November 26, 2009

Gliebers Dresses: Home Page Design, Part 2

Welcome to this week's Executive meeting.

Glenn Glieber (Owner): "... you know, there's really nothing like getting a standing ovation from an enthusiastic crowd, even if there are only 65 people in attendance. When you are acting, you have to channel your character. I really felt like I was Myles Standish!"

Pepper Morgan (Chief Marketing Officer): "Kevin, welcome to our meeting."

Kevin: "Thanks, Pepper. Where's Meredith?"

Pepper Morgan: "She took today off."

Roger Morgan: "Well, we have test results. And they are interesting."

Pepper Morgan: "Overall, the current home page had an 8% conversion rate. Meredith's design had a 5% conversion rate."

Lois Gladstone (Chief Financial Officer): "So the old design was clearly better. My goodness, how much money did this test cost us?"

Pepper Morgan: "Well, there's a couple of interesting findings. Average Order Value for the existing home page was $125, while AOV for Meredith's strategy was $150. Therefore, dollars per visitor in the existing home page was $10.00, and was $7.50 for the new home page."

Lois Gladstone: "How many visitors saw the new creative?"

Pepper Morgan: "20,000".

Lois Gladstone: "So we lost $50,000 demand, and maybe $15,000 profit, much less the cost to execute the test, because our merchandising leader wanted to test something, and because Kevin supported doing the test. We don't need to keep losing money, folks."

Pepper Morgan: "Here's what is interesting, Lois. The customers in the loyalty program performed different than anybody else. For loyalty customers, conversion rate was 12% for the existing site, but was 18% for the new site. And AOV was $150 for the existing site, but $225 for the new site. In total, the existing home page generated $18.00 a visitor, while the new home page generated a whopping $40.50 per visitor."

Lois Gladstone: "How is that possible?"

Pepper Morgan: "Because new customers absolutely hated the new home page. They couldn't stand it. But it appears that our very best customers loved that we did something new, creative, and innovative. And I think that is what Meredith was leaning toward when she wanted to try this strategy. She felt that customers who love our merchandise are absolutely bored with what we do."

Roger Morgan: "So maybe we could recognize visitors, based on prior purchase habits, serving up different home pages based on whether the customer is in the loyalty program or not?"

Pepper Morgan: "And that solution would be far more profitable, based on these test results, than to do what we've always done. See, Meredith was right, and Roger was right. New visitors need a site that makes navigation easy. Our best customers want to be romanced. Just think about it. Is every single customer the same, or do different customers at different stages have different needs? Why do everything the same way?"

Roger Morgan: "Because we don't have the technology to do this in-house. Our database and web infrastructure don't support executing a strategy like this."

Pepper Morgan: "Kevin, what do you suggest?"

Kevin: "There are many vendors who would be happy to help Roger with serving up different pages based on customer preferences. And I can easily segment customers into those who are best, those who are new, and those who have varying merchandise interests. I can feed those customers into any of many vendor platforms, and then the proper home page or landing page can be served to the customer. Over the course of a year, you'll be far more profitable doing this."

Glenn Glieber: "Well, it's a good thing we had the courage to do this test! Ok, on to the rest of the meeting. Our next topic is about the temperature in the building. The employees think it is too cold, and they are right, because I asked Roger to turn the thermostat down to 62 degrees to save money. So I think we should raise the thermostat to 63 degrees, what do you think?"