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WP Online Retailing Optimized 2011
WP Online Retailing Optimized 2011
Twitter.
Table of Contents
Introduction Trends in Online Shopping Consumers Are Spending More on More Items Mobile Device Usage and Social Media Are Growing Consumer Attention Continues to Decline Carting and Ordering Hit Record Highs Single-Page Bounce Visitors Remain High Best Practices Focus on the Customer Life Cycle Capitalize on the Mobile Channel Retarget Your Browsers and Abandoners Use Personalized Product Recommendations Cultivate the Social Media Channel Make the Holiday Season Profitable 1 2 3 5 7 8 10 11 11 15 17 20 21 22
Introduction
The 2010 holiday season was huge for online retailers. Web merchants racked up double-digit increases in total site sales and average order value as consumers shook off the effects of the recession. Those increases have continued into 2011, IBM Coremetrics Benchmark data shows, suggesting that the upcoming holidays could well be another record-setting season for online retail. Yet pitfalls loom. Consumer attention has flatlined at its weakest levels ever, sinking to new lows in such metrics as average time on site and page views per session, according to Coremetrics Benchmark data. Discriminating visitors are spending a lot less time browsing retail sites than they did several years ago. Theyre shopping surgicallyzeroing in quickly on the items they wantand are more likely than ever to bounce after a glance at a single page. Meanwhile, mobile browsing and shopping has surged impressively as consumers indulge in the convenience and rich functionality of feature-laden tablets and smartphones. Mobile sales as a percentage of overall site business nearly doubled in our reporting period, with mobile shopping poised to break into double digits by the holidays. Social media visitors and sales have lifted modestlyyet these shoppers are more than twice as likely to convert compared to overall site visitors. In this fourth annual holiday guide from Coremetrics, an IBM Company, youll find in-depth analyses of key trends in online shopping and usage based on anonymous data aggregated from more than 500 U.S. retailers participating in the Coremetrics Benchmark program. This report also offers best-practice guidance on how you can adapt to fast-moving trends and make the most of your opportunities during the critical holiday season, including a look at: Trends in key performance metrics over time Emerging opportunities and challenges in online retail Proven strategies to maximize success and deepen customer engagement Key technological capabilities for web analytics and online marketing In preparing this guide, our goal is to help you, the online retailer, formulate powerful programs and tactics to take this holiday season head-on. Happy selling!
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Bizrate Insights and Forrester Research, Online Retail Holiday Study, December 2010. Forrester Research, North American Technographics Retail Online Survey, Q3 2010 (US), September 2010.
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Figure 1. Online retailers posted double-digit AOV gains during the 2010 holiday season.
As the economic rebound continues, retailers have the opportunity to capitalize on consumers newfound willingness to spend. Smart retailers will not rest on their successes and blindly assume that spending will remain strong past the 2011 holidays, but will aggressively expand their emarketing, web analytics, mobile, and social efforts to maximize returns while strengthening long-term customer loyalty. Retargeting browsers and abandoners with personalized emails and targeted display ads is a proven way to prompt return visits and conversions among would-be buyers. Product recommendations technology can contribute 10 percent and more of total sales, Coremetrics Benchmark data has shown, boosting both AOV and items per order. Strong mobile device support is essential to satisfying the fast-growing population of mobile browsers and shoppers, while social media offers an emerging channel to deepen consumer engagement and trigger site visits.
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Figure 2. Both average order value and average number of items per order hit record highs in early 2011, signaling opportunities for a banner holiday 2011.
Conclusion: Increases in average order value and average number of items per order should prompt savvy retailers to look for ways to smartly engage online shoppers and capitalize on consumer use of social media and mobile devices.
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Figure 3. The mobile channel shows strong growth in percent of both site visits and sales.
Site visits and sales by social media visitors were less than 2 percent in our limited reporting window of October 2010 to April 2011, rising incrementally over those six months. Interestingly, as seen in Figure 4, the percentage of social-driven site sales is higher than social-driven site visits (1.6 percent versus 1.2 percent respectively in April 2011). This indicates that social visitors (often Facebook fans or Twitter followers) are uniquely predisposed to purchasing and are responding to offers exclusively on social media. Though the population is relatively small, its a promising segment that retailers are smart to cultivate.
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Figure 4. Social-driven sales exceed social-driven site traffic, indicating social visitors are highly inclined to convert.
A comparison of key metrics across overall, mobile, and social visitor populations reveals some interesting insights: Social visitors. Theyre more than twice as likely as the overall population to convert, at a rate of 10.7 percent versus 5.2 percent. Many of these social visitors are likely responding to offers, as their bounce rate (62.8 percent) is high and their time on site (3:26 minutes) is low. Mobile visitors. Theyre less engaged than the overall population, with fewer page views, less time on site, lower conversion, and higher bounce rates. Though this is not unsurprising, it does underscore the need for retailers to monitor and optimize the mobile user experience.
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Page views per session Average time on site Conversion rate Bounce rate
Figure 5. A comparison of key metrics across the overall, mobile, & social segments of retail site visitors.
Conclusion: Mobile and social visitors are rapidly becoming a force to be reckoned with. Retailers need to move fast to ensure they meet the expectations of fickle mobile visitors, and should continue cultivating the important segment of social media users.
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Figure 6.
Average time on site and page views per session hit new lows in late 2010.
Conclusion: A leveling off of consumer attention spans illustrates a new reality of discriminating customers and surgical shopping. Retailers need to diligently test and implement techniques, such as relevant product recommendations and site optimization, to improve these important metrics.
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Figure 7. Consumers are carting and ordering more items, but theyre viewing fewer product pages.
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Conclusion: Savvy retailers will strive to improve product page views per session, using relevant product recommendations and social media techniques, to capitalize on consumer inclinations to cart, order, and spend. New visitor and shopping cart conversion. Retailers are increasingly successful at converting new visitors, with new visitor conversions hitting a high of 4.9 percent in December 2010, more than double the roughly 2 percent typical during 2008. This metric has trended gradually upwards for more than a year and reflects growing consumer trust of web sites they havent dealt with before, and in online retail in general. Shopping cart conversion, however, has been erratic over the past two years, with less than one-third of carting sessions ending in conversion. With no sustained gains in this critical metric, retailers can benefit by applying web analytics for a fresh re-examination of their ordering funnel, and retargeting abandoners with personalized emails and display ads.
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New visitor conversions are rising gradually, but retailers havent been able to make sustained improvement in shopping cart conversions.
Conclusion: Erratic and unsustained movement in shopping cart conversion trends suggest the need for retailers to re-examine their carting and ordering processes, using web analytics to identify key drop-off points. Testing and optimization towards improving this key metric can pay off with sizable increases in top-line revenue.
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Figure 9. The bounce rate hit a record high in Dec. 2010conversely, multi-page sessions fell to an all-time low.
Conclusion: To improve bounce rate performance, retailers need to ensure that landing page content corresponds with what was highlighted in an email promotion and display or paid search ads. They should also test and optimize page content to entice visitors into clicking through to multiple pages.
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Best Practices
Going into the holiday season, how can you take advantage of increases in online sales and AOV, while combating the decline in consumer attention? Online retailers that excel will relentlessly pursue these objectives: Learn from a customers browsing path over an extended period of repeat visits Use historical behavior data to optimize all online marketing efforts Deliver highly personalized and relevant customer experiences across all channels Invest in processes of continuous improvement to create and execute marketing programs that get better and better Those best practice principles apply to five areas of strategic focus for the holidays and beyond, which we examine in the next section of this report: Focus on the customer life cycle Capitalize on the mobile channel Retarget your browsers and abandoners Use personalized product recommendations Cultivate the social media channel
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Paid Search
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Display Ad Email
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Came to the site via Natural Search, entered discount code and purchased.
Figure 10. Marketers must understand the journeythe complete conversion cycle and all of the key points of influencein order to appropriately allocate marketing spend.
Furthermore, marketers must be aware of where customers are in their customer journey outside of understanding all of those points of influence. First time visitors to a web site may be responding to different campaigns through different channels. A first time buyer may respond differently and perhaps have an affinity for certain products or content on the site compared to a repeat buyer. Each of these milestones are an important point to help map the customer journey for your web site. Each retailer may have different characteristics as to what should define a milestone: visits, purchases, product reviews, or perhaps social media.
Figure 11. In this Coremetrics Lifecycle report example, milestones are mapped based on shopper frequency. Of the 399,311 visitors over the last 400 days, 239,132 were unique visitors while 8,855 were 3x buyers. Furthermore, 9,995 visitors migrated from 1x buyers to 2x buyers.
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Even though online shopping may differ over the holiday season as gift shopping is more common than personal shopping, these life cycle analytics provide new opportunities for marketers to retarget customers and build loyalty. The IBM Coremetrics Explore and new Coremetrics Lifecycle solutions offer the tools marketers need to prepare for the holiday 2011 season and beyond. Some techniques include: Track customer behavior over time. Versus a campaign-centric or page-view centric analysis, beginning to understand individual customer behavior over time will help to develop the broader context and story for how customers engage with your brand. IBM Coremetrics LIVE (Lifetime Individual Visitor Experience) Profile tracks customers and prospects as they interact with your business online, across multiple ad networks or via email, video, affiliate sites, social media and more, providing a single comprehensive view of each visitors behavior over time and across channels. Define your customer journey. With the customer behavior information in hand, look at what segments or milestones define your customer journey or what your goal is for how you want customers to interact and engage with your brand. With the right solution, you may even be able to look at segments from last years online holiday shopping season to see if certain behaviors, patterns or segments stand out that should be tracked this year.
Figure 12. Within Coremetrics Lifecycle, standard out-of-the box reports provide pre-made milestones or you can create your own customized milestones. In this figure, milestones have been mapped based on a more high-level customer journey starting from customer awareness evolving to customer advocacy.
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Adjust your marketing efforts based on your customer life cycle. Begin to nurture your customers based on where they are in the customer life cycle. As the holiday season approaches, start looking more closely at the content, campaigns and products that are most heavily influencing their behaviors.
Figure 13. In this example, Coremetrics Lifecycle shows that the marketing channel that most heavily influenced the 2x buyer segment was an email campaign. Marketers should pay attention to these analyses to adjust investment appropriatelynot only for marketing campaigns, but for web site content and product recommendations as well. As the holiday season approaches, begin tracking these types of reports more closely to make real-time decisions and execute campaigns in response to how customers are progressing through the milestones.
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Figure 14. iPhone remains the leader for mobile site traffic, but Android is narrowing the gap.
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ABI Research, Mobile Commerce Sales Explode in United States: Will Top $3.4 Billion in 2010, news release, December 17, 2010. Forrester Research and Shop.Org, The State Of Retailing Online 2011: Marketing, Social, and Mobile, May 2011. Forrester Research, 2011 US Mobile Marketing Predictions, January 4, 2011.
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The Coremetrics Explore ad hoc reporting solution and other elements of the Coremetrics platform give you the tools you need to capitalize on the mobile opportunity during holiday 2011 and beyond. Some techniques include: Optimize the site for mobile usage. Given the high bounce rate and brief time on site of mobile users, retailers need to aggressively hunt down and correct weaknesses in usability and functionality for mobile devices. Coremetrics technology enables you to pinpoint device drop off points in navigation and conversion, which pays off in both the short term and over time by delivering a satisfying user experience that prompts return visits. Segment and cultivate your mobile audience. Studies have found that mobile users are generally more affluent and savvy; as such, they represent a particularly valuable customer slice. Segment them as mobile users and then by types of device, products they browse and buy, content they view, and their social media interactions. Building this intelligence gives you a foundation to engage these visitors with personalized emails and mobile-specific promotions. Test and measure mobile marketing tactics. Delivering marketing messages via text or mobile-optimized display ads, using location data for geo-specific promotions, offering mobile coupons and bar coding, and mobile-optimized paid search and email are gaining traction. Mobile marketing is still youngjust 34 percent of interactive marketers were planning mobile campaigns, a Forrester study found.6 If closely measured and adjusted, mobile marketing can be a competitive differentiator, particularly during the promotion-happy holiday season. Understand mobile in a deep, broad context. Measuring the mobile channel is essential to success. Its not enough to simply track mobile application downloadstheir usage must be measured. Its critical to understand the extent to which mobile is cannibalizing sales from the conventional online channel. Coremetrics comprehensive platform enables you to measure mobile not as a silo, but as a component in an overall digital marketing ecosystem to support informed channel and spend decisions. Benchmark your industry performance. In the fast-moving mobile race, how well youre performing compared to your competitors is critical in informing your strategies, priorities, and resource allocations. With Coremetrics Benchmark, you can track your key metrics versus your peers in retail as a whole, or in a number of subverticals such as department stores, health and beauty, electronics, and more.
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Figure 15. Coremetrics Benchmark enables comparison of your site traffic and conversion rates against industry peers.
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Such evidence of the payback from retargeting comports with broader industry research. For instance, a study by the Network Advertising Initiative (NAI) of 12 online advertising networks found that behaviorally targeted ads are considerably more effective than non-targeted run-of-network ads.7 According to NAI, behaviorally targeted ads: Generated 2.68 times more revenue than non-targeted ads Resulted in a 6.8 percent conversion rate for ad clickers, versus 2.8 percent for non-targeted ads While retargetings primary goal is to reacquire departing browsers and abandoners, it also serves to enhance brand presence, particularly among people who have shown interest in your products or services. Some strategies to keep in mind: Strive for personalization and clarity. Retargeting dovetails with consumer propensity for surgical shopping. Done right, it cuts through the informational clutter that confronts shoppers to present a personalized offer and clear call to action. For instance, an email to a shopping cart abandoner is likely to be most effective if it highlights the product left in a cart and invites one-click access to conclude the transaction. For product browsers, a targeted display ad can and should illustrate the products browsed, rather than a brand-level message. Use advanced segmentation. The best emarketers finely slice their clickstream, customer, and campaign data to maximize precision and relevance. Consider using a funnel approach to determine retargeting type and message, segmenting those who visited high-level category pages, product detail pages, or shopping cart pages. A particularly effective segment can be social media users, given their higher rates of conversion and the word-of-mouth value they offer in sharing their experiences with your brand. Mobile users, high-value customers, and dormant registrants are also good candidates for segmentation and retargeting. Continuously monitor and optimize. The holidays are a dynamic period, with browsing and buying patterns that fluctuate as the weeks go by. Take advantage of the real-time capabilities of the Coremetrics platform to monitor and optimize on the fly. For instance, its beneficial to monitor the effectiveness of targeted display ads by frequency, as once a day may be too little and every 15 minutes, too much. It also pays to measure retargeting email by lag time after cart abandonment, time of day, creative and message, effectiveness by audience segment, and other attributes. Measure unclicked ad impressions. Look beyond click-through and conversion as the only metrics to monitor targeted display ad performance. IBM Coremetrics Impression Attribution enables you to measure the view-through impact that unclicked display ads have on conversion. By embedding an impression tag in display ads (or other impression-based assets, such as videos or blog posts), Coremetrics allows you to correlate offsite impressions against web site visits, along with subsequent sales, conversions, and other activities.
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Figure 16. Coremetrics LIVEmail allows for the simple automation of email marketing to retarget shopping cart abandoners and other high-value segments.
We firmly believe that retargeting is a valuable way for improving your marketing communications. The ability to speak with our customers on a 1-to-1 basis drives immense value back to our business.
Ewald Hoppen, Senior Web Analyst, wehkamp.nl
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Figure 17. Coremetrics Intelligent Offer enables users to create business rules to govern product recommendations in the holiday season.
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The results weve seen with Intelligent Offer have been really quite impressivewere very happy with our return on investment. Intelligent Offer has created an interesting mix of products that people really seem to like.
Will Bender, Web Merchandising Manager, S&S Worldwide
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Figure 18. Coremetrics Social Analytics enables analysis of business-impacting metrics across various social media.
Without the Coremetrics data, we would have seen Facebook as only obliquely connected with top-line enrollment and bottom-line revenue goals. Because of the data, we can see that Facebook is a significant and subtly sophisticated new front in the development of markets for the university.
Senior Director of Strategic Marketing, Seton Hall University
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Coremetrics for eCommerce Coremetrics, an IBM Company, offers a set of solutions suited specifically for the online retail industry. Through the fusion of customer profiles, web analytics and digital marketing automation, Coremetrics empowers marketers to turn site visitors into repeat customers and loyal advocates by orchestrating a compelling experience throughout each customers digital life cycle. To achieve this, Coremetrics tracks customers and prospects as they interact with a business online presence providing marketers with a comprehensive view into how consumers are interacting with their brands online over time and across channels. This unique insight is used to automate real-time personalized recommendations, email targeting, display ad targeting across leading ad networks, and search engine bid management delivered to customers through any digital vehicle including social, mobile, and web. Through a simple integration with other systems of record such as CRM, advertising, and demographics, Coremetrics enables marketers to further enhance not only their online marketing channels, but offline channels as well. The Coremetrics Digital Marketing Optimization Platform includes the following solutions: Coremetrics Reporting and Analysis Coremetrics Web Analytics is our base analytics solution, enabling marketers to track website activity and cross-channel campaign performance. Coremetrics Explore is an ad hoc reporting solution that provides a complete picture of visitor and customer behavior, enabling marketers to automatically execute campaigns, drill down into granular detail, and create precise and actionable customer segments. Coremetrics Impression Attribution allows marketers to understand how unclicked impressions (display ads, videos, social media presences, etc.) affect behaviors and conversions. Coremetrics Intelligent Offer The industrys most sophisticated recommendation engine automatically generates personalized product recommendations by leveraging the rich, detailed customer information in LIVE Profiles, as well as in-session and wisdom of the crowds data. Seamless integration with Coremetrics LIVEmail lets you easily target browsers, abandoners, and buyers with recommendations in emails. Coremetrics Benchmark Coremetrics Benchmark captures online marketing results and commerce data from more than 500 contributing U.S. retailers. The industrys only peer-level benchmarking solution enables Coremetrics customers to measure performance against the competition (in anonymized, aggregated form). Coremetrics Benchmark comes standard with Coremetrics Web Analytics at no additional cost. Coremetrics Lifecycle Coremetrics Lifecycle provides visibility into unique, event-driven customer segments that equip marketers with the most effective tools to cultivate high-value customers. Marketers can track and understand how customers progress through long-term conversion life cycles. A life cycle is characterized by milestones ranging for example from first-time visitors to repeat buyers or social advocates. Coremetrics AdTarget Coremetrics AdTarget is a data syndication platform and online marketing application that enables targeting and personalization of display advertising. Customized for online retailers, it leverages granular visitor activity captured by Coremetrics to deliver highly relevant display ads that increase visitor reacquisition, power cross-sell and up-sell, and promote customer engagement.
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Coremetrics LIVEmail Coremetrics LIVEmail solution gives marketers the flexibility to automatically deliver emails to customers based on specified scenarios. For instance, Coremetrics LIVEmail may be configured to generate personalized emails to individuals who abandoned a shopping cart, or to send offers to select customer segments. It features prebuilt best practice metrics for online retailers and integrates with email service providers. Coremetrics Search IBM Coremetrics Search is a pay per-click (PPC) management application that improves top-line business performance, reduces operational costs, and enables data-driven optimization of search advertising initiatives. It makes it easy for online retail marketers to identify top-performing keywords, automate and fine-tune keyword bidding, and integrate with leading search providers. Coremetrics Social Analytics Coremetrics Social Analytics enables marketers to treat social media as another marketing channel and measure ROI and engagement accordingly. Coremetrics Social Analytics provides online marketers with a centralized console for analyzing social media channels and campaigns. As part of the Coremetrics platform, it allows users to track social channels alongside other online marketing channels to help understand the performance (ROI) of campaigns.
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