February 04, 2009

E-Commerce Strategy

Here's a common set of findings for a Multichannel Forensics project, executed for a decent-sized specialty retailer, one with stores, an e-commerce site, and catalogs.
  • Catalog Buyers (telephone orders, e-commerce orders matched back to a catalog) have a 53% annual retention rate. They are in equilibrium mode with e-commerce and stores --- in fact, catalog buyers are more likely to place a next order via e-commerce or stores than in catalogs.
  • E-Commerce Buyers (non-catalog sourced orders) have a 45% annual retention rate. They are in isolation mode with catalogs, but are in transfer mode with retail. In other words, the e-commerce buyer will not go back to shopping via old-school catalogs, but is very likely to leave e-commerce in the future for retail store purchases.
  • Retail buyers have a 38% annual retention rate. They are in isolation mode with catalogs, and are in isolation mode with e-commerce. In other words, once a customer shops in a store, the customer becomes unlikely to shop via catalogs or e-commerce.
  • Management is upset that customers appear to migrate to channels that have ever-decreasing customer retention rates. Lifetime value calculations bear this out. The catalog buyer has a LTV of $50. The e-commerce buyer has a LTV of $35. The retail buyer has a LTV of $25.
  • Retail store comps are at -10%, while e-commerce is at +10%. Catalog comps are at -20%.
  • 60% of all new customers are acquired in retail stores. 25% of all new customers are acquired via e-commerce. 15% of all new customers are acquired via catalog marketing.
  • Retail buyers visit the e-commerce website an average of eighteen times per year.
  • E-Mail marketing drives $0.10 per customer to e-commerce, and $0.10 per customer to retail stores.
  • Catalogs drive $1.50 to the telephone, $0.50 to e-commerce, and $0.15 to retail stores, per catalog.
  • E-commerce paid search orders are matched to the mailing of a catalog in half of all instances. In 1/3 of all cases where a customer visits the site via paid search, an order occurs at a retail store within three days.
  • You have a "buy online --- pickup in store" option. You find that your best customers use this option, but the option does not increase long-term customer value at all.
Given the findings listed above, describe your marketing strategy for catalog marketing, for the e-commerce website, and for driving traffic into retail stores.

And even more important, describe your e-commerce strategy for this brand. Do you focus on e-commerce, or do you make your website a research tool for store purchases, or both? And if the answer is both, describe how you do both!

Discuss.

MLV

Y'all have heard of Customer Lifetime Value (called CLV or LTV), right? Another 10% of you calculate the metric and know what the rig...