As in the States, there is much discussion here in Europe (note: I run ATG’s European operations) about how the slowing global economy will impact e-commerce. Whether you believe current economic conditions are good or bad for e-commerce (or will have no effect), you no doubt always want to maximize your sales on the Web. In working with a roster of great customers, we have gained a lot of insight into what works and what doesn’t. In this post, we present five basic steps that all e-tailers should be taking to get the most out of their e-commerce Web sites.

1. Deploy product-comparison tools. If shoppers are being drawn to the web because they are looking for bargains, comparison tools can be especially useful – particularly in the case of products with many different specifications such as consumer electronics. At a time when people are watching their wallets, comparison tools can be vital in helping shoppers consider how much to spend and, ultimately, in justifying a purchase.

2. Create customer ratings and reviews facilities. Although it can take some time to get a reviews system furnished with a large amount of user generated content, it is time extremely well spent. Any content created by your customers can help win over other shoppers.

3. Personalise. An old principle, but a vital one. As soon as a customer comes to a site, they want to see highly relevant information. E-tailers need to embrace technology that will help them build up sophisticated consumer profiles so that they can match web content and promotional offers to specific customer interests and previous spend threshold. Interconnectivity is the key to any multi-channel strategy and by sharing information captured online with other commerce channels, it is possible to build up an in-depth profile of customers which can be effective right across the business.

4. Co-ordinate on- and off-line marketing initiatives. Retailers should coordinate marketing strategy with merchandising. By integrating e-mail campaigns, for example, with website content, companies will be able to attract new and repeat business. Customers need to be able to relate to a brand and solutions across the full purchase lifecycle.
 
5. Searchandise. When looking for a good deal, consumers will make the most of a website’s search function. Searchandising can deliver search results based on both a customer’s personal profile and the merchandiser’s strategy. Changes to the product catalogue can be automatically updated in the search function so shoppers are not offered items that are, frustratingly, out of stock. Searchandising can also suggests additional purchases that complement what a customer has searched for, presenting items the customer did not even realise they wanted.

Despite worries about the U.S. economy in general and particularly for retailers, e-commerce is turning out to be the sunny spot for retailers. On our second quarter 2008 earnings call yesterday Bob Burke, our CEO, noted how we continue to see strong demand for our technology, as retailers are looking to the internet to help offset their lagging brick and mortar sales. This New York Times article does a nice job illustrating how rising gas prices are driving more and more consumers online.

It is my great pleasure to present the interview below with Kelly Mooney, president and chief experience officer at Resource Interactive, as the latest installment of our Q&A series. In addition to her day job at Resource, Kelly is also a highly regarded speaker and author. Her latest book, The Open Brand, is the basis for today’s discussion. (Oh, and in her “free time” Kelly keeps a great blog at www.mooneythinks.com.)

Kelly, in your book “The Open Brand,” one of the themes we found particularly compelling is this notion of the “rise of the icitizen.” More and more consumers whose behavior and contributions to online communities would have made them “early adopters” just a year ago, are now part of the norm.

You highlight certain ways that these “icitizens” have come to expect different things from brands – that they expect to be involved in every stage of a product, from its creation to its promotion and beyond. Can you give us some examples of ways that brands can tap into the opportunity to engage consumers early on?

The first step is to support consumers’ chief web 2.0 behaviors—creating, sharing and influencing. It’s important to engage consumers wherever their passions lie, from software code tinkering to creating ratings and reviews to creating the perfect chocolate chip cookie. Web 2.0 is ultimately about using technology to enable, expand and catalyze marketing mixes that only get better with more cooks in the kitchen. Find their passions and meet them there. Enable their interactivity. Create ways your brand can make their goals (and lives) easier, more efficient. I realize it’s a new concept for marketers—but there’s a lot of buzz around marketing and customer service becoming one. Think about it—it’s pull marketing, not push.

The bar is being raised by innovators like Ning, FriendFeed, Jott, Loopt and Twitter, which are redefining cultural relevance, paving the way for brand co-creation, social networking, citizen journalism and more. Now all brands are expected to provide faster and more customizable experiences, more enhanced content, and more opportunities.

Consider tapping into your consumers as early as product development. Ask them for their feedback. Use it. Jeff Jarvis and Dell Hell may be the oldest example in the web-made world, but as a result, Dell created IdeaStorm, an entire online community dedicated to an open sharing of ideas and consumer feedback—ultimately ending in an ideal open branding scenario—it led to actual product improvement.

As for a more current example, I know of no better model for marketers than the Obama campaign. Regardless of what side of the red/blue coin you choose, the campaign is an example of open on all counts. The campaign homepage states emphatically that the goal is “ONE MILLION PEOPLE TO OWN THIS CAMPAIGN”. It’s a whole different mindset.
So what’s open about Obama?

• Information is given on-demand, via mobile, video, blog, social network, and by topic areas (not all or nothing)
• The campaign site is personal with so many videos, pictures and comments from real people that it gives the feeling of ownership outside the campaign itself.
• Barack Obama himself is a key engaging factor, but the campaign itself (not unlike other campaigns) is built on outside participation.
• Supporters aren’t just asked to tap their own networks, the campaign networks them too. For example, when someone makes a donation online, the campaign introduces them (with permission) to other supporters.

Have you ever considered having such an open dialogue with your consumers that they feel part of a larger ownership of your brand?

What about threats? What are the negative consequences of the increased emphasis on interaction between consumers and brands?

The real threat lies in inaction and ignorance. Brands are at risk of losing cultural relevance in the web-made world because they’re adopting trendy technologies without developing fresh insights. Even worse, some brands are simply waiting for this open season to pass, or at least to seem less chaotic, less of a threat to the completely choreographed success they’ve long enjoyed. Confronting accelerated change and the lack of appropriate resources to keep pace, marketers’ resistance to the brave new world is understandable.

Negative reviews and posts are a natural part of a fair and free-wheeling exchange with and among consumers, and have to remain visible, in all their bruising glory. Besides, they can be the source of the brand’s most valuable consumer insights, and can arguably build brand credibility over time more effectively than a set of purely (and suspiciously) positive reviews. But brands do have rights—and ways to keep the conversation constructive.

While some online advocates promote anonymous posting as a form of free speech, for brands, requiring mandatory log-in before contributing falls in the category of an ounce of prevention trumping a pound of cure, ultimately reducing the burden of liability for the brand or company hosting the user-generated content. Along with Terms & Conditions, mandatory log-in can help protect brands from renegade user behavior.

Brands can also steer consumers in a positive way, by prompting topics for discussion that can benefit the community at large, as well as the brand. What’s good for the engaged consumer is good for the brand. The people behind the prompting and listening occupy some of the newest positions in marketing—Toyota has a Corporate Manager of Consumer Generated Media—and some of the oldest but increasingly valued positions, including consumer affairs and public relations.
Ultimately, the community itself is the most effective tool for shaping and policing user-generated content. When empowered with reporting mechanisms, users freely report objectionable content to the proper authorities (often, the online policy enforcers employed by many large content sites). Users also vote online with simple “Was this information helpful?” feedback polls that can drive poorly ranked content to the bottom of the bin.

In short, transparent (but requisite) policies and log-ins and a self-policing user base can be the best tools for brands seeking to enable consumer- (or employee-) generated content without suffering collateral damage in the process.
But remember, the real risk for brands today is in not opening.

You present continuum from the “everyday” to the “elite” icitizens and talk about the opportunity for the everyday to “ascend” the ranks. Do brands play a role in facilitating this ascension? Is there any benefit to them in doing so?

Yes and yes. In a world where a talented nobody can rise to the top on American Idol, the masses are empowered as never before to generate, celebrate and venerate their crowd-made stars. And therein, naturally, lays an opportunity for marketers.

All icitizens are uniquely passionate and transparent about their expertise but some of these snowflakes soon snowball into larger-than-life personalities. Their notoriety achieves critical mass, and their influence gains momentum and reach in a way that is particular to the web.

Because of the trust and familiarity existing between everyday icitizens and their closer-knit networks, they are best leveraged for driving trial and purchase. Elite icitizens can be used to build broad awareness of a brand. They might even be positioned as the next face or voice of a brand, where brands can play a key role in their ascension to web celeb. Online ”auditions” and voting, coupled with studies of social media archetypes, can help identify an elite icitizen with plenty of network charisma and attributes highly compatible with the brand. The benefit is mutual—an icitizen climbs the ranks of internet fame while bringing greater awareness to the brand. Just be sure the icitizen’s profile—private and public—is compatible with that of your brand.

I realize the concept can be a bit overwhelming, so consider breaking it down into smaller steps:

How strategic is your brand’s relationship with the icitizenry? Do you have one at all?

Do any of the icitizenry’s main motivations (competence, collectivism, cultural change and celebrity) align with your consumer segments or consumer personas? If so, how are you marketing to this motivation?

Have you identified your icitizen truth tellers and tastemakers? Are you mining the blogosphere for the most influential and charismatic among them? Identifying the icitizens and spheres of influence most valuable to you as a marketer?

Do you know how and where your consumers interact with everyday and elite icitizens? Have you discovered their common traits, and learned how to capitalize on them?

How are elite icitizens influencing your consumers’ awareness of and opinions about your brand?

You also talk about the four motivations for icitizens (competence, collectivism, cultural change and celebrity) and challenge brands to align their customer segments and personas to these motivations. Have you seen any specific examples of merchandisers doing this particularly well on their e-commerce Web sites?

Known for their creativity (not just in their clothing), Free People isintroducing its shoppers to Jaime, a brand fan who works at the Ardmore, PA store. The site offers an interview with Jaime, a list of her favorite products, blog entries, video, and 28 product reviews (her screen name is FPJaime806 and her entries are also denoted as “fp employee”).I love this apropos approach to engagement. Leveraging the authentic passion of a member of the Free People family, the brand provides relevant emotional experiences that are inspiring, entertaining and contextual. Wonder if she’ll boost conversion online as well as she does off?

(Full disclosure, Free People is a long-standing ATG customer.)

Victoria’s Secret PINK is another great example. The brand held an open contest call for students to spend their summer as an intern at PINK’s home office, announcing the winners on their site. PINK has even taken the love triangle offline, by meeting its customers at their point of passion—on college campuses nationwide. Not only did the brand partner with universities to create an exclusive collegiate collection, PINK also plans to hire brand ambassadors at 15 campuses. Aspiring ambassadors submitted their resumes, and the chosen girls will go through a training program before promoting PINK on campus. They’ll also provide strategic insights, contribute their ideas—ultimately influencing the brand’s overall strategy for seasons to come.

Patti Freeman Evans of JupiterResearch shares some key findings from the analyst firm’s recent survey that looked at best practices in the use of Web marketing metrics. Her insights are key to anyone responsible for driving revenue via the Web.

ATG: Patti, tell us about the research project and its major findings.

FREEMAN EVANS: We surveyed retailers – both multi-channel retailers as well as online-only – and wanted to find out what factors were most responsible for improving business results. What analytical tools and measurements are the best? What areas of the marketing process are likely to deliver the best returns? What returns on investment can be achieved? And so on.

And one of the key findings was that fully half of the retailers we spoke to – that is, 50% – are getting either no return, or a negative return on investment on their use of metrics. So, they may be spending money on a Web metrics package or even using Google Analytics for free, but have not been able to derive business benefits from these performance metrics. At the other end of the spectrum, we found that 22 percent of retailers are actually doing a very good job, driving some very significant gains using their metrics. In the middle, about 28-30% are getting some benefits, but have lots room to improve. And these percentages haven’t really changed from two years ago when we did a similar study.

What was really interesting was that it didn’t matter what tool they were using, it didn’t matter what size they were, and it didn’t matter how many people they had thrown at their metrics efforts – none of these made the difference between who was good and who was not good. The real differentiator seemed to be their approach to using metrics, their process.

ATG: How is it even possible to have access to analytics, and yet not improve results?

FREEMAN EVANS: When we were doing research for this report, we interviewed an awful lot of retailers, and many of them said, “You know, I’m just overwhelmed by the information.” Now, as you know, the level of detail that’s possible to track can be excruciating, and picking out which metrics are going to be useful is really not that easy, necessarily.

But I would argue that it’s not simply a matter of too much information. In fact, we found that across the board, the best performers actually use metrics at a higher rate than the others. So the real difference isn’t an overabundance of data, it’s that the poor performers haven’t figured out how to approach and apply the information they have at their disposal in a strategic way. Because this is all new to them. Retailers in particular have, over the last 20 or 30 years, operated against a very straightforward set of metrics: gross margins, turns, dollars per square foot, same-store sales.

The retailers who have figured out how to make metrics work understand that you have to get out ahead of the wave: they actually approach the Web in a proactive way, where you come up with a hypothesis, test specific alternatives and then see what the numbers tell you. The poor performers on the other hand were far more likely to use their metrics in an ad hoc way – look at today’s click reports, and react.

We heard a lot of, “Well, that change we made – we didn’t measure it because it was clearly the right thing to do.” But if you don’t measure the effect, you don’t know how right it was, and you don’t know how to make better decisions going forward. And you can be sure that sooner or later your competition is going to start making those measurements, they’re going to get smarter about how they’re making their decisions, and you’re going to be paying the price.

ATG: What kind of ROI improvements are we talking about for those who adopt a more scientific approach to performance metrics?

FREEMAN EVANS: Our survey found that the top performers have extraordinarily better results in terms of moving the needle on conversion rate, on their ROI from search and e-mail marketing, on average order value, and so on, across the board. Our middle 30% of retailers, for example, earned a 5 percent increase in their return on investment from e-mail marketing. That’s good, but a 19 percent bump is an awful lot better – and that’s what the top performers averaged. The top performers also averaged a 24% increase in conversion rates, a 19% improvement in SEO, 13% in average order value – each a multiple of what the middle performers did. So clearly, even the mid-level performance could be doing an awful lot better than they are.

I mentioned that half of retailers have a negative return on investment. What we found was that the best performers averaged a 68% return on their investment performance metrics, and that investment amounted to .9% of their sales. Their ROI came from both improved sales and gross margin numbers. The mid-level performers achieved a 12% return on investment, but the impact on the business was even less given that their investment level was a third of the best performers.

ATG: All right, so for these 80% of retailers that still have a lot of upside on the table – How do they turn the corner? Sounds like analysts who know how to do this in retail aren’t exactly growing on trees.

FREEMAN EVANS: Well, for the most part, retailers give the job to a single mid-level or junior person; we found an average of 1.3 workers dedicated to metrics. And even though it’s the right thing to do to have a person devoted to analytics, these people tend to be report generators. And while generating reports is necessary, what really makes a difference is getting a senior person involved, who’s there saying, “Here is this problem, here’s what it means… Let’s try to think up some ideas of how we can get better results.” A senior level person, a VP or EVP, not a $50,000-a-year person.

Another thing that the best performers do is to bring together cross-functional teams to tackle the problems, with weekly review team meetings focused on getting results. This is quite critical because no single person knows all the questions to ask. So having a cross-functional team meeting – or better yet, a cross-channel cross-functional team meeting – will get people to start asking questions that can really impact the business.

For example, something like raising the issue “I don’t think that our free shipping offers are producing enough incremental revenue to pay for the bill.” That’s what Timberland did. In that case, it turned out that they needed free shipping to drive a 40 percent lift on incremental sales to be a worthwhile offer, and they found they were not getting anything like that. So as a result, they not only improved their margins on this particular issue, but they have a better sense of how free shipping impacts shopper behavior, and can use it in a more strategic way to impact the business. And they wouldn’t have done this if they didn’t have regular team meetings with the purpose of identifying areas for improvement, setting out hypotheses in advance, and then using metrics to figure out.

This is not an easy thing to do. Your internal structure, the sensibilities and culture all have to work together to make this happen. If you can’t get that level of commitment internally, it’s very difficult to make inroads. But you can make things work better by bringing external talent to the table. Maybe your commerce platform vendor has a strong analytics group, or your analytics package vendor has a consulting arm. Or even an outside consultant can help the company face up to the tough questions, and help change the culture of the organization.

ATG: Okay, changing the corporate culture takes some time. Are there some simple steps or areas of focus that can make a difference in the short term, while we’re working on the cultural sea change?

FREEMAN EVANS: We identified a couple of them. If you’re looking for the one place to start in terms of using your metrics most effectively, it’s checkout. We’re loathe to touch checkout because it’s such a critical component of the shopping experience, but it actually offers the largest ROI impact. Yet among the weak performers, fewer than half even look at checkout metrics, much less test variables strategically.

In addition to that, look at improving your “add to cart” rate – because obviously, the more that people add things to their carts, the greater likelihood they will check out. Another metric that the top performers are starting to use is their zero search results. Right now only about 30 percent of retailers are actually tracking or using zero search results to make decisions, but these metrics can be such a wealth of knowledge in terms of understanding how the public actually sees your product offering – knowledge you can then use in your search, in your merchandising, in your marketing efforts, and in your Web site copy. It can be tremendously valuable.

So those are all critical things, and each step can help put you on the right track. But the real kicker is to approach these issues not in an ad hoc way, but in a proactive way. And that’s easy to say, but not so easy to do. And ultimately it means breaking down the silos that naturally exist in our organizations, and implementing a cross-functional process that drives continual improvement. Start asking those “What If?” questions, setting hypotheses, and then being much more focused in terms of what metrics you look at and how you’re going to use them. But that’s how you move out of the ad hoc approach.

Today’s post is from Frank Lord, head of ATG’s Commerce Suite business in EMEA. Frank will also have a longer contributed article on this topic that is due to appear in an upcoming issue of the UK publication, Netimperative Magazine.

The Harvard Business Review recently published a study examining thousands of e-commerce sites worldwide, concluding that those who add compelling content to their websites to directly engage customers successfully grab the sale. The scary part though, is that a majority of e-commerce managers shy away from adding content, believing that “a broad array of information diverts attention from the core offerings.”

When consumers shop online, they want to see information and products that are relevant to their interests. Too many times, retailers focus on price or dramatic offers to lure shoppers in. But research indicates that e-commerce managers who build their sites around what really matters to the person at the other end of the keyboard will be rewarded with higher returns. After all, who doesn’t want to be shown a little TLC? 

Imagine you’re at a party and two different (but equally attractive) men or women approach you hoping to get a date. One asks you a few questions (are you single, your age) and proceeds to give you their life story. The other chats up an engaging conversation during which you both share your thoughts on your jobs, hobbies, recent vacations and your favourite restaurants. Most people would be inclined to choose the second person. People don’t like to be lectured at or involved in a ‘one-size-fits-all’ conversation – they want to feel engaged. The question now becomes, how can e-commerce managers apply this knowledge to their operations?

Really, the trick is to help your site behave like a human being again. New technology tools such as searchandising, click to call and web self-service tools allow you to track and analyse online behaviour and ultimately use this knowledge to connect with your customers. Are they looking for flip flops? Provide them with tips on keeping their tan. If a customer has a question, they want instant gratification. A unique and tailored experience for customers will keep them coming back for more, which in turn will increase up- and cross-sell opportunities for the business and prevent customers from abandoning online purchases at the last minute.

As the economy is slowing and food and fuel bills continue to rise, shoppers are watching their dollars all the more closely. This gives e-tailers a real opportunity to maximise sales. As increasingly savvy customers turn to the web for deals, e-commerce managers should be considering how they can keep them engaged using product comparison tools, reviews and co-ordinated online marketing. These tactics are miles away from the one-sided ‘chat up’ of the shop window websites of the past, but also help to create an interactive conversation with the customer which is far more likely to lead to a long-term relationship – or at least a date. The principals of retail are not much different than dating whether it is online or in person – great looking stores with personalised service keep customers coming back, and happy customers who feel assured that the retailer will remember them every time they return are more likely to pay for their quality experience.

Engaging customers in a two-way conversation is not as difficult as you may think – especially if you know what makes them tick. Retailers that get to know the other person first and use that information in way that engages them, will be walking out of the party with a new date. Skipping the essential courting period could cost e-commerce managers more than a second date. As in the natural world it is only the fittest e-commerce sites that will survive, and to do so they need to engage with the customer in as natural a way as possible.

[tags] e-commerce, personalization, e-tailing [/tags]                 

Last month, ATG, Bazaarvoice, Forrester Research, and Multichannel Merchant hosted a webinar on personalization using user-generated content (UGC).

After seeing the impressive attendance numbers on that, it was clear this is a topic a lot of people are interested in, so Bazaarvoice invited me to participate in a follow-up interview on their blog. You can read that content here.

Please take a look, and let us know if the comments if you agree that most online retailers deserve a “C” grade for their personalization strategies to date. Are there e-tailers out there who are doing an exceptional job with personalization and UGC? What are some of your favorite examples?

[tags] ATG, Cliff Conneighton, personalization, e-commerce, Bazaarvoice, user generated content, UGC, Forrester Research, Multichannel Merchant, online retail, etail [/tags]