In 1999, the year-end sales push started early, especially for anyone providing advertising or business services to online retailers. Online retailers were flush with cash, and desperately seeking Amazon.com-like greatness with one big television spending spree.
This year, now that the money is spent and investors are more discriminating, those in Internet land are focused on building real (read: profitable) businesses. The challenge is doing so in this unique medium of rapid growth and a constantly evolving business landscape.
There are several important principles to follow when planning for this year’s peak selling period. First, be proactive, especially and most importantly when it doesn’t cost anything. Second, be reactive with your resources, tactics and commitments. Finally, focus on your existing customers, and maximize the amount of money they spend with you, as opposed to getting distracted by the quest for new business.
Being proactive means assembling contingency plans and opening fast-reacting communication channels across functions. Contingency plans are critical, and too few companies spend the time to put them together.
Map out the entire marketing process from visitor to package delivery, and understand what happens, for example, if the credit card verification process fails or if someone runs rampant with “renegade” coupons. Make sure you understand potential bottlenecks, and start measuring critical performance parameters as soon as possible. These steps will enable you to establish a base line before the season starts.
Encourage your senior management to imagine what potential disasters might occur, and agree on how you will respond, both from an operational and a public relations perspective. Prepare the organization to react, and anticipate/discuss the natural conflicts among functional areas.
A good example of this is engineering and marketing. Engineers naturally want everything laid out weeks in advance, and marketers want to turn on a dime. Encourage both sides to talk about and address the other’s needs before things get frantic so that communications do not break down.
Being proactive also means seeking marketing and promotional partnerships with companies with which you might not normally do business. These partnerships often cost nothing, and they can make a big difference when the seasonal onslaught begins. Get involved with the credit card companies, bricks-and-mortar and catalog retailers, and others that share similar customers and sell dissimilar products. Get creative in your quest and do everything you can on a quid pro quo or “pay for performance” basis. Your risk is minimized, and you’ll reach customers you otherwise would not.
As mentioned above, the flip side of being proactive where it counts is to be reactive whenever possible. This entails avoiding inflexible, “long lead” marketing initiatives like TV advertising and focusing on short lead tactics like e-mail. It also entails keeping a lot of your budget in reserve for last-minute opportunities that are sure to arise.
Our rule of thumb is to emphasize marketing initiatives, especially during the holidays, that can be executed in four weeks or less, and to keep at least 30 percent of our budget in reserve as we go into the quarter. We also like to keep close to 25 percent of our “open to buy” available for special last-minute holiday product opportunities, or to chase any trends we might otherwise have missed.
A reactive mind-set should be encouraged in all functional areas of a company, not just marketing. Our engineering department freezes all new site features in mid-October so that our engineers prepare for the ever-changing demands of the holidays. We have contracts with third parties to handle customer service overflow and to bring in temporary employees to help in the warehouse, as needed. And we also monitor all potential bottlenecks and performance parameters closely, so that adverse (or positive) changes can be reacted to immediately.
Perhaps the most important thing is to focus on your existing customers and avoid the seasonal temptation of concentrating on getting new shoppers. There are a number of reasons for this.
First, online profitability is heavily dependent on strong repeat business. Therefore, it is critical that you figure out how to keep your customers coming back, and there is no better time to do so than during the holidays.
Second, word-of-mouth spreads quickly on the Web, so if you can delight your existing customers, they’re more likely to tell their friends about you, thus compounding your growth.
Finally, the “holiday shopper” segment is notoriously fickle and impatient. Establishing an enduring relationship that is initiated through a holiday-based promotion, therefore, is extraordinarily difficult. In short, build your customer base before the season starts, and provide those customers with ample incentives (monetary and otherwise) to shop with you during the holidays.
• Al Noyes is executive vice president of sales and marketing at SmarterKids.com, Needham, MA. Reach him at [email protected]