Hitmetrix - User behavior analytics & recording

New Ways for Old Retail Approaches

Retail marketing professionals are flocking online in hopes of cashing in on the new economy. While armed with knowledge and the eagerness to deploy their grandest ideas the second they arrive at their door/desk/start-up cubicle space, these gurus find within days that their past retail experience will only take them so far.

In the online world, even the basics aren’t always easy and successful. Retail marketing for e-commerce means finding new ways to deploy old techniques. The basics of traditional offline tactics don’t easily translate online — even such “good as gold” standbys as thank yous, buddies and coupons.

Gone are the days of establishing relationships with customers through the old-fashioned “thank you.” Remember training your customer service representatives to thank your customers by name? While you could look at the name on the credit card or customer account, the anonymity of the Internet makes it much tougher to thank someone by name.

You can drop a cookie into a computer and welcome Ms. Smith to your Web site, but with privacy issues and uncertainty about Internet security, it takes a while to get and build trust. Even sending a thank-you note after a purchase is difficult in these days of e-mail spam paranoia.

To avoid the spam factor, marketers must think of new ways to show their respect and gratitude for their customers. One simple way to build that customer relationship is placing a welcome gift, kit or thank-you note in their first shipment. Customers love being surprised by receiving more than they paid for. That alone immediately establishes a relationship. Place a coupon in the box, and you’ve got a good chance of getting that customer back. It is important to build a relationship in that first shipment.

Other basic techniques, such as referral programs, don’t always work in online retail. In the bricks-and-mortar world, customers referring new customers get a special coupon, bonus offer or gift. It’s an easy and low-cost way of acquiring a customer with a small incentive.

Online, though, confirming a customer referral is much more difficult. Customers can create a separate user name and password and refer themselves. By even slightly changing an address or name, a customer can reap the rewards of a referral repeatedly and undetected.

For instance, the address 123 Main Street can be changed to 123 Main St. and appear as a new account. Referring one account address as a home address and one as a work address gives customers another way to get around the program. Customers will even place their next-door neighbor’s address into an account if it means getting a customer reward. Cookies, which can be placed into a customer’s computer to track whether the customer has been to a site, can easily be either turned off or deleted. And, the customer most likely to abuse a referral program certainly knows his way around cookies as a means of detecting him as a new or existing customer.

Referral programs work best online when companies either spend time designing a good database program that will cross-reference several fields, including credit card numbers if applicable, or check referrals manually. Hire a database person to look at each referral and check against several fields. Checking a referral program helps spot patterns of abuse that an automated system will not pick up, such as names of people or techniques that can make it through the system long before they are discovered.

Everyone likes paying less. So just as in the bricks-and-mortar world, coupons offer an easy means of acquiring and retaining customers. The offline coupon route starts with retailers typically defining a goal for a coupon, and targeting a demographic through a list buy, ZIP code target or newspaper insertion. Then, coupons get printed on a piece of collateral with a barcode assigned to apply the discount at the register. The bricks-and-mortar road offers a measure of control, since the customer has to go to the store and be seen to redeem a printed coupon, reducing the risk of fraud.

However, the online world is, once again, different. An online retailer can target a demographic through list buys, niche Web sites and ad buys as well. But there is no printed paper for the coupon, only a code entered and redeemed by customers at the virtual checkout line. Nothing prevents a coupon code from popping up on consumer Web sites, news groups or in e-mail forwarded from one customer to another.

Thousands of Web sites specialize in posting coupons for the world to use. Even customers not likely to clip coupons in the offline world find it tempting to save an additional $10 at an online store by checking these coupon sites. And just as with the referral program, first-time customer coupon offers encourage the creation of several user names and accounts to meet the requirements of a new customer. With those problems lurking, developing one-to-one coupon programs that generate unique coupon codes per target vs. multiuse coupon codes per campaign becomes vital to the success of a coupon campaign’s goals.

While somewhat overwhelming, offline retailing techniques still can be applied to Web stores. You can still thank your customers, and buddies can still help buddies. Online retailers simply have to change their way of thinking slightly. With thousands of customers in your online store each day, 24/7, the possibility for abuse of traditional programs is much higher.

Marketers have to stay about 50 steps ahead of the game instead of just ahead of the game. Many more techniques can be applied to online retail than offline retail. Master the basics, and you will be a pioneer.

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