The Missing Links in the Customer Engagement Cycle

The Customer Engagement Cycle plays a central role in many marketing strategies, but it’s not always defined in the same way. Probably the most commonly described stages are Awareness, Consideration, Inquiry, Purchase and Retention. In retail, we often think of the cycle as Awareness, Acquisition, Conversion, Retention. In either case, I think there are a couple of key stages that do not receive enough consideration given their critical ability to drive the cycle.

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?

My Favorite Sites of the Year

It’s the end of the year and the end of an amazing decade for e-commerce. So, in keeping with the time-honored tradition of awarding “bests” at the end of the year, I’m listing some of my favorites sites and site features of the year. I always enjoy discovering new sites and techniques when I read other people’s lists like this, so I hope you’ll find something interesting in my web award show.

The overall best e-commerce site award goes to:

Moosejaw.com

Moosejaw has it all. They’ve done an excellent job creating a very intuitive site that provides lots of options to narrow your selection; you can easily sort by price, color, size and brand. They have lots of what they call “custy reviews” available for their products, and you can even choose a “custy reviews” search/browse results page that highlights recent reviews in the product listing. Moosejaw has a great checkout process that does a good job of guiding the customer through the process, and their error messaging is clear and easy to understand. And no commentary on Moosejaw would be complete without mention of their Madness section, which is full of wacky content that keeps you coming back for more. In a final stroke of branding brilliance, Moosejaw provides free Moosejaw flags to anyone who requests them, and encourages people to take photos of themselves with Moosejaw flags at the height of their adventures, literally, like at the top of a mountain. What a brilliant way to make your customers your greatest marketers. As a final point of support for this award, when I asked people around the office for their favorites sites, Moosejaw was by far the most common choice.

Runner-up

Net-a-Porter

Net-a-Porter shows they understand how their customers shop, and they understand that the self-service experience of the web requires extra attention. They have a prominent “What’s New” section, and their landing pages get right to the products (without lots of “window” signs screaming about promotions). Each item in the listing has an alternate view when hovering over it, which is becoming fairly common, but Net-a-Porter uses and alternate view that features the item being worn rather than just showing it from the back. When you click through to the product pages, there are many more product views and some items have an excellent video of a model walking in the clothes so customers can see how the clothing looks in action. Finally, there are details about how items fit and an invitation to contact a “Fashion Advisor” for more help if you need it.

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Best use of video:

K-Swiss

I’ve always wondered why more sites don’t do what K-Swiss is doing with their product videos. Namely, use them as the primary image for the product when they’re available.

When you arrive at a product page that features a video (which, unfortunately, isn’t all of them) the video launches immediately and shows a model walking in the item. You can easily switch the view to see her walking from the front, from either side and from the back.  And best of all, there’s not sound that could get a workplace shopper in trouble. K-Swiss also features multiple static images of product to ensure customers are getting as much information as possible.

Runner-up

Ice.com

Ice.com is also making excellent use of video and using it as their primary image when a video is available. And they’re getting great results. Ice’s Pinny Gniwisch reports conversion rates jumping a whopping 400% after customers view a video, and return rates drop 25% for products with videos. Video really helps give customers a much better understanding of what they’re buying, which helps to remove one more barrier to purchasing products online. I’m really impressed with the quality of the short videos they’re producing, as well. The folks at Ice.com clearly understand the value of video, and they’re making the right investment to improve their business.

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Most interesting merchandising tool:

Polyvore

Polyvore is not a retailer, but that doesn’t mean there’s not something to learn from or leverage what they’re doing. They call themselves “a fashion community site that lets you mix and match products from any online store to create outfits or any kind of collage. It is also a vibrant community of creative and stylish people.” They have a really cool drag and drop capability that let’s visitors “create looks” from product feeds from many different retailers. Essentially, the visitors become merchandisers, and they’re looks are posted to be voted on and commented on by the community. The best looks rise to the top. There are some really amazing collections, and of course each product has a buy button. Polyvore is now making their technology available to retailers, as can be seen in Charlotte Russe “Design Your Outfit” section.

Runner up:

Hunch

Hunch is also not a retailer, but as with Polyvore, there’s lots to learn and leverage. Hunch describes themselves as “a decision-making tool that gets smarter the more you use it. After asking you 10 questions or less, Hunch will provide a concrete result for decisions of every kind.” Basically, they ask you a series of questions and then provide product recommendations that match. The general concept is not new, but Hunch’s implementation is the best I’ve seen and it gets better the more it’s used. They’re using the community to build and refine the question sets, and they’re covering a massive range of topics. The whole experience is really addictive.

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Most proactive:

Restaurant.com

Poorly written error messages are the bane of the web and a shameful way to lose sales, as I’ve previously discussed. But even well written error messages can be annoying because they come after the fact. Restaurant.com has taken a proactive approach in their account creation process. As a visitor enters a form field, a small box appears to the right giving the user detailed descriptions about what’s expected to be entered and, when appropriate, giving the reason why it’s important. Try it out to see how helpful it is.

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I could go on and on about lots of great features on a lot of different sites, but the seven above really stood out for me as great examples worth checking out.

But there are tons of great sites I haven’t even seen.

What sites stand out for you? I would be grateful if you’d use the comments section to share your favorites with the rest of us.

Sitting in the “Marketing Hot Seat”

My good buddy Adam Cohen, a Rosetta partner who heads up their Search, Online and Social Media businesses, issued a challenge called “The Marketing Hot

You’re the CMO.  You
have a marketing budget of $1M.  Your company is a consumer product
company, relatively unknown / early stage.  Customers who know the
product like it. CEO wants ROI within 12 months.  What do you do?

I thought this would be a fun exercise to take on, particularly because the scenario placed me in the seat of a manufacturer, publisher or product company. Would my retail oriented perspective provide a different line of thinking than would typically come from a manufacturer, and would that perspective be worthwhile? I’d certainly love to know your thoughts.

My take is actually the first one Adam posted on his blog, A Thousand Cuts. Check things out over there over the next few weeks to see perspectives from the other 12 bloggers.

Here’s my answer to Adam’s challenge:

OK.
Setting aside all the caveats about the fact that I don’t know what the product is, what it costs to make and what our margins are, here’s generically how I would approach the situation:

Strategy

1. Thoroughly understand the customers who like our product
   The customers who know our product like it. We need to find out why, in their words, and determine what personality traits, hobbies, demographics, etc. in those customers are relevant to their liking our products so that we can speak to others like them.
2. Get our online destinations right
   With a relatively small marketing budget, we’re going to need to maximize our online strategy. (Actually, we should do that even if have a large marketing budget.) We need to make sure our website and our retailer websites are highly usable and highly effective in merchandising our product and providing the ability for customers to easily spread the word about us.
3. Drive traffic with whatever budget is left
   Only when we have ensured that we have solid destinations for our traffic will we start to actively search for traffic.

Tactics

1. Learn as much as we can about the customers who most love the product.
   Why do they like it? What are there personality types; let’s use the Myers-Briggs personality test and really get a  thorough understanding of these folks. How do they describe our product? Let’s pay attention to the words they  use as we’re going to reuse those words in our copy.
2. Hire ForeSee Results to measure our site’s effectiveness from our customers’ perspectives.
   I realize this may seem self-serving since it’s my company, but I was a client for seven years before joining the  company three months ago, and I’ve see how well it works.  So, I want it in this role. So there! We’ll use  measurements, analysis, Session Replay and usability audits to ensure we’re providing the best experience  we can.
3. Hire Bryan Eisenberg to develop archetypes and to implement Persuasion Architecture on our site.
   We need to speak to customers in language that resonates, and Bryan understands how to do that. We’ll also use  his language for product descriptions and other content we give to retailers for their sites.
4. Create a high quality product video.
   We’ll use this video on our own site and we’ll give it to retailers for their sites. We’ll focus on the key aspects  customers love and use copy that includes words that resonate with those customers. We’ll also show real  customer testimonials.
5. Launch customer reviews and customer forums on our site
   We need to make sure our customers can openly provide their thoughts about our product, even when  they’re negative.
6. Launch several blogs on our site
   Since we only have one product, we need to provide some fresh and compelling content on our site to give people a reason to come back. The content doesn’t need to be about the product all the time. It can be able anything, as  long as it’s compelling. I’ll focus on general marketing, our CEO can blog about leadership, and we’ll find some  people to blog about topics our customers are interested in. All of this blog content will also be great for SEO.
7. Launch a marketing campaign to retailers informing them about key customers and teaching them how to sell the product
   Our initial marketing efforts will essentially be internal. Let’s get the sellers pumped up and doing their jobs well  before we send customers their way.
8. Develop a widget for retailers that gives customers the ability to easily share information about the product
   We need to give our customers ways to share information about our product on their own in a way that is easy and  positive. Let’s create a fun widget that people want to share on Facebook, Twitter, email, etc.
9. Get our SEO right, buy search terms, send emails, run re-marketing campaigns, etc.
   I don’t want to minimize the value of these techniques, but we really need to make sure our destinations are right  before we add lots of traffic.So there you have it. My main point here is to focus on the customers first, the destination second and the traffic driving last.

What do you think? Does my strategy make sense? How would you have addressed the challenge? Do your manufacturer/publisher/product partners address your needs?

The Case for an E-Commerce IT Org Change

As multi-channel retailers move more and more towards implementing cross-channel strategies, organizational structures need to change to support those new strategies. I am a huge proponent of breaking up most e-commerce silo  organizations and integrating online and in-store marketing and merchandising teams to ensure a common vision and voice across channels. For IT, though, I actually recommend the opposite approach. I believe technology  professionals who work full time (or near full-time) on the e-commerce site should report directly to the head of e-commerce.

While at a high level is seems like technology should have the same kind of continuity as marketing and merchandising, I believe a close look tells a different story.

Here’s why e-commerce IT is significantly different from traditional IT:

In e-commerce, the business is technology

Traditionally, IT creates tools that help employees be more productive and efficient. However, in e-commerce, IT is actually creating software designed to generate revenue. E-commerce “stores” are really self-service software  applications designed to help customers perform a service — in this case it’s to buy the products and services we sell.  Intuit has Quicken; Microsoft has Word and Excel; retailers have our e-commerce sites. We really need to think about  our sites more as software products and organize our teams in a product management type of structure.

Also, a particular pet peeve of mine is when IT folks refer to those in other functions of the company as “the business.”  Just that reference alone insinuates that IT is not a crucial part of the overall business and creates a separation that  frequently leaves IT coming across as second class citizens, which they are not. While I’ve never liked “the business”  reference in any circumstance, it’s doubly bad in e-commerce where success absolutely depends on technology team  members actively working as part of the business.

Self-service applications require a different mindset

Working on an e-commerce application that is designed to be used directly by customers requires a very different  mindset than what is typically required when working on applications that support employees. Even when the  underlying technology is similar, the mindset required is substantially different. New employee applications usually  come with training programs and manuals. Moreover, employees are ultimately forced to use the app; they get used to it and get incrementally better at using it over time through daily usage. Customers, however, don’t get the benefit of manuals and training programs. They’re on their own. And if the experience doesn’t satisfy them, they give up and the sale is lost.

Site functionality and customer experience are major components of the e-commerce business strategy

The website application is a key differentiator for the business, and customer experience is hugely driven by site functionality. While functions other than technology certainly contribute to an e-commerce site’s success or failure, there can be little doubt that the quality of the technology is a massive contributing factor.

E-commerce is 100% dependent on technology to be open for business.

While technology is critical in all areas of the business, most retailers have offline contingencies for stores so they can  continue to make sales even if the system is down. Websites obviously don’t have an offline mode.

Web businesses are still immature and need considerable agility and flexibility to mature as quickly as possible

For many absolutely legitimate reasons, most IT organizations at multi-channel retailers have significant (and some might say onerous) processes in place to manage technology requests and roadmap prioritization. Because requests for technology improvements come from all corners of the company, it’s important for CIOs to ensure they are spending their resources on work that is thoroughly vetted and likely to generate the highest return on investment for the company. But given the absolute dependence of the e-commerce business on technology, typical IT prioritization and allocation processes are too slow for e-commerce businesses that need to be able to adjust quickly to issues that arise with customer experience.

The e-commerce competitive marketplace innovates far quicker than the brick & mortar marketplace

The CEO of a pure-play e-commerce company is in basically the same role as the head of e-commerce at a multi-channel retailer. If for no other reason than there is no alternative, the CIO of a pure-play reports to the CEO. This reporting structure gives the pure-play leader a leg up in agility and the ability to react to customer needs. In a multi-channel retailer, the CIO must split time between many functions of the business, and I find e-commerce often gets time allocated in a ratio roughly equal to its financial contribution to the business. While such an allocation is understandable given everything on a busy CIO’s plate, I believe this lessened focus can lead to stunted growth and lost ground to competitors such as Amazon who are more devoted to improving their software application and increasing their customers’ satisfaction with their site customer experience.

I believe if a head of e-commerce is to be truly held accountable for the success of the site, he or she should have  appropriate authority over such a major contributor to the success of the site.

So why should the head of e-commerce have authority over e-commerce IT and not e-commerce marketing and merchandising?

To me, it’s all about what faces the customer and what doesn’t. A brand should be clear to its customers about who it is and what it stands for, so continuity in marketing and merchandising trumps silo control over those aspects of the business. Site functionality has no parallels in other parts of the organization. Since it is both unique and customer facing, I believe the head of the online channel should maintain the authority to develop and execute the technical strategy for his or her business unit when it directly affects the customer relationship.

I’ll add this final point: I’ve lived through many different org structures surrounding e-commerce IT, and the only times I’ve found the pros to outweigh the cons of an org structure have been when e-commerce IT was part of the e-commerce operation and reporting to the head of e-commerce.

What do you think? Am I completely misguided? What structures have you seen work and not work? What structure do you think is ideal?