NEW YORK — E-commerce companies stand to lose $400 billion in sales during the next four years if they do not make it easier for customers to use their Web sites, said Phil Terry, CEO of e-commerce consulting firm Creative Good, to attendees at the Direct Marketing Association's first E-Commerce Customer Care Conference here this week.
“Today's online customer is incredibly confused, intimidated, frustrated and overwhelmed,” he said, noting that the increasing penetration of the Internet into American homes has fostered an abundance of Web users who have little technical expertise. “They have a tough enough time just logging on to the computer and finding your site. Once they are there, they want things to be as easy as possible.”
Speaking to an audience of more than 100 at the New York Information Technology Center, Terry echoed the opening remarks of DMA President/CEO H. Robert Wientzen, who said veteran direct marketing firms have the advantage of experience in one-to-one marketing as they migrate their businesses to the Web.
Wientzen cited results from a previous DMA survey that found 69 percent of DMA members who conduct online sales are making a profit. He said direct marketers' understanding of processes such as measuring lifetime value, data warehousing and relationship marketing are skills that translate well to the Internet.
“The companies that have made it big have been doing it well for 40 years,” he said.
Terry said firms that have a direct marketing or catalog background tend to generate better conversion rates — the number of purchase transactions divided by the number of site visitors — than the 1.7 percent to 2 percent conversion rates that e-commerce companies average.
“Most of your customers already are coming to your site — you just need to get them to make a purchase when they are there,” he said. “The biggest challenge of e-commerce companies is to convert first-time shoppers into buyers.”
Stressing the importance of taking a customer-centric approach, Terry also criticized companies such as fashion retailer Boo.com that have tried to make online shopping an interesting experience rather than an easy experience. Any site that requires you to download special software just to shop on it in the interest of creating a mystique around the brand is not taking the right approach, he said.
“We believe, fundamentally, that you build a brand online by giving customers the kind of experience they want to have,” he said.
He outlined five basic rules that e-commerce companies need to abide by in order to survive: They need to center their entire site strategy on the customer experience; make it easy for customers to buy products on the site; relate to customers with empathy and respect, rather than thinking of them as “eyeballs” to be “monetized”; measure conversion rates; and instill simplicity in not only in the Web site but also the entire online business plan.
He compared shopping online to a customer walking through a store with blinders on, unable to see everything the store has to offer.
“The Web is a very constrained medium,” said Terry. “You can only see one small thing at a time.”
It also is different from retail shopping in that customers have not yet learned any particular rules about how to shop online like they have for retail stores, he said.