The journey to customer retention on the Web is still mostly uncharted territory. Those who have taken the role of electronic Lewis and Clarks say in the rush to establish a Web presence and acquire customers, e-commerce concerns are just focusing on retention on retention techniques.
Although more consumers are flocking to the Web than ever – online holiday sales for 1999 were double that of 1998 – customer satisfaction with online shopping has been steadily dropping. It has fallen from “a high of 88% in July 1998 to just 62% one year later,” says a Jupiter study, “Digital Commerce Strategies,” published in January.
Sites are acutely aware that competition is only a mouse-click away. E-coms must be savvy at enticing people to return. They have to constantly remind customers how good they are – and do so in precisely the way customers demand.
Personal computer vendor Dell Computer Corp., Round Rock, TX, for example, is among the top PC providers in the nation. But the company can’t afford to take its status for granted. Since people don’t buy computers as often as they purchase, say, books and flowers, Dell has to keep customers engaged between computer buys.
It does that by suggesting site visitors sign up for e-mail newsletters, such as Dell Browser, which “is not a sales pitch for Dell,” explains Tom Vogel, senior manager of marketing communications in Dell’s consumer business division. “This is more informational so customers can get the most out of their equipment for their lives.”
The Browser e-mail is broadcast to more than a million customers each month. It covers technical developments, equipment updates and techniques for taking advantage of the Web. Different customers receive different levels of information. “We’re getting extremely tactical to our customer base,” says Vogel. Someone who is extremely techno-savvy may receive information on how to make their PC into an entertainment center. Less-sophisticated customers may get information on what accessories they need to transmit family photos over the Web. The newsletter also directs traffic to the site (www.dell.com), where articles, technical help, discounts and deals are available.
The Browser “contributes to an overall relationship that will add to greater loyalty when they get ready to buy the next PC,” says Vogel. A spokesman will not say how many customers return, pointing out only that Dell is “growing at three to four times the rate of the industry in the consumer space.”
The way a site is designed has everything to do with its stickiness, say experts. Those that are too cluttered or have complicated checkouts lose customers. A site needs to be designed to help a user get things done, observes Patrick O’Flaherty, director of design at New York-based eCentric Consulting, a Web site strategy and design company.
Customers to a vitamin site, for instance, must be able to find what they want without knowing its exact name. A visitor wants St. John’s Wort, but doesn’t know how to spell it, or is depressed and wants to know what will help, but doesn’t know the name of the remedy. On many health Web sites, if you spell the supplement wrong in the search box, you will not get the product back, says O’Flaherty. So using an intelligent database, with alternative spelling of words and the ability to analyze different ways of inputting words, is crucial. “The challenge,”he says, “is to accommodate as many user patterns as possible in a clear, easy-to-use way.”
Another feature that draws customers back is a simple personalization. O’Flaherty designed a drugstore site so a buyer may save her deodorant, shampoo and prescription drugs on a shopping list at checkout time, and opt-in to receive an e-mail reminder to purchase those items again in a month. A hotlink in the e-mail leads directly to the drugstore URL, where she can add or subtract items, then hit buy – and check out. “If she wants to go to another store, she’s going to have to gather those items again and reorder them,” O’Flaherty points out.
Though keeping track of what the customer wants and delivering it is customer retention 101, the Internet is not your father’s direct marketing channel. Two major differences are speed and interactivity.
Men’s Health magazine (www.menshealth.com), Emmaus, PA, is relying on those Internet attributes to build customer loyalty. Although the publication’s e-mail database is just around 200,000 out of a subscriber file of 1.2 million names, the magazine tested renewals by e-mail in 1998 and 1999. Response to these e-mails was 5% greater than the standard method. Plus, “the savings in paper, postage and lettershop are pretty hefty,” states Claudia Allen, consumer marketing manager at the magazine. “It costs us nothing to send out an e-mail.” A group of subscribers now receive e-mail instead of snail-mail renewals.
Subscribers are encouraged to check their account status, change their address, contact customer service and pay bills online. “The more satisfactory their transactions are with you, the more satisfied customers they are going to be,” affirms Allen. Indeed, a 1996 subscriber survey showed only 18% preferred contacting Men’s Health about their account via e-mail. By 1998, that percentage had increased to 33%. Plus, some 1,500 subscribers are handing over their e-mail addresses to the magazine each week.
CareerPath.com, Los Angeles, a career management and job-search site, relied on word-of-mouth to drive job seekers back to the site in December. It sent 1.2 million of its registered users an e-mail offering a chance to win a year’s salary up to $50,000 to someone who updated or posted their resume. If a user forwarded the e-mail to a friend, and the friend registered, the initial user automatically received $10-off coupons to a CD site and four others.
The campaign was “a phenomenal success,” reports Jacqueline Meaney, vice president of marketing. Not only did the slowest month of the year become the highest registration month CareerPath had in two years, but “at least one in five registered users has been back.”
Instant frequency programs, such as three-year-old MyPoints (www.mypoints.com), claim to offer customer-retention solutions. The San Francisco-based company offers registered consumers points that can be cashed in for discounts and prizes. Consumers get points for reading advertisers’ e-mails and for purchasing their products. Advertisers also offer MyPoints promotions through their own sites. The service has 6 million members and 700 marketing partners. (Primedia, which publishes Direct, is an investor in MyPoints.com.)
“Our business model is one part direct marketing, one part Greenstamps, and one part Internet technology,” quips Steve Parker, senior vice president of marketing.
The success of the program depends on customers receiving e-mails that they deem relevant. MyPoints slices and dices database information to see that they do. “Points are not crack,” Parker cautions. “The offer has to be good.”
At Saleoutlet.com (www.saleoutlet.com), New York, advertising drove customers to the site, but MyPoints converted them into buyers, notes Michael Aronowitz, president and CEO. The site, with 20 categories of products ranging from lingerie to golf clubs, is an outlet store that sells excess merchandise at a profit for vendors. The holiday promotion gave visitors 350 points for buying something from Saleoutlet. Aronowitz won’t say how many visitors became buyers, but indicates that he now sends out an electronic e-mail circular each week to 100,000 buyers. A post-holiday e-mail survey asking 14,000 customers what they thought of the site in return for a $25 gift certificate reaped a 50% response rate. “The response says our customers answer our e-mails and they answer them quickly,” Aronowitz remarks. “It says our customers like us.”
Nevertheless, Aronowitz realizes the site’s future depends on increased ability to personalize. His plans for spring include upgrading his site to target buyers according to their purchase history.
Prudent move, say experts who believe consumers are saturated with untargeted e-mails. A Rubric Inc. study of the top 50 e-commerce sites last summer found only 16% of post-purchase e-mails were personalized. Only 4% contained offers that were related to the original purchase. “Marketers had better be experimenting with segmentation, modeling and all of the traditional stuff that direct marketers do in their regular lives,” cautions Reggie Brady, vice president of strategy and partnerships at the Greenwich, CT, office of FloNetwork Inc.
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