“Getting ’em, converting ’em, keeping ’em.” This could be the new motto of the e-tailing Internet generation.
With several hundred million surfers out there, the first issue at hand is to get as many as possible to visit your Web store. Once they are at your site, you have to convert them into buyers. And finally, once you have converted them, do everything you can to keep them as customers.
At last month’s Internet World 2000 in Toronto, Marco Argenti, CTO of Toronto’s Microforum Inc., outlined 10 basic strategies for creating a Web site that ensures visitors enjoy their stay, and return. But before he discussed these strategies he lay down some ground work on the reality of the Internet and e-commerce.
One of the biggest issues for companies deciding to venture into the world of e-commerce is to get a grasp of how many people really are on-line. Surveys give numbers all over the map (100 million to 260 million in 1999) and Argenti added that even the definition of a user is rather unhelpful. “An active user is defined as using [the Internet] once a month, so it’s really not that active,” he said. Argenti continued by stating there is incredible growth expected in the few years to come, especially in Europe, Asia and the Pacific Rim.
One of the daunting tasks facing an e-tailer is shopping is not one of the top reasons people go on-line. According to statistics presented by Argenti, the top reasons range from e-mail and hobbies to gathering product information and getting up-to-date news. Regardless, a Web site “is considered a must, in terms of customer service, rather than a plus,” according to Argenti.
For some companies with traditional retail outlets (as opposed to those that exist solely in cyberspace) the Web stores actually fare very well. Argenti said The Gap’s fifth busiest location is their on-line store, thus proving on-line stacks up well against brick and mortar in certain retail domains. But whether or not e-tailing competes with retail outlets, the task of getting visitors to your site is getting more and more daunting. According to Argenti, there are 100 million sites out there and 250 million users. Not great odds for a seller.
The bottom line: “repeat business is really the key to success.”
To explain this motto Argenti took the attendees through a hypothetical ad banner campaign. Most statistics show that about 0.5 per cent of those exposed to a banner ad click through to the banner site. Of those who visit a site, about 2.7 per cent actually buy something. But, and this is the good news for e-tailers, 20 per cent to 40 per cent of buyers will be repeat buyers.
If you go out and buy a million banners (not a huge number according to Argenti) for $34,000 and get a 0.5 per cent click through ratio, you will have 5,000 people visit your site. A 2.7 per cent conversion rate will mean 135 buyers or a cost of $252 per buyer. Unless you are making that margin of profit per buyer (unlikely since Argenti said the average sale is $162) you are going to lose money. “Except for some bright cases like Dell or e-Bay…almost all [sites] are losing money. You are literally purchasing customers.”
Is there light at the end of the tunnel? According to Argenti there is, and two factors point to this. First, repeat buyers won’t come in through advertising banners and this will help reduce costs. Secondly, “as people become more familiar with the Internet and people become more familiar with purchasing on-line, making it a habit, then you will…get in position to make money,” Argenti said.
By getting a click-through ratio of one per cent you double potential buyers. This is not as difficult as it sounds, according to Argenti, if you follow some basic marketing goals and strategies tailored to the Internet.
The first, he said, is to target promotional campaigns to maximize click through ratio. The results will be influenced by how you present your company and how effective the target message is. The second is to create a loyal (repeat) user base. The success of this will be a reflection of how well the site was planned. An unattractive and inefficient site will increase the likelihood people leave. Thirdly, your site must work to maximize the visitor to shopper conversion ratio. This is a retail issue, which deals with issues like the site’s overall convenience, product placement and prices. The final goal is to create a loyal shopper base (repeat shoppers). This includes everything that happens after the Submit button is clicked. How is your supply chain, how quickly and easily can a customer get support or return a product? If the customer doesn’t return all you are doing is generating a loss, Argenti said.
step by step
Following are Argenti’s 10 rules for successful e-tailing.
Keep it simple: Create a simple site with neutral colours. Focus on products, not on the shelves — since you aren’t selling the customer on the site’s design, use a white background since it downloads faster. You do not want to attract the attention to fundamental elements such as navigation bar and logos. Keep in mind that the attention span and patience of visitors is limited. They want to see something quickly. Most successful stores have a neutral white background which is faster to load and decreases any difficulty in matching colours. Black backgrounds tend to flash a bit when they load, which is neither easy on the eyes nor as fast.
Make it fast: Remember that the majority of people who access the Internet do so through modems and only about five per cent use broadband. The average download is about 3Kbps, so a 100Kb page will take 30 seconds to load. This is about as much as you can expect anyone to wait. People wait between 10 and 20 minutes (overall) during an Internet shopping experience, so speeding up the process is good. Avoid unnecessary GIF, Flash, animation or plug-ins. If you do use them, offer users low bandwidth alternatives.
Build trust: Security and fraud are still a big concern for the majority of Internet users. Make your site SSL and digitally certified, and deal with those issues up front and clearly. A secure site is of no use to a customer is he or she doesn’t know it is secure. To allay fears, limit customer liability by covering the $50 that credit card companies pass on to users in the case of a fraudulent charge made on a credit card. Get third-party certification to show that others have deemed your site secure. And remember, “the number one barrier between being a shopper and actually purchasing at the site is a matter of trust.”
Give directions: Access to information is very, very important. Visitors can get easily confused on a complex site. Make sure instructions are clear. Keep the site’s architecture simple. Always give the visitor a way back to the main page. Keep the site consistent by having items such as navigation bars and products in the same place on a page. Minimize the levels on a site so customers never end up far from home.
Welcome the shopper: Try to make customers feel at home since on-line shopping is much more impersonal than retail. Welcoming them back (if they have registered). Show the customer personalized promotions and product offerings based on their previous purchases. On-line surveys help gather some of this information. People naturally don’t want too many stores to have personal information so they will go back to sites if they are treated well. Remember there is nothing to persuade then to stay so you need to have reasons for them to return. Examples of this could include membership areas and loyalty programs.
Create a community: If you go to a store you see other people and what they are buying. On-line you have no idea if the store is busy or empty. The most popular techniques to address this include displaying other shopper’s purchasing habits, customer views and feedback, product reviews and collaborative filtering: “people who bought what you bought also like this product.” Create interactivity between shoppers by having chat rooms, reviews and message boards.
Service the customer: On-line removes the human element from shopping and can create fear and panic. Have mandatory confirmation that an order was received and provide a toll free number if customers want to call to verify anything. Have this number prominently displayed on the site. The confirmation should tell the customer that the order was received, the day it will ship and the day it is expected to arrive.
Universal currency: Explain currencies. The world does not revolve around the U.S. dollar. Set up multi-currency accounts so customers can pay in the currency of their choice. Keep up to date currency rates and display product prices in multiple currencies.
Shopping must be easy: Shipping is not the place to make some profit. It should be done at cost. Create the easiest possible forms, with a flat fee. Don’t have separate shipping and handling prices. You can also offer free shipping as an incentive.
Let the world know: With hundreds of millions of potential customers, advertising is the key to success. Build it and they will come does not work here. Choose a combination of on-line banners, TV, radio, newspapers and magazines, Know your audience and target it specifically.