The fourth quarter is the biggest profit opportunity of the year for most consumer-focused sites. And if you are a small to medium-sized e-tailer with high hopes, you are probably wondering what you should do to ensure success.
But there are things you should not do, because, after all, what you don’t do is just as important. Here are five mistakes to avoid:
• Branding. How can branding be a mistake? It isn’t, in and of itself. But e-tailing is about traffic, customers and transactions. Branding is great, but October is too late to start a branding campaign. For now, focus on activities that drive traffic rather than the long-term process of establishing a position in your customers’ minds.
If you have a choice between a billboard and a boatload of banner ads, buy the banners. Make sure they are sales-focused and purchased on a cost-per-click basis. Focus your fourth-quarter marketing budget on results, not image.
• Bundle badly. Bundling is a great way to get customers and maintain a healthy margin. You offer the core product at a great price and bundle it with related, higher-margin products (software, accessories, car adapters, etc.). The customer gets a complete solution (or gift), and you get a good sale at a reasonable margin. But do it badly, and it’s worse than not doing it at all.
For example, take Sony’s PlayStation2. This will be, without a doubt, one of the hottest sellers this season. Toysrus.com knows this and bundled a package around it. You get the PS2, but you also have to buy several games and DVD movies. As someone addicted to computer gaming, I was interested. I went to the site, credit card in hand, ready to buy. After several screens of information and some online forms, I got to the movie selection. It was pathetic: a mere five to six choices of movies I had already seen or was not interested in. I canceled the whole process, and toysrus.com lost a $500 sale.
This was the worst possible scenario: It invested 100 percent of the cost to acquire me as a customer, and it got nothing. I came away with the impression that toysrus.com is not really interested in offering me a fair shake. Asking me to buy $100 worth of movies I don’t want just to get a PS2 a few weeks earlier seemed like a raw deal. Irrational of me? Sure. Will I remember this the next time I shop for games online? Definitely.
If you are going to offer package deals, which means a higher overall price tag, make sure the package is attractive.
• Treat all your customers the same. This is a mistake. They are not the same. Some are big purchasers. Give them free shipping, better payment terms, free gift-wrapping or other relatively inexpensive extras that are effective in winning loyalty — and referrals.
Some customers are a wealth of referrals. Don’t wait for them, hoping they say good things about you; seek them out. Offer a referral program encouraging them to recommend your site to friends.
Many Web sites are basically content sites run by private individuals: Joe’s Photography Page, Sandy’s Site of Airline Info, Mike’s Mandolin Resource, and you would not believe what else. They are run essentially as hobbies, but they can attract a fair number of visitors and have a lot of influence among the group you are trying to reach.
Say you sell camera gear. Call Joe, tell him how much you like his site, and learn what you can do for him in exchange for referrals to your store. Maybe you buy a small sponsorship on his site — perhaps the first time he has ever made money from his hobby. Make Joe a hero by offering special deals to people who come to you through his site.
Maybe it’s not money at all, but content. Suppose that, as a Nikon dealer, you have technical drawings of Nikon’s latest 22mm-80mm zoom lens. Send them to Joe for placement on his site, along with a T-shirt. You will be surprised how much business Joe sends your way.
But don’t wait for Joe, and don’t treat him like everyone else.
Discount too heavily. Everyone likes a deal, especially online, and low prices can attract a lot of shoppers. But the Internet is not like a retail store, where you can discount one item to get them in the door and count on selling them a bunch of other things while they are there. It’s easy to skip from site to site buying all the loss leaders, and many people do that. (That’s why bundling can work well. See above.)
If you rely on discounts to drive traffic, you might find yourself sold out of underpriced items and holding a lot of inventory on more sanely priced goods.
Overdiscounting has another problem. Your pricing sends a signal to your
customers about the kind of service you offer and the kind of business you run. Price too cheaply, and people will assume that you don’t offer support or that returns are a hassle.
It’s important to have a good price — but not too good a price.
• Forget there’s a next year. Holidays are trying times for shoppers. This is doubly so for stores. There’s a lot of pressure to get the order, to make the sale. But customers have long memories. Don’t commit to a ship date you are not sure you can make. Don’t promise products you are not sure you can get. It will come back to haunt you.
Besides, between Christmas and New Year’s, millions of people will be sitting around with little to talk about except football, what presents they got, and their terrible experience with this store or that Web site. You are better off satisfying fewer customers than making yourself the centerpiece of endless holiday gatherings where people complain about your failure to deliver.
• Rick Scherle is executive vice president at Bravo Marketing Inc., San Francisco. Reach him at [email protected].
