Supersize ‘Em

Jan 01, 2006 10:30 PM  By

A multichannel merchant’s average order value online tends to be smaller than its offline average order. Among participants in Multichannel Merchant’s Benchmark 2005 on E-commerce (June 2005 issue), only 18% generated larger orders online than via their print catalogs and contact centers; in contrast, 47% said their catalog/contact center order sizes were larger than their Web orders.

One obvious reason: Websites don’t have a friendly service rep on the line who has a financial incentive to prod customers into adding to their orders. “It’s difficult to say no to a human being. On the Web, you don’t have that,” says Patti Freeman Evans, retail analyst for New York-based JupiterResearch.

But there are techniques and insights specific to the Internet that can compensate for the lack of human contact. As Neal Cohen, vice president of direct marketing for gourmet products merchant Sur La Table, puts it, “Anything that helps conversion can also help [raise] your average order.” For example, enabling customers to enter multiple ship-to addresses on Sur La Table’s online order form has increased average Web order sizes for the Seattle-based cataloger/retailer.

Don’t wait till checkout

Sometimes the best — and simplest — way to boost average online order sizes is to ensure that your site is easily navigated and runs as efficiently as possible. “You can have the most refined cross-sell process, but if you make it hard for clients to connect to product, those cross-sells aren’t going to be able to do their jobs,” says Jennifer Wells, senior marketing manager for Covington, KY-based e-commerce consultancy DMinSite. “Open yourself up to what other things may encourage clients to want to continue the buying process. It’s really about examining the whole customer experience. The more product you can expose them to, the more likely they are to make a purchase.”

One way to expose customers to more products is by cross-selling on the product page and on the shopping cart. “A lot of people do one or the other,” Wells says. “I would do both.”

You want to avoid displaying products alone, Wells continues. She cites a merchant of musical instruments that has raised its average online order size by offering accessories to the instruments, such as cases and bows, on the product pages.

“It’s important to be able to order multiple products that have a relationship to one another from a single product page,” Wells explains. “If you know two products are dependent on one another or just go together like peanut butter and jelly, then the client can purchase both of those from the same page, and you’ve reduced the number of clicks necessary for that.”

Don’t rely solely on your gut, however, when deciding which items to merchandise together. Wells says you should first look at your site’s purchase-history data. “Let the buying behavior be your first guide,” she says. Often customers’ buying patterns are not what you think they should be. “The data doesn’t lie. Even if it doesn’t make sense to the merchandiser, that’s not what is important. If it makes sense to the customer, that’s what you want.”

Evans agrees: “Invariably the combination that works is not even close to what the merchant or designer thought was going to work best.”

Wells also advises rechecking cross-sells regularly — say, six weeks after you’ve added products — to make sure they’re selling. “It’s not a process where you pick [items to be merchandised together] once and then you’re done,” she says.

Illuminate your offer

Incentives to encourage customers to exceed certain spending thresholds — such as free shipping on offers of more than $75 — have long been popular among catalogers looking to boost order sizes. They can work well online too, so long as you display those incentives prominently and repeatedly on your Website.

“If you’re already using an offer to bump up your average order, make sure you’re not putting that light under a bushel,” says Wells. “Often marketers will use that kind of offer in an e-mail, but then once the customer gets to the site there’s no reminder of the offer that got them there in the first place.” In fact, she suggests setting up your shopping cart so that it reminds customers of how much more they must purchase in order to receive the discount or free shipping.

Of course, repeating an offer throughout the Website requires extra involvement with IT — something few marketers relish — but Wells says the pain is worth it.

Online merchants that focus on customer loyalty also realize higher average order sizes, says JupiterResearch’s Evans. Though most traditional direct marketers needn’t be told about the importance of retention, Evans says many Web marketers have only recently gotten religion when it comes to customer loyalty.

“Online retailers tend to focus an awful lot on acquisition, and that was right in the early days,” Evans says. As the Internet matures as a selling medium, however, online retailers find that prospecting is getting more difficult and, consequently, are realizing that loyalty and retention are more critical. A side benefit is that loyal customers tend to make larger and more frequent purchases.

Some merchants find that focusing on a certain segment of their customer base online helps increase loyalty and average order sizes from that segment. Case in point: Edmund Optics. The Barrington, NJ-based manufacturer/marketer of industrial optical equipment began its Vision Integrators Program, or VIP, on its Website in January 2005 as a way of gaining more loyalty from its top consultant resellers. These consultants typically work for manufacturers and other businesses that need optical inspection systems installed in their plants. For example, a Tylenol packaging plant or a Coca-Cola bottling plant would need such a system to make sure the product is being packaged correctly.

“Basically everything that is on the market today is manufactured in a plant where they have to have some kind of vision inspection system on it,” says Marisa Edmund, director of marketing for Edmund Optics. Average order sizes for Edmund Optics — which manufactures everything from lenses to complete systems — can run in the tens of thousands of dollars.

To launch its Vision Integrators Program, Edmund Optics identified 100 consultants in its customer database who were heavy buyers of the company’s products and offered them special discounts to join. “We decided these people are great conduits to sell more because they’re kind of like salesmen on the street for us,” says Edmund.

About 20 consultants have joined the program so far. They have been given password-protected accounts on EdmundOptics.com. Once they log in, they can see the discounted pricing available to them, eliminating the need to call the company to have price quotes faxed to them. They also have access to their order history so that they can see, for example, what they ordered to complete a similar job in the past.

“They can price stuff out… They never have to call, never have to get quotes, never have to wait for a fax to get to them,” Edmund says. “They can plan everything they want and within one click see if it’s available to be shipped overnight to them.”

The program is not aimed at reducing call-center volume, however. If the consultants want to talk to an Edmund engineer, they get one. The integration of self-service and personal service allows the program participants to respond to their own customers that much faster, Edmund says. “In b-to-b, timing is very critical. When the Food and Drug Administration comes to your plant and says, ‘You have to increase your quality inspection of Tylenol pills,’ you’d better have a good game plan for them ASAP.”

Each VIP participant also gets an area of the Website to use as an archive for client-presentation materials, such as a drawing an Edmund Optics engineer made for them. And the Website gives participants the ability to customize Edmund Optics product specification sheets with their own logo. “At any time, they can log on and print all of their own customized marketing material,” says Edmund.

The result: Sales to this group have increased more than 60% during the past year. “They’re buying more frequently and in greater volume,” says Edmund. “Giving a discount is always interesting to people, but facilitating it with the right tools creates loyalty. And then having the engineering support and putting everything at their fingertips, that creates the relationship.”