Sometimes, I think we focus so intensely on the e-commerce sales of our sites that we miss the overwhelming additional value they bring to our businesses. Retail websites, particularly for multi-channel retailers, are more multi-dimensional than any other channel and any other brand vehicle. We fail to recognize the value of these sites beyond the buy button at our own peril.

Some are starting to see the additional value. During her presentation at the Retail Innovation and Marketing conference in San Francisco last week, Express Chief Marketing Officer Lisa Gavales talked about her epiphany surrounding Express.com’s value to the brand. It was Express.com’s traffic numbers that sparked the light bulb in her head. She realized that Express.com got as much traffic in a week as all of the Express stores combined. In other words, half of Express brand interactions were occurring on Express.com. Lisa immediately understood the marketing value of such high levels of engagements from Express’ customers. So much so, in fact, that she came to a conclusion she deemed controversial during her presentation — Express.com should be a marketing vehicle first and a direct sales channel second.

After the presentation, my good friend Scott Silverman, Shop.org’s Executive Director, asked me if I agreed with Lisa’s positioning of Express.com. I rambled on a bit before essentially saying “yes and no.” I’ll now take this space for what I hope is a more coherent answer.

I completely agree with Lisa that retail websites are much more valuable to the overall business than their direct sales indicate. Applying resources and strategic importance to sites based only on their percentage of sales is a mistake that could prove very costly in the long run. Customers use our sites for many reasons beyond direct transactions and our failure to highly prioritize those intentions is a disservice to our customers that will affect our bottom lines. But the value of our sites goes well beyond just marketing and direct sales and simply switching priorities is not enough. Furthermore, I worry that prioritizing marketing higher than everything else will lead to the types of conversion problems I previously discussed in my post “Conversion tip: Don’t block the product with window signs.”

Let’s consider some of the many values a retail website provides for a multi-channel retailer:

• Marketing vehicle
  As Lisa noted, the marketing value of our websites is immense. We are getting tons of traffic, and each engagement is an opportunity to enhance our brands. (Of course, if we’re not careful, the opposite is also true.) Websites are a highly efficient way to strengthen the Customer Engagement Cycle. Both online and offline marketing vehicles can direct customers to our sites to further enhance our messages. Our sites are also a great way to tell people about our stores on both a collective and an individual level.
• Merchandising vehicle
  Customers come in droves to our sites to learn more about the products we sell, whether they intend to buy online, over the phone or in our stores. Our sites have to essentially be our best and most knowledgeable merchants. They have to lead customers to the right products for them and provide the right information for them to make a selection, regardless of the channel where the purchase takes place.  This is a huge, often untapped, opportunity for quality merchants to reach their customers and sell them the right products.
• Customer research tool
  This is a bit of a double entendre. As mentioned above, our customers are certainly using our sites for their research. But we can also use our sites to learn more about our customers. There is a wealth of information to be had about what our customers are doing and what they desire. Not only can we see what they purchase, but we can also use web analytics to see what they look at. With tools like those provided by ForeSee Results (shameless plug), we can also know what they are thinking, what they are intending to do, and how they are perceiving our brands. All of this can be done fairly easily and inexpensively in ways that are either impossible or impossibly expensive in the physical world.
• Customer relationship enabler
  We can continue to build relationships with our customers by applying what we’ve learned above to give them better experiences. The applied knowledge of our merchants combined with the long-lasting memory of our websites should allow us to constantly serve our customers better. As we focus on building those relationships with more personalized site experiences, more informed personal interactions via contact centers and in-store, and more relevant email and direct mail communications, we will build stronger loyalty with our customers.
• Community builder
  Websites also give us ways to connect our customers with each other. Our brands can act as a central hub for like-minded customers to find each other and help each other find products that meet their needs or solve their problems. How great is that? We can make these connections both via our own sites and via social networks like Facebook. Either way, it’s another way for our brands to provide services for our customers. Our sites can also allow our brands to be more localized by providing additional vehicles for our stores to connect with their communities.
• Sales driver — in-store and online
  And, of course, we can sell stuff. We can sell lots and lots of stuff online. Our sites are still not where they need to be for maximum usability, so we have plenty of opportunities to improve their ability to sell directly. But we also have lots and lots of opportunity to drive traffic into our stores. We can show inventory; we can let people buy or reserve online and pick up in-store; we can host coupons;  we can help people find a store close to them; we can provide reviews and recommendations to people standing in our stores (whether via kiosks or mobile phones). The possibilities are endless.

These site values are not mutually exclusive. Their value in combination is exponentially higher than any one individual value. Therefore, it’s critically important to consider our sites holistically when determining their place and priority in our strategic plans. We need to consider their combined value when we determine allocation of resources and organizational structure.

Too often, though, resources and executive attention are not apportioned to the site according to this additional value. And we often don’t even measure these additional value points (which might explain the lack of resources and executive attention). If our most important measures of our sites revolve solely around direct sales, we will continue to minimize the importance of all other values of our sites.

I believe the multichannel retailers with the brightest futures in this new decade will be those who fully embrace and leverage the multi-dimensional value of their websites.

What do you think? How is your site valued in your organization? What retailers do you think are most recognizing the additional value of their sites?

Convenience. We value it more than I think we sometimes realize. We’re willing to pay more for it, and we’re willing to sacrifice quality in exchange for it. So it stands to reason that delivering convenience for our customers can lead to a pretty profitable equation for retailers.

Consider the convenience effect of some of the more popular innovations in recent years:

• Mobile phones. We love our mobile phones,  even though they’re more expensive and of significantly lesser sound quality and reliability than land lines. And now we browse the web on our tiny smartphone screens.
• Digital music. While it’s getting better, the sound quality of digital music is not as good as CDs (and some people say CDs aren’t as good as LPs). And we happily listen to our iPods over poor sound quality earbuds because they’re a lot more convenient than bulky headphones.
• Camera phones. Digital photography with nice SLR cameras is finally nearing the quality of film, but cameras on phones have a long way to go to get to that same level of quality. But it sure is easy to post photos on Facebook and Flickr from a camera phone.
• Diet pills.  OK, these aren’t as widely adopted as the previous examples (yet), but they’re the easy way out for weight loss even though there are some less-than-pleasant side effects. (Hint, you don’t want to sit next to an Alli pill taker on a long flight.) Of course, if you’re not into pills maybe you can still avoid exercise and get some six-pack abs with the Vibro-Belt.

I would be remiss if I didn’t mention the immense convenience of e-commerce and the effect it’s had on retail. But we cannot rest on our laurels as the desire and demand for convenience knows no bounds.

The threshold for inconvenience continues to get ever lower. We often complain about how many clicks it takes to get to what we’re looking for on a web page. Think about that for a moment. The energy required to cause our index fingers to press a button too many times is irritating. Some might say it’s not the energy, it’s the time. OK, fair enough.  Then the “waste of time” threshold starts kicking in when we are forced to wait three to four seconds for a page to load. We’re busy! We haven’t got that kind of time to waste!

My favorite example of the power of convenience is the Kindle. Amazon managed to make the paper book seem inconvenient. If that doesn’t tell you that just about everything can be made easier, I don’t know what will. People (and I’m one of the them) are willing to drop hundreds of dollars for a book reading device that still doesn’t format as well as a paper book. But it’s so light and so much easier to hold in one hand than a hardcover book. You can lay it flat on the table. You can carry lots of books around easily, which is very nice for a traveler like me. And you can get books in an instant with the wireless connection, which is soooo much more convenient than plugging the device into a PC for a sync. I sometimes feel ridiculous saying things like that, but I’m not going back.  And I’m not alone; people write long blog posts professing their love of the convenience the Kindle brings.

But this post isn’t a social commentary. It’s about recognizing an opportunity to make money.

So, how can we focus our businesses on the convenience opportunity? Here are three places to start:

1. Start with website usability
   We should start with our sites because they are the low hanging fruit. The promise of convenience with e-commerce is high, but all too often we put obstacles in our customers’ way, many of which I’ve written about previously. Where are we causing customers more clicks than necessary? Why are we requiring all those clicks? Is it a lack of planning on our part, or are we putting our immediate priorities ahead of our customers’ needs? Have we overwhelmed our customers with choice? How can we make narrowing our selection easier and quicker? And let’s not forget site performance. How fast are those pages loading?
2. Re-examine the store experience
   We need to continue to think about how our in-store experiences can be easier and more convenient for our customers to shop. Paco Underhill provided some great tips in his book,  Why We Buy. We can also look to a cross-channel strategy to allow technology to provide some conveniences. How can we bring customer reviews and recommendations into the store? Is “buy online pickup in-store” a desirable convenience to offer? How about accepting payment via mobile phone or PayPal in our stores?
3. Consider our customers’ lives – what could make those lives more convenient?
   What’s life like for our customers? If she is a busy mother of young children, can we do more to help her easily put together some nice outfits for the kids (or herself) to free up time for answering emails, paying bills, or maybe, just maybe, giving her time to relax in the bath? Does it make sense to give our customers the ability to automatically replenish certain items at certain intervals? If we think hard, we can probably find ways to improve certain tasks that don’t currently seem difficult. If the book can be made more convenient, there are no limits.

Sometimes I think we get so caught up in our metrics and the particulars of our businesses that we forget about our customers’ needs. After all, retail is really a service business. Customer convenience can and should be a key part of our value proposition. When we find ways to make our customers’ lives easier (even by just a little bit) we are providing services and products our customers will be willing to buy — and at prices that are nice for our bottom lines.

What do you think? Is customer convenience the right strategic target for us? What ideas have you implemented to improve convenience?

While the percentages varied slightly, all three studies found customers who “friended” or followed retailers said they were interested primarily in learning about new products and new or exclusive promotions. How great is that? I have to admit I was a bit surprised to see these results because it seems like current conventional wisdom says to avoid being promotional on sites like Facebook in deference to its more personal nature. In hindsight, that conventional wisdom seems a little questionable since it’s unlikely customers are going to interact with retailers like their friends. They know we’re about selling to them — we’re retailers!

More good news: It appears that the customers who follow retailers are really the best, most engaged and brand committed customers for those retailers. I suppose that’s not terribly surprising, but it’s certainly valuable information. Since our findings were part of a larger customer satisfaction study, we were also able to determine that site visitors who also interact with a company on a social media site are more satisfied, more committed to the brand, and more likely to make future purchases from that company than customers who don’t follow those retailers. Our study also found that 61% of people who follow retailers follow less than five retailers. That’s further  indication that people are really focused on their absolute favorite retailers.

We also found that more than 80% of shoppers who use social media list Facebook as a site they use regularly, which makes it the overwhelming social media leader. YouTube came in second place with only 31% of shoppers.

So, to summarize, our best and most engaged customers like to interact with us on Facebook (an incredibly viral platform) and want to hear about new products and promotions. This is a great foundation for a successful strategy!

Without further ado, here are three steps to a more effective retail Facebook presence:

1. Focus on best customers
   Rather than trying to build our fan base to the highest possible numbers, let’s focus on getting as many of our highest value customers as fans on Facebook. They’re the most likely to become our Facebook fans anyway, but they’re also the most likely to recommend us to their friends. Facebook’s viral nature gives us the opportunity to put our Word of Mouth Marketing on steroids, and developing messages for our best customers gives us a clear focus. We should reach out directly to our best customers via targeted messaged and encourage them to join because we…
2. Give ‘em special promotions and news about products
   These are our best customers. Let’s treat them well and make them feel special. Let’s give them exclusive offers and early notice on cool new products.  Victoria’s Secret does an excellent job here, and it shows. Of the Internet Retailer Top 40 retailers’ Facebook pages I looked at, Victoria’s Secret has by far the most fans at almost 2.7 million at the time of this writing. Clearly, they are delivering on customer expectations, and they’re being rewarded for it by attracting lots of really engaged customers.

   My good friend Adam Cohen, partner and social media lead at Rosetta and blogger at a thousand cuts, (and my go-to guy on all things social media) correctly cautions against too many rich, exclusive promotions as they could be unsustainable as the fan base grows. This is particularly true if the offers start to attract deal seekers who are not our best customers. Good warning from Adam and in line with the excellent old adage “everything in moderation.”

3. Leverage Facebook viral features
   We’re giving great, exclusive offers and product news to our best customers. Those best customers are the most likely to recommend us to their friends. Let’s encourage them to do so. It could be as simple as letting them know an exclusive offer can be shared with their friends by simply hitting the “share” link.  There are lots of Facebook applications and other techniques that can be used, but I would personally just start simply and go from there.

(Bonus tip) Make sure your page can be found in Facebook search.
This isn’t really one of my key steps, but during my research I was surprised by how poor Facebook’s search is. For example, I searched for “LL Bean” and found nothing. Then I tried “L.L. Bean” and again got nothing. Their page is actually entitled “L.L.Bean” with no space between “L.” and “Bean.” Facebook’s search will only find it if you search for it exactly as it’s titled.  So, my tip is think about how people might search for your brand and then name the page with the most common search term.

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Three separate studies have all found that customers who friend or follow retailers in social media are most interested in learning about promotions and new products. That’s some mighty strong corroboration, and it’s incredibly great news. Judging from the large percentage of retailers with little-to-no Facebook presence, I’m guessing many have been holding pat waiting for a clear direction on how to best leverage social media. While this information may not give the clearest direction for all social media channels, it certainly provides some clarity on today’s biggest channel, Facebook. Different social media channels require different strategies and tactics, and in the end it’s still important to learn more from our customers about their specific needs and desires and then work to satisfy them.

In the meantime, let’s build some really great Facebook pages for our best customers and give them some exclusive offers to enjoy. Please let me know when you’ve got your page running so I can become a fan!

What do you think? What have you learned about Facebook? What tips do you have?

We often talk about focusing on our “core businesses” at the expense of everything else. At a conference I attended last week, I heard a number of speakers and attendees reference Amazon as a “technology company” as sort of a dismissal. They were basically saying, “Yes, Amazon has lots of great features and functionality and people rate their experience highly, but they’re a technology company. We’re retailers. We can’t compete on that level with them.” This type of statement draws the obvious retort: “So, then, on what level do you plan to compete?”

While Amazon does generate some revenue from selling technology services, the vast majority of their revenue comes from retailing products. Their financial statements look pretty much the same as most retailers (except they have much bigger numbers and growth rates). But Amazon and other pure play online retailers are not burdened with the type of legacy thinking that exists in a lot of multichannel retailers. They understand full well the value of creating a quality online experience, and they understand that technology is part of their core business.

Competing with Amazon is clearly very difficult for a variety of reasons (price being high on the list), but how many business elements can we abdicate to them before our very survival is at stake? Shifting our mindsets regarding our sites is one key way to claw back into the game.

Our websites are consumer software applications, in many ways like Microsoft Word or Quicken. And this means that online our business is technology.

People use our website applications to accomplish tasks like buying our products, learning more about our products or getting inspiration. Their perceptions about the quality of our applications can absolutely make the difference in whether or not they complete their tasks and whether or not they return to use our applications again.

And their perceptions of our brand can also be influenced by the quality of our site experiences. A study by ForeSee Results on the Internet Retailer Top 100 sites found that people who were satisfied with the online experience of a retailer were 44% more likely to purchase offline. That indicates significant value in making sure the website is a quality software experience.

Our websites are also an opportunity to differentiate from our competitors, particularly if we’re not selling proprietary products. If consumers can buy the same North Face jacket or Nikon camera from a variety of different retailers online, the quality of the online experience will be a contributing factor in the decision.

Let’s do what it takes to include the quality of our site experience in our value proposition.

Here are 3 ways to get started towards becoming a consumer technology company:

1. Organization
   We will likely need to make organizational structure changes to support a consumer technology focus. I previously made a case for changes in E-commerce IT organization that goes into more detail, but suffice to say the technology strategy and the business strategy need to be not only aligned, but integrated.

   Furthermore, we need think about different types of roles. Software companies have product — not project — managers and product teams who are dedicated to building customer focused product strategies and life cycles. A quick check on the Amazon careers page reveals many product management positions. Do you have product management positions in your organization?

   Check out a typical set of responsibilities from Amazon’s Baby Registry product management gig and note the mix of business and technology functions and responsibilities:

   • Research and identify opportunities for Amazon to further distinguish our Baby Registry offering.
   • Define a long-term product roadmap, including technical, business development and marketing initiatives.
   • Develop new strategic partnerships ad drive day-to-day partner relationships.
   • Conduct business and financial analysis, including forecasting, monitoring, and reporting.
   • Define requirements, and drive customer experience projects and work with all relevant cross-functional areas and our technology teams to guarantee smooth, efficient implementation.
   • Manage bottlenecks, provide escalation management, anticipate and make trade-offs, balance the business needs versus technical constraints, and maximize business benefit while building great customer experiences
   • Work cross-functionally with designers, software development engineers, salespeople, product managers, and other internal partners.

2. Budget/Investment
   How might our current budgets change if we considered ourselves  technology companies? Maybe not at all, but we should nonetheless re-examine our customer investment strategy in such a light. At the very least, we might consider revamping our budget processes to accommodate a fast moving, highly innovative competitive marketplace where the features and functionality of our website “product” are key parts of our business strategy and our ability to differentiate from our competitors.
3. In house 0r outsource?
   Often we decide to outsource technology (and other elements of our businesses) because they are not “core” to our business and other people can do a better and more cost effective job. How does our thinking on outsourcing change if we consider ourselves technology companies? We might still legitimately consider outsourcing or licensing third party software, as many software companies do. However, we might also consider building up true competencies in at least some areas of software design and development because of the need to differentiate and deliver quality branded experiences for our customers.

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Recognizing and accepting the fact that developing an e-commerce operation puts us in the consumer technology business is an important first step to successfully competing in the online marketplace. Once we’ve achieved the consumer technology mindset, we’ve got to take steps to create an organizational structure that executes like a consumer technology company. Without such steps, we will fall further and further behind the companies who are leveraging their technology focus to create the positive customer engagement cycles I discussed in my previous post.

What do you think? Do you think being in e-commerce means you’re in the in consumer technology business? How is your company organized?

Photo credit: Sebastian Bergmann

The missing links are Satisfaction and Referral.

Before discussing these missing links, let’s take a quick second to define the other stages:

Awareness: This is basic branding and positioning of the business. We certainly can’t progress people through the cycle before they’ve even heard of us.

Acquisition: I’ve always thought of this as getting someone into our doors or onto our site. It’s a major step, but it’s not yet profitable.

Conversion: This one is simply defined as making a sales. Woo hoo! It may or may not be a profitable sales on its own, but it’s still a significant stage in the cycle.

Retention: We get them to shop with us again. Excellent! Repeat sales tend to be more profitable and almost certainly have lower marketing costs than first purchases.

Now, let’s get to those Missing Links

In my experience, the key to a strong and active customer engagement cycle is a very satisfying customer experience. And while the Wikipedia article on Customer Engagement doesn’t mention Satisfaction as often as I would like, it does include this key statement: “Satisfaction is simply the foundation, and the minimum requirement, for a continuing relationship with customers.”

In fact, I think the quality of the customer experience is so important that I would actually inject it multiple times into the cycle: Awareness, Acquisition, Satisfaction, Conversion, Satisfaction, Retention, Satisfaction, Referral.

Of course, it’s possible to get through at least some of the stages of the cycle without an excellent customer experience. People will soldier through a bad experience if they want the product bad enough or if there’s an incredible price. But it’s going to be a lot harder to retain that type of customer and if you get a referral, it might not be the type of referral you want.

I wonder if Satisfaction and Referral are often left out of cycle strategies because they are the stages most out of marketers’ control.

A satisfying customer experience is not completely in the marketer’s control. For sure, marketing plays a role. A customer’s satisfaction can be defined as the degree to which her actual experience measures up to her expectations. Our marketing messages are all about expectations, so it’s important that we are compelling without over-hyping the experience. And certainly marketers can influence policy decisions, website designs, etc. to help drive better customer experiences.

In the end, though, the actual in-store or online experience will determine the strength of the customer engagement.

Everyone plays a part in the satisfaction stages. Merchants must ensure advertised product is in stock and well positioned. Store operators must ensure the stores are clean, the product is available on the sales floor and the staff are friendly, enthusiastic and helpful. The e-commerce team must ensure advertised products can be easily found, the site is performing well, product information in complete and useful,  and the products are shipped on time and in good condition.

We also have to ensure our incentives and metrics are supporting a quality customer experience, because the wrong metrics can incent the wrong behavior. For example, if we measure an online search engine marketing campaign by the number of visitors generated or even the total sales generated, we can absolutely end up going down the wrong path. We can buy tons of search terms that by their sheer volume will generate lots of traffic and some degree of increased sales. But if those search terms link to the home page or some other page that is largely irrelevant to the search term, the experience will be likely disappointing for the customer who clicked through.

In fact, I wrote a white paper a few months ago, Online Customer Acquisition: Quality Trumps Quantity, that delved into customer experience by acquisition source for the Top 100 Internet Retailers. We found that those who came via external search engines were among the least satisfied customers of those sites with the least likelihood to purchase and recommend. Not good. These low ratings could largely be attributed to the irrelevance of the landing pages from those search terms.

Satisfaction breeds Referral

Referrals or Recommendations are truly wonderful. As I wrote previously, the World’s Greatest Marketers are our best and most vocal customers. They are more credible than we’ll ever be, and the cost efficiencies of acquisition through referral are significantly better than our traditional methods of awareness and acquisition marketing. In my previously mentioned post, I discussed some ways to help customers along on the referral path. But, of course, customers can be pretty resourceful on their own.

We’ve all seen blog posts, Facebook posts or tweets about bad customer experiences. But plenty of positive public commentary can also be found.  Target’s and Gap’s Facebook walls have lots of customers expressing their love for those brands. Even more powerful are blog posts some customers write about their experiences.  I came across a post yesterday from entitled Tales of Perfection that related two excellent experiences the blogger had with Guitar Center and a burger joint called Arry’s. Both stories are highly compelling and speak to the excellent quality of the employees at each business. Nice!

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Developing a business strategy, not just a marketing strategy, around the customer engagement cycle can be extremely powerful. It requires the entire company to get on board to understand the value of maximizing the customer experience at every touch point with the customer, and it requires a set of incentives and metrics that fully support strengthening the cycle along the way.

What do you think? How do you think about the customer engagement cycle? How important do feel the customer experience is in strengthening the cycle? Or do you think this is all hogwash?