Online businesses will increase their spending significantly in 2005 in an attempt to meet their customers' needs.
Posted Oct 25, 2004
Through 2005 e-business will be characterized by increasing demand from consumers, with respect to both volume and also quality of experience--and increasingly sophisticated response from online businesses.
Holiday 2003 sales grew 46 percent from holiday 2002, according to Goldman Sachs and Nielsen, Harris Interactive, and that trend has continued into the first quarter of 2004, which was up 28 percent over the same period in 2003, according to the U.S. Department of Commerce. Yet consumers are demanding more. Forrester Research reports that online conversion rates are flat, shopping cart abandonment rates are increasing, and more than half of all consumers want more merchandising help.
Across industries Forrester reports that one of the most frustrating user experiences involves cross-channel business: Web sites, call centers, and physical locations of companies are not coordinated.
As a result of this unsatisfied consumer demand, online businesses will increase their spending significantly in an attempt to meet their customers' needs. Forrester predicts that "growth in e-commerce budgets will outpace overall IT spending--40 percent of companies plan to increase spending on sell-side technology and services" and that "improving user experience is top of mind. Top e-commerce themes for 2004 include improved usability, enhanced self-service, and driving customers to use online channels." Jupiter Research concurs, claiming that "49 percent of Web site managers say usability is their top challenge for 2004."
The most successful companies will improve the experience they offer their customers by advancing along four major themes through 2005:
1. Consumers demand a seamless experience across their life cycle of researching, buying, and using their purchases, and the best online merchants will match that with a seamless array of systems for marketing, selling, and servicing their customers. A consumer expects an online marketing campaign to be cognizant of her purchasing history with the company, and if she approaches the company online for service she expects the response to be relevant to what she has bought. Consumers will not be satisfied with stovepipe approaches to interaction, and companies will find it difficult to create a seamless experience with independent products. Best practice will be the use of integrated customer experience suites as platforms for creating the best user experience.
2. Consumers will demand an online experience that approaches the most personal and relevant human experience. In response, 65 percent of retailers are investing in better search functionality, according to Forrester. But consumers demand more than that. For example, travel sites must remember the traveler's preferences, and present him with only the most relevant information. "Do you have a room in London for August 8th near Victoria Station?" "Yes we do. Based on your previous choices, we recommend the InterNational London at Hyde Park. Based on your Elite status, on August 8th, we can offer you a free upgrade to the club floor. You may upgrade to a suite by applying 10,000 Priority points (your current balance is 150,000 points). Click here to book a room, or click here to book a dinner reservation now also." Financial sites can offer much more than static FAQs. "How much can I invest in a 401K?" "You have already invested $6,000 this year, so you can invest $6,000 more. Also, because you are over 50, you may be eligible for a catch-up contribution. And, your employer has a matching program--click here for details."
3. The best online businesses will offer synchronized traditional touch points. The consumer who buys an item online should be able to pick it up, or return it, at a physical location. A traveler who makes a reservation online should be able to change it at an airport kiosk. A customer who calls a contact center after an unsuccessful attempt to find an answer online wants an agent who already knows what he has tried online.
4. The best online businesses will be those who practice professional marketing: the best sites will be those built by research, not by the seat of someone's pants. Forrester reports that 83 percent of businesses would invest in better Web site analysis tools. Businesses must be able to go beyond site statistics--they will apply tools that analyze buying behavior, and help online marketers understand why sales are aborted. Marketers will demand the ability to test merchandising as easily online as they do in physical stores, testing placements, navigation, pricing, and offers frequently without requiring development projects
Sites that are more responsive, more adaptive, more personal for the buyers, and thus more profitable for the sellers--this is the mandate and the opportunity for the successful businesses in 2005.
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