How to Optimize CRM in Online Retail

The Internet is the most powerful customer relationship management medium in history. Historically, the discipline of CRM has been focused on business-to-business transactions where the average customer value is high and individual attention is affordable. The Web, however, makes it possible to treat each shopper according to his or her unique needs with very little incremental expense.

We contend that traditional retail models, when applied to the Web without a CRM overlay, are highly vulnerable to new competitors who take full advantage of the medium. Here are the four steps to successful consumer relationship management on the Web:

1. Develop a value proposition that is individualized to the consumer. Internet retailing combines traditional retailing skills, direct response marketing, database management and user interface design in a way that enables a much more relevant and powerful marketing proposition for each individual consumer.

Online retailers must identify what makes each consumer different and leverage that difference to its fullest. In the education field, for example, because of economic constraints, traditional stores and schools are unable to give kids the individual attention that they deserve, even though each child’s educational pace, priorities and approach are different.

A good education marketer recognizes these differences by providing a suite of tools and mechanisms for consumers to illustrate a child’s educational situation and then rearrange the store accordingly. In other fields, from gardening to books, online retailers must learn how to gather relevant, salient data on each consumer and then use that data to improve the value they deliver.

2. Leverage Web marketing tools to track everything from the initial advertising impression through to post order satisfaction. Use a variety of leading edge tools to manage marketing initiatives, track progress and fine tune your efforts.

Third-party tools and services, such as those provided by AdKnowledge, net.Genesis Corp. and Bizrate, help marketers understand which ads are most effective, how the people attracted to the site are navigating it and how satisfied customers are with the shopping experience. Refine your site design and your advertising efforts frequently based upon the information you glean from these tools. Without them, you will be flying blind.

3. Focus maniacally on the highest probability customers – those most likely to appreciate your value proposition – until you have optimized your ability to address their needs. Then focus some more. It’s easy to get distracted on the Web. Before you know it, your site will be registering thousands of hits and you’ll be tempted to add more products and services to exploit traffic.

Keep in mind, however, that hits don’t necessarily translate into business, and your first and only priority must be to flawlessly deliver your core value to your core customers. Only when you have that established – and it will take longer and be tougher than you think – should you consider broadening your mission.

4. Develop feedback mechanisms and metrics that faithfully track your unique attributes. Many Web sites begin by measuring their progress against common industry benchmarks. Unfortunately, these benchmarks are often irrelevant and even misleading. Even something as straightforward as the number of visitors you attract to your site can vary by as much as 100 percent depending on how a visit is defined and who is measuring it.

As a result, smarter Web marketers develop systems and tools to measure their progress against the value proposition they have defined, and they constantly strive for relative improvements.

I know from experience that an educational products site cares most about which grades and subject matters are attracting the most interest and the nature of the visitors who are signing up in the personalized portion of the site. Design your site to make it easy to track these numbers and constantly experiment with ways to improve them.

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