What could be more encouraging than online sales as a percentage of total holiday sales nearly tripling since 2005, while the offline side remained almost flat? How about the growing influence of online channels on offline spending in general? According to Sucharita Mulpuru, Vice President/Principal Analyst at Forrester Research, her data forecasts that 44% of annual retail sales will be impacted by the web in 2016; combined with the steady increase in ecommerce sales, that’s a compound annual growth rate of 9%.
Those are some big numbers to fill, especially when looking at ecommerce performance metrics. Comparing KPIs like conversion rate, cart abandonment rate, and repeat shopper revenue, Mulpuru noted that the averages really haven’t changed all that much over the past decade.
For Mulpuru and David Brussin, CEO and Founder of Monetate—who co-presented these finding and more during the “Trends & Tactics to Get Ready for the Holidays” webinar last week—these statistics suggest companies need to do a better job of improving the online customer experience if they want to take advantage of consumers’ growing interest in shopping online.
When better to get started than this holiday season? The panel offered a multitude of advice for how to drive ROI for the coming spike in website traffic. Here are a few of the key trends they identified and how to incorporate this insight into your marketing plan.
#1. Go Early, Go Multichannel.
Transactional data from Chase Paymentech for holiday 2011 shows, unsurprisingly, that Cyber Monday was the biggest online shopping day of the holiday season. However, the two Mondays that followed were nearly as big in sales, plus the days leading up to Thanksgiving weekend and the week after (called Cyber Week) saw heavy activity. With people spreading their online spend over a longer period of time, Mulpuru says it’s important to ensure you have a strong presence on Cyber Monday but also to synergize your efforts across channels. You need to respond to people doing more shopping online, and moving back and forth across channels as part of the process.
Brussin agrees, emphasizing data from Monetate’s Ecommerce Quarterly (EQ) reports that show average order value (AOV) starting to increase in Q3. This pattern suggests that shoppers actually start their holiday shopping a little earlier than October, and so ecommerce firms will want to take that into consideration in determining when to begin their efforts. Whenever you do start, your planning needs to account for the rise in cross-channel shopping by consumers. Include both offline and online teams in the planning process, he says, and ensure all customer-facing campaigns are coordinated across channels and devices.
#2. Segment Traffic to Leverage Margin.
As Mulpuru notes, the “offer genie” has been let out of the bottle when it comes to online deals and specials. Research conducted last holiday season by Bizrate Insights and Forrester confirmed the obvious: People like as many deals as possible and often buy only if they get a good deal.
But a good deal is in the eye of the beholder, right? Mulpuru suggests that ecommerce firms think about staying competitive within their niche to reign in over-use of discounting and shipping deals. Brussin goes a step further by urging companies to match the offer to the segment to better leverage this tactic. You don’t want to spend margin points everywhere, he explains, only where they help you.
A smart approach to segmentation that has worked for Monetate clients during the holidays, Brussin notes, is focusing on three core audiences:
- new customers;
- holiday shoppers; and
- high-value customers.
Each group has specific shopping needs, and so expects to be treated differently. By tailoring offers—and products, brands, navigation, customer service information, and more—to these segments, ecommerce firms can provide each with the best value while driving ROI.
#3. Make the Most of Popular Channels.
If you think that email and search are losing steam compared to social media, take another look at the data. Mulpuru pointed to research from last season that cements email’s role as a source of access to and action for online deals. For hard goods, organic search played a key role in driving traffic and sales. So while search and email might be mature tactics, they’re still incredibly effective.
Brussin shored up this insight with EQ data for the past 12 months that gives search the nod when it comes to driving the best AOV, but also shows how AOV on email efforts climbs in the second two quarters of the year. With email and search so important to holiday selling, he advises companies make the most of their campaigns in these channels by delivering a consistent experience—one that helps consumers follow through on that first click and then keeps the message prominent during their visit.
#4. Prepare for More Mobile and Tablet Users.
One of the hottest gifts for holiday last year were tablets, notably the iPad and just-released Kindle Fire. Even though consumers increasingly use their smartphones during the buying cycle, transacting on a mobile phone remains a hurdle. A Forrester Research study reports that transactions on tablet devices nearly triple that of smartphones; according to Mulpuru, tablet owners typically own both devices, but prefer to place orders on their tablets where the experience is similar to that of shopping on desktop.
Mobile is not tablet, Brussin stresses, adding that EQ data from Q4 2011 indicates traffic visiting your website on tablets versus smartphones often have different purposes and needs. Shoppers using tablets or desktop/laptops converted at similar rates and shared comparable AOVs. By contrast, smartphone users converted much lower, but with a higher AOV than tablet and traditional devices. With checking out typically more difficult to navigate on a smartphone, he explains, these shoppers are far more invested in the purchase.
To support the mobile shopper, Mulpuru urges companies to make it quick to share web content, especially imagery. Play up product photos, and make browsing easier with less text and more images. Alternative payment methods, like Paypal, will also help, she notes, because they reduce the number of keystrokes needed for consumers to transact; Forrester has seen the percentage of Paypal transactions increase on mobile devices versus visitors on desktops and laptops.
If ecommerce firms can only focus on either mobile or tablets, Brussin says, then tablet is the more important device to a successful holiday this year. To create a better experience for tablet users to drive conversion, he advises the following enhancements to websites: larger navigation, no Flash for iPad users, and the support of finger swipes and tap-only displays.
#5. Shipping Programs Must Be in Ship-Shape.
One of the biggest levers that affects whether consumers convert during the holidays—and the rest of the year, for that matter—is shipping costs, says Mulpuru. As such, you want to be competitive with other offers for similar products this season, she says. Another idea she has for addressing consumers’ shipping concerns without bleeding profit is to offer a shipping club if you have repeat traffic that has good reason to shop with you multiple times throughout the year. And don’t forget the role that customer satisfaction plays with respect to conversion; consumers like transparency in the shipping process–especially during the time-sensitive holidays—so consider the investment of allowing customers to track packages.
Because shipping offers can move various parts of your ecommerce business, understand what you are trying to achieve to guide your program, says Brussin. For example, increasing a free shipping threshold will drive a higher AOV at the expense of conversion, and vice-versa. Determine your objectives, and then test different offers to different segments to hit your goals.
Also, use geography wisely to adjust your offers as the calendar runs out. In cascading your delivery times across the geography and up to the holiday peak, Brussin says, you might be able to ship at ground rates close to your warehouse for a long time; you lose that ability farther away from your fulfillment centers, having to move to two-day and then overnight shipping. But if you go back to the best practice of segmenting your traffic, he explains, you can “put those upgraded shipping offers in front of just those segments that no longer can receive a ground package in time. It’s very efficient in terms of margin, but still allows you to drive transactions.”
For more tested ideas you can apply to your holiday marketing programs this season, check out the full webinar as well as our 2012 holiday planning eBook, “The Ultimate Guide to Optimizing Your Website for Holiday Traffic.”