Many a cataloger has been wooed by the promises of “quick fix” technologies. And it’s easy to see why. The Websites of too many marketers are underperforming. Conversion rates are far below potential, phone-to-Web ratios (the percentage of online customers who switch to the call center to complete an order) are too high, and so on.
My contrarian rule #5 must be kept in mind (borrowed from a 1997 speech by former Travelocity CEO Terry Jones): “You can’t put lipstick on a pig.”
To know if this rule applies, it must first pass through my contrarian rule #1 (borrowed from Warren Buffett): “You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.”
Regarding my skepticism of the hot, new, flashy technologies, am I simply disagreeing with the crowd? What’s the problem here? The problem with this focus on technology fixes is not that these technologies are problematic. Some are very good.
No, the problem is that for many i.merchants these technologies are the wrong answer to the wrong question at the wrong time. The question most online sellers should ask is not “Which generation of technology works?” Rather, they should ask “What generation is our online store?” A first-generation site is defined as an online business that performs below average on key metrics and does not yet feature best practices in navigation, search, merchandising, and checkout. Despite multiple redesigns and a variety of technologies, most catalogers today have first-generation online businesses.
At the Direct Marketing Association’s recent Net.marketing conference in New York, we ran “listening labs” (customer one-on-one sessions) on 13 Websites. Customers (in this case, conference attendees, who are clearly more experienced with this medium than the average customer) were able to complete a purchase at only two of the sites.
On the site of cosmetics marketer Mary Kay, customers struggled with disappearing subcategory navigation, which meant that they had trouble finding products. Catalog shoppers on the site of women’s apparel cataloger Newport News who used the “quick search” — typing the catalog product number into a special search bar — were presented with a product page that had no photos and little product information. On the Caesar’s Pocono Resorts Websites, potential honeymooners were confronted with such top-of-the-page navigation tabs as “Cove Haven” — labels that were meaningless to visitors not already familiar with the resort. Meanwhile, left-side navigation links such as “Romantic Poems” and “Forever Lovers” were not helpful to those trying to find the answers to basic questions about amenities, costs, and booking information. Self-service applications, online video brochures, and other technologies could not help these users for the simple reason that they could not find the links amid the clutter.
These results are consistent with those of other conferences where we run labs. At the Shop.org conference in January, customers (again, professionals in the field) were successful at finding a product, making a purchase decision, and checking out at only two of eight Websites.
As for actual performance metrics, many companies do not have conversion rates above 3% (the industry average, skewed by several high-performing players). For a number of those that do, their rates are still far below their potential. The same dynamic applies to inventory turnover, marketing yield, and other metrics. If your site does not have the basics right and you spend your time and money on advanced self-service applications as opposed to fixing the basics, at best your efforts will have a reduced return on investment. At worst, they will hurt your site’s performance.
Back to basics
Assuming you agree with my reasoning, what should the companies that still need to get the basics right do?
They can follow the lead of the A&E Television Networks’ direct-to-consumer business, which last year focused on improving the customer experience. After several months of work, A&E relaunched its online video and gifts store and reported
- 50% increase in sales conversion rate (and the original conversion rate was already higher than the industry average);
- 15% improvement in average order volume;
- 20% reduction in phone-to-Web ratio; and
- 100% increase in positive feedback from customers.
What did A&E do? First, it conducted open-ended customer listening labs — before making decisions about strategy or design. Too many companies try to improve the site without conducting customer research. And those that do conduct research typically conduct the sessions after they have decided the strategy and prototyped the solution. This limits the effectiveness and power of customer insights.
Next, A&E developed a simple, focused strategy aimed at improving those problems that it could immediately address and that would yield the most in business metrics improvement. So Young Park, the director of e-commerce at A&E, deserves a lot of credit for leading her company in the right direction. “I get calls all the time from vendors selling me the latest solution,” Park says. “However, we have learned that while certain technologies can make a difference, our most pressing problems are to get the basics right. We made a huge leap in that regard in 2003 and saw a tremendous benefit from it.”
With the basics down pat, Park and her team have started investing in more-sophisticated technical solutions. For example, they implemented Omniture’s SiteCatalyst reporting software to generate much better and meaningful metrics. They’re also experimenting with a promising new A/B testing technology from A&E’s platform vendor, ATG.
Park’s advice to other online marketers: “Do not listen to the siren calls of technology fixes. Make sure first you understand your customers and that you have made it possible for them to find a product, make a purchase decision, and check out.”
Next time you get a call or read an article about a hot new technology, remember Park’s advice. If you get the basics right first, you’ll avoid putting lipstick on a pig. Instead, you’ll make a lot more money and build the foundation to become more sophisticated in your online selling efforts.
Phil Terry is CEO of Creative Good, a strategic customer-experience consultancy based in New York.