• February 26, 2009
  • By Jessica Tsai, Assistant Editor, CRM magazine

Online Retailers Actually Had a Holly, Jolly Christmas

PHOENIX — Think retailers had a lousy Christmas? Well, hold onto your pity -- the online ones don't seem to want any.

In an audience poll at the 2009 eTail West conference here this week, Larry Freed, chief executive officer of ForeSee Results, sought to gauge retailer-attendees' satisfaction with their 2008 holiday season. On Freed's 10-point scale, the extremes were thinly populated: Seven percent rated the season a 1 and a boastful two percent gave the holiday period a perfect 10. It's where the other 91 percent ended up that may surprise you. Despite headlines and surveys throughout the winter that repeatedly proclaimed the death of retail as we knew it, e-commerce practitioners seem to have dodged the doom-and-gloom reality of their brick-and-mortar counterparts.

Attendees, for the most part, looked back on what analysts and the media have described as the worst holiday season in decades in a relatively positive light: 54 percent rated the 2008 holiday season as either a 7, 8, or 9 on Freed's scale, a result that Freed himself says he found "shocking" considering his expectation that the majority would report 3s and 4s.

In a subsequent panel discussion, "Evaluating Criteria For Success: Identifying Multichannel Measurement Strategies to Justify Expenditures," retail experts reinforced this sentiment, illustrating the key advantage of e-commerce: measurability.

The challenge with analytics, panelists said, isn't so much implementing the technology -- it's determining which key performance indicators (KPIs) are the most meaningful to a given business. For many companies, an overzealous desire to be metric-driven often renders them handicapped, said Eric Rasmussen, director of market research at Shutterfly. "[Companies] want to look at everything, which is impossible," he says. "They have a sea of data coming their way and they're unable to do anything about it."

At The Knot, a provider of wedding-planning solutions, simplicity is critical, according to Miriam Alexander, the company's vice president of insights and analytics. The business, she told attendees, is effectively summarized into two daily, high-level dashboards tailored for each department: one contains the three key metrics specific to the department; and another has three key metrics for the c-level executives.

When a company is driven by numbers-based evidence as opposed to instinct and intuition, it makes the argument that much more convincing. "Use the metrics to help you educate your team, [to understand] what you're doing and the success you're having," Freed says. In doing so, companies are able to discern precisely what "lever" to pull in order to drive your business and optimize toward a particular goal, whether it's to increase your cross sell and upsell capabilities, or just simply to get more visitors onto your Web site.

Before determining what lever you're trying to move, segmentation of your customer base is critical. "There's nothing worse for your company than a bad segmentation," Shutterfly's Rasmussen said. Customer needs and desires change, which means that the messages and services they require must change as well. A metric-based approach requires on-going and continuous consultation of the numbers to determine what's working and what isn't. Unfortunately, Rasmussen said, many companies fall prey to taking the easy way out, assuming that their customers are a static list of names and addresses. "Here are our customers over here," he imagined misguided companies thinking. "Just like we've been doing all along."

In the past year, Jack Kiefer, president and chief executive officer of baby gift and furniture retailer Babyage, has seen six of his competitors go out of business. Though Babyage is still standing, Kiefer admitted in an earlier panel discussion that "there's a lot of paranoia in the vertical." Survival from here on out, he added, will depend on the company's ability to "focus on what we're doing, keep our head down, and make sure we get out the other side."

In such a tight market, companies have to pay much closer attention to their competitors. "This is a time to look at benchmarking," Alexander said. "There's a pie that's being sliced up between you and your competition. You can't expand the size of the pie, but you can expand your slice."

[For more on CRM amid the economic downturn, see the February 2009 edition of CRM magazine, The Recession Issue.]

With consumers more reluctant to spend, everyone's cutting prices -- but several presenters agreed that the winners will inevitably be the ones that achieve the greatest level of customer satisfaction. Freed also believes that waiting out the storm will prove to be detrimental strategy. "Now is the perfect time to get aggressive," he told the audience. "It's all about competition and how you can take share away from others."

Because of its black-and-white nature, Alexander said, numbers-driven market research tends to get siloed off in an organization. Neglecting the benefits of research, the panelists agreed, will inevitably result in a business based on guesses, and consequently, wasted time and effort on faulty initiatives. Yet, despite the predominant focus on a metrics-driven approach, the panelists softened up toward the end to recognize that a "hardcore" analytical approach cannot stand alone. In fact, Alexander defended that there are times when it's actually good to get away from hardcore metrics and simply talk to customers. Companies who can marry both the qualitative and the quantitative, she said, will come out the better organization.

While Freed conceded that many successes have been built on instinct, companies today are finding that they need to grow past that. This cultural shift will undoubtedly require some dramatic adjustments. The situation now, as Rasmussen described, is such that "you can have a poorly done research project but if it's telling the [c-level executives] what they want to hear, they'll say bravo." If changes and recommendations are backed by research and data, however, he said, you'll have legitimate grounds, essentially, to "tell your company their baby is ugly."

In order to do so, companies will have to develop a relationship that has proven to be less than amicable in the past -- the one between business and technology. "[Technology] is your best friend," Alexander said. "The recommendations that you make are only as good as the data it's based upon."

News relevant to the customer relationship management industry is posted several times a day on destinationCRM.com, in addition to the news section Insight that appears every month in the pages of CRM magazine. You may leave a public comment regarding this article by clicking on "Comments" at the top; to contact the editors, please email editor@destinationCRM.com.

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