact that the customer is interested in the digital camera so that the next time the same customer visits the web site, the home page features some of the best selling digital cameras. These kinds of targeted offers have a much greater chance of acceptance. In addition, a company's targeted email campaign program must be driven by the segmentation based on customer profile.
By implementing site analytics, and using these insights to drive offerings on the site, an online retailer can significantly enhance its connection with customers. Although having good site analytics and targeting by itself does not guarantee success, it certainly improves the odds in favor of hitting that bullseye.
