Best Bets for online acquisition and retention

In the world of online marketing, it’s easy to lose focus on the core objective when you’re haggling with search engines, chasing down affiliates, and fixing your Web analytics. To make it a little easier and to sharpen your focus on your primary goals, here is a breakdown of some of the best practices in online marketing for customer acquisition and retention.

ACQUIRING CUSTOMERS ONLINE

Certainly the percentage of new and existing customers from programs such as affiliate and search engine marketing (SEM) varies by brand, but I am going to go out on a limb and generalize search and affiliates as primarily acquisition opportunities. A third critical — and maybe even the best — opportunity for acquisition lies within your own e-mail file: those who have signed up for e-mail but have not yet purchased from you.

You may well be thinking that all of these tactics are a given. If that’s the case, proudly consider yourself best in class! But you may be surprised to learn that many companies — and not just smaller or newer ones — are still not availing themselves of these tools.

Besides, just because a company is using afiliate programs, SEM, and e-mail marketing doesn’t mean it’s doing so correctly. Below are some best practices for each.

1. AFFILIATES

   • Work with an affiliate provider that checks the identity of each affiliate to make sure that it is a valid operation and Website conducting business legally and ethically.

   • Reduce the size of your affiliate network to eliminate affiliation with lower-quality sites.

   • Offer tiered commission structures to affiliates in order to motivate them to drive more sales; 76% of marketers have a per-sale relationship with their affiliates.

   • Run contests periodically to reward top affiliates.

   • Studies show that 98% of sales come within the first 48 hours after a person clicks on an affiliate link. Contrary to what you may think, however, this is cause to lengthen the affiliate window — the reporting period for which an affiliate gets credit for a sale — rather than shorten it. Affiliates will promote the brands that they feel they have the greatest opportunity to drive the most revenue, and for them this includes the length of the reporting period.

2. SEARCH

   • Before investing heavily on search engine marketing, make sure your onsite search functionality is effective enough to increase click-through and conversion rates. In fact, you should consider onsite search as a merchandising tool.

   • Employ keyword metatags to leverage natural (unpaid) search. Metatags are HTML code embedded in Web pages that help search engines identify and rank pages in search results. (Eighty-percent of the Fortune 100 retail sites don’t employ metatags.)

   • Use automated, scalable data feeds to leverage distribution, improve reach and ranking, and drive more sales through search and comparison shopping. This technology can be used to customize one feed into several feeds based on the partner and objective.

   • Focus on the big three search engines first: Google, MSN, and Yahoo! This is where you will see the most volume.

   • Consider using a search marketing services provider to ramp up your SEM program. Such third-party providers have the automated technology required to successfully bid and manage keywords on a large scale.

   • Focus on your keyword copy; test content about the product, the offer, and the season or holiday to maximize click-through rates. It’s not enough to use your catalog copy.

   • Be specific with your keywords. Leverage keyword popularity tools to understand the number of searches for any given keyword, as well as all the variations. For example, “dining table” may be too broad and too expensive to bid on; “glass dining table” or “round dining table” could well be more profitable.

3. E-MAIL

   • Nonbuyers who opted in to receive e-mail from you are your most qualified leads. While it can be difficult to come up with the creative resources for true e-mail segmentation, targeting your nonbuyers separately is one of your most cost-effective customer acquisition opportunities.

   • There are many options for tailoring your message to those who haven’t purchased yet, but one place to start is understanding the differences in what your new and existing customers are buying and then promoting those products.

RETAINING CUSTOMERS ONLINE

Now that you’ve acquired your customers online, how do you keep them? Some say that retaining customers online is difficult given all the competition — and I agree! If Internet buyers tend to be less about brand loyalty and more about value and convenience, then this is especially true for brands with commodity products such as electronics. With online-tracking technologies — such as cookies — in question amid increasing consumer awareness, e-mail and onsite tactics remain the two core ways to proactively retain customers. Here are some tried-and-true practices.

1. E-MAIL

   • Provide a box for e-mail opt-in “above the fold” on your home page (in other words, on the first screen), and make it easy for your customers to use. At the same time, communicate the benefits of signing up for e-mail.

   • Give customers the ability to provide content preferences for their e-mail communications; be sure to also ask for postal address/catalog request on the e-mail sign-up page.

   • Customer segmentation based on standard recency, frequency, monetary (RFM) metrics (identical or at least similar to house file circulation segments) is more standard at this time than segmentation based on behavior and product categories. The capability for behavioral targeting is increasing, though, so make use of it if possible with automated, triggered campaigns based on behaviors (such as abandoning the shopping cart) or events (such as a birthday).

   • Use automated e-mail for order and delivery confirmations; these are easy, expected touch points.

   • Implement some sort of personalization. It can be as simple as including the customer’s name at the top of the e-mail or as complex as including content tied to his previous purchases or Web behavior.

   • Append e-mail addresses to your lapsed customers and ask permission to contact them; use an e-mail change of address service to maintain your active e-mail file.

   • Focus on your “from” field as much as your “subject” field — test different copy for both.

   • Use a delivery reporting tool to show you the details of blocking, filtering, blacklisting, and unknown-user rates.
2. ONSITE MARKETING

   • Identify repeat visitors, even if they haven’t registered. You can classify existing visitors into certain groups and create targeted messages based on their actual buying or navigational behavior. If this is too complicated, you can still distinguish repeat visitors from new visitors by promoting those products on the home page that existing visitors typically purchase or are interested in.

   • Cross-sell and upsell in the shopping cart. There are still a few sites where it seems that technology constraints are limiting opportunities to increase revenue in the cart. As an interim solution, you can use ad-serving technologies to serve up product ads that look as if they belong on the page without your having to create the back-end changes needed to implement a true cross-sell program.

   • Create homegrown usability labs so that you can really understand navigational behavior. While Web analytics tools are a great place to start understanding the navigational behavior of your customers, they can’t replace the need for true usability studies. Creating a usability lab can be as simple as using an empty office to bring in local customers (in exchange for a gift certificate) to complete specific tasks on the site. This will provide additional insight into optimizing Website functionality.

   • Step up your onsite search results. While almost all e-commerce sites now have search engines, many still lack advanced functionality. Remember that search is one of your greatest conversion opportunities on the site. Just a few opportunities: link to category pages, promote site-wide offers, call out related best-sellers, cover all areas of the site including shipping information, allow navigation of results by product attribute, sort results in multiple ways, and present alternatives when no results are found.

LEADING-EDGE PRACTICES

Are all these suggestions old hat to you? If that’s the case, here are some advanced tactics to consider:

• Integrate your e-mail marketing with Web analytics data to refine and improve e-mail performance.

• Make use of new technology that allows you to track audience composition after a campaign and to analyze the reach and frequency of actual ad exposures to target demographics.

• Identify and target multiple users under one e-mail address with specific content.

• Focus on the reach/frequency impact from online marketing on the brand, rather than exclusively on ROI.

• Dynamically create Web pages based on a shopper’s search terms and previous site navigation. (For more on dynamic merchandising, see “Site dynamics,” page 25.)

• Use a content management tool (such as WebCollage) that allows both vendors and merchants to directly control branded content.

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Polly Bickel Wong is associate vice president, strategic consulting for the growth strategies group of New York-based list and marketing services firm ALC of New York.