Don't Lose Sight of the DM Basics
Online technologies give unparalleled insight into valuable site navigation statistics, customer buying behavior and product performance. But unless you can sustain a controlled Web environment with attainable, accurate site and commerce transaction data, the output from these technologies can be even more frustrating than their implementation.
Traditional direct marketing is a business of precision. To survive postal rate increases and rising paper costs, DMers have been forced to squeeze every ounce of response from each catalog or mailer. This means constantly testing offers and presentations, refining segmentation and developing highly relevant offers. These concepts have begun to arrive in the online world.
Survivors online will not be those who invested in sophisticated Web technology, but those who invested in direct marketing expertise. Here are a few areas where "tech-know" is more important than "techno."
Test variables. How effective are your special offers? Which photos are most effective? What price points generate the greatest margins? Try asking online consultants what they suggest as a statistically valid sample size and many will stutter.
Perhaps the Web's greatest value to traditional direct marketers is the ability to efficiently test and deploy new strategies and tactics. The ease of creating e-mail offers and the speed of realizing test results make the Web an ideal environment for maximizing campaign results.
For instance, most traditional DMers use a champion/challenger testing method. This means that small parts of a list are allocated to testing offers (the challengers) while the bulk of the list is mailed an offer or presentation with historically proven results (the champion). All offers are mailed together to control for the mailing environment.
In the ensuing two to four weeks, results are obtained and projected-to-final, accounting for differences in response rates, average order sizes and product margins. If a challenger proves more profitable, it becomes the new champion for the next appropriate campaign, which, due to print lead times, may be two to three months away.
E-mail offers the ability to apply this technique from start to finish in as little as three to five days. But many online marketers lack either the resources, know-how or patience to maximize their e-mail performance.
Benchmark your site's performance. Not all online variables are as easy to evaluate and measure as e-mail performance. Site changes and modifications don't allow for creating a perfectly controlled environment in which a single variable can be isolated. In this case, benchmarking can be used as an evaluation method.
Online benchmarking requires considerable tracking sophistication to understand the effect of site changes. Measures such as the number of monthly unique visitors, close ratios, average order size, product mix and promotional activity must be tracked and recorded daily, both before and after site changes, to produce actionable data. If you can't easily identify these measures, you've got bigger and more immediate fish to fry.
When considering modifications to products on your site, start by making this change only to a select sample of products on your site. After enough time has passed so that sufficient order data has been captured (a statistically valid sample size), compare purchase data on just the products that were affected. What were their close ratios, basket abandons, click-throughs, etc., before the change versus afterward?
Now look at the products that were not modified in the test period. Changes in these products before versus after the test period will alert you to other variables or environmental factors that could have affected your test results.
Considering an entire site redesign? Don't start until you have at least 60 days of benchmarked site traffic and commerce data. Start by benchmarking your site's performance so you can track its effectiveness before and after the design launch. Knowing what works and what doesn't on your site before you begin your redesign may help you understand what's broken versus what's fine. Too many Web managers end up scratching their heads when their online sales decline after launching a "really cool" new site.
Several tools on the market can provide a wealth of data as to the source of unique traffic on your site, top navigation paths, exit points, repeat visitors, etc. They provide easy-to-understand graphical reporting and can be cost-effective and simple to deploy.
Also try researching other industry models that are similar to yours so you can benchmark your site performance against these. Industry analysts can be good resources for this type of information.
Monitor your tactics. Identify the specific areas that you can affect and determine the tactics that you will use to move the needle. Target your efforts. Don't just add promotions and special offers to be proactive. Objective-driven initiatives focus on a specific goal, such as lower abandon rates or increased line items per order.
When you deploy a site merchandising campaign, monitor site activity to determine whether the objective was achieved. If not, re-evaluate, readjust and re-fire the offer. Use the creative flexibility and speed that make the Web such an advantageous direct response media versus traditional offline. With careful planning and observation, you can read and react quickly.
Once you grow comfortable with your ability to read and react to your online marketing efforts, you can begin to build convergent marketing promotions that combine traffic-driving efforts and site merchandising techniques to achieve maximum results. A typical and effective convergent campaign might consist of e-mail efforts or search engine keyword buys to drive site traffic; cross-sells, upsells and shopping cart banners to increase order size; and an order confirmation e-mail message with a bounce-back offer to promote repeat purchases.
Back to basics. Sniffers, open detection, cookies. Basic segmentation techniques such as RFM and product purchase history are what drive results. The ability to present relevant, uniquely compelling offers has been, and always will be, the bread and butter for any direct marketer, offline and online.
The last time an online marketer thanked me for opening their e-mail, I thanked them for taking me off their list. Don't be enamored by what you can do with online technology. Be thrilled by how technology can make your direct response campaigns more productive.