Correctly Allocate Unsourced Orders

Forget the dot-com collapse, the Internet is back and maturing nicely this time around. The Internet channel is about to have a major effect on how multichannel marketers gather, store and report customer information. Are you ready for a marketing database makeover?

Consider some of the facts regarding how the Internet is playing a growing role in direct marketing:

· Online advertising grew 29 percent in 2004, according to consulting firm eMarketer, New York. For 2005, spending for online ads will surpass $9 billion.

Search-based advertising, which makes up one-third of online ad sales, has grown exponentially and is estimated at 500 million searches daily. Paid search — where “keywords” are auctioned minute by minute — has grown from nearly zero in 1999 into a $3.9 billion business in 2004, up 55 percent over 2003, according to eMarketer.

· Another trend affecting multichannel marketers is the growing percentage of catalog response that is coming to their Web sites rather than their call centers. Abacus Direct said online orders surpassed call center orders for the first time in fourth-quarter 2004, in some cases reaching 50 percent of total sales.

All of this change has produced a new tangle of marketing complexity, creating measurement challenges for multichannel marketers in these areas:

· Understanding where customers are coming from and which online sources provide the best long-term revenue per customer.

· Figuring out how customers use the Web site before purchase.

· Tracking how much online revenue is being driven from offline channels.

Understanding customer/prospect sources. One big challenge is that the Internet presents an almost infinite number of options and combinations to test. Marketers can pick from a growing number of Web advertising formats and an unlimited number of keywords. They must decide whether they want to hit targets at work, at home or both. Then they must select on which of the thousands of commercial sites or hundreds of affiliate/search networks to run the ad.

With paid search they also must consider how much to bid for each keyword. Finally, there’s the big variable of day part – the time of day the ad will run – where an entire program might change as different groups log on and off the Web.

All of this Internet advertising data is new and different than data about offline media. New tables, data fields and meta data and response management reports must be added to the customer marketing database system.

Though some Web site analytics software can help determine what is or is not working on an initial cost-per-order basis, only the marketing database will let you isolate orders from the truly new customers … and fully profile and segment these new Web customers and track their performance and repeat purchases over the long haul.

Understanding customer Web site visits. With the Internet capturing $145 billion in orders last year, the trails left by site visitors are another huge source of new data from the Internet that multichannel marketers are finding extremely useful. We need to capture and store in the customer database what are generally known as click-stream data, which include elements on registrations, pages viewed, links clicked, navigation paths taken, drop-offs and shopping cart abandonment. Such data can support critical activities including:

· Understanding how prospects use your site differently than customers or multichannel buyers.

· Tracking the percentage of shoppers dropping off at each stage of the shopping process.

· Executing targeted cross-selling and follow-up programs to boost sales and recapture lost opportunities.

· Measuring which products and content are most popular and generate the most revenue.

Tracking online revenue back to offline marketing activity. When catalog buyers order on a Web site, they are much less likely to provide a source than in a call center where the service agent can help gather this data. As a result, the Internet produces a higher percentage of unsourced orders, up to 80 percent. It is important to allocate these orders back to the proper source, particularly if the merchant also has active Internet advertising and search marketing programs.

The best practices for allocating unsourced orders are to use the merchant’s catalog and e-mail contact history files to see when that customer last received a catalog or e-mail. Then client-specific business rules can be used to allocate the order to a specific campaign and communication piece. A cataloger could decide that response may be allocated to an e-mail only if it came within seven days of the e-mail receipt. Allocation of unsourced orders is a business process that can be built into the regular marketing database update process.

Even more change is on the way. Consumers are increasingly comfortable completing transactions on the Web. Improved speed of access and enhanced site design will accelerate this trend as the Internet becomes more mainstream. Will your marketing database be ready?

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