Ways Manufacturers Can Drive Higher Conversion Rates Through The Online Retail Channel

In a keyword-driven Web world, brand manufacturers get more than their fair share of Web shopping traffic.  But because most manufacturers maintain a relatively small direct-to-consumer business, they largely rely on online retail partners to convert leads that originate on their websites.  Disintermediated from the final sale, manufacturers often know little about how to optimize the lead referral process that begins on their own websites.

To gain some valuable insight into how manufacturers can help optimize sales conversions downstream, Forrester teamed up with Channel Intelligence, a company that tracks the purchase path of leads from manufacturers’ websites to online retailers’ websites.  Forrester and Channel Intelligence analyzed over 44 million clicks across 150 manufacturer websites spanning two full years of closed-loop sales data (2010-2011).  In our new report, “Top Three Ways Manufacturers Can Drive Higher Conversion Rates Through the Online Retail Channel,” we identify clear best practices from the clickstream analysis.  A sample of key findings:     

  • Be direct and aggressive with “Buy” button language and placement. For example, manufacturers that put the word “buy” first on a purchase button see 53% higher average conversion rates downstream at online retail websites than those that display the word “buy” as the second or third word (e.g. Where To Buy).
  • Be maximally transparent on price.  Manufacturers that display both MSRP and actual retail prices experience a 111% higher conversion rate downstream on online retail websites than those manufacturers that show an MSRP but no actual online retail prices.
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Optimizing the Affiliate Channel for Deal-Driven Customers

With consumers increasingly looking for discounts online and flocking to horizontal coupon sites (e.g. ShopatHome and RetailMeNot), vertical coupon sites (e.g. TechBargains), and cashback sites (e.g. Ebates), eBusiness professionals face a new “coupon-driven” shopping normal. As a result, eBusiness professionals are increasingly considering, and reconsidering, the affiliate deal space as a channel for both acquiring and retaining online shoppers.

As stated in my new report, “Optimizing the Affiliate Channel for Deal-Driven Customers,” while some historical questions persist around measuring incrementality, sales crediting, and brand association, affiliate deal sites today now help eBusiness professionals address a growing number of “deal-insistent” customers by offering:     

  • Advanced targeting capabilities. Today’s affiliate deal sites have modernized to accommodate eBusiness professionals’ higher targeting, tracking, and geographic coverage standards. They now offer sort and search functionality, rich editorial content, exclusive deals, and reach into international markets.  
  • New means to optimize offers and commission payments.  Advanced technology now enables eBusiness professionals to more accurately align commissions with affiliate deal site performance.  Affiliate deal sites operating within a broader affiliate network can tie commissions to the quality of the sale and the quantity of margin available.  
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“Cyber Friday”

When we think about the Thanksgiving weekend and online sales, we’re conditioned to think "Cyber Monday."  But now there’s another online sales story to report -- Black Friday.

While Cyber Monday saw a record $1.25B in online sales this year, a somewhat underreported story was that Black Friday also set a record by bringing in $816MM– or nearly the same amount spent on Cyber Monday just two years ago.   

Increased Black Friday online sales are being driven by:

  • A behavioral shift among consumers. In 2010, 49% of consumers surveyed after the Thanksgiving holiday weekend said that they shopped less in stores on Thanksgiving weekend because they were shopping online instead. In addition, an increasing number of online shoppers report that they are now pre-shopping online for Black Friday deals.
  • High traffic throughout the weekend. This year, Thanksgiving Day took the top spot for holiday weekend online traffic, but Black Friday finished second -- edging out Cyber Monday by a nose.  Data from Experian Hitwise shows that traffic to the top 500 online retailers increased by 2% YOY on Black Friday to more than 170 million unique visits.
  • The consumer perception that better deals can be found online. 58% of US online adults say that they are more price-conscious today than they were a year ago. 48% maintained that they found better values and deals online.   
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The Unemployment Rate Fell On Friday . . . But Don’t Brace For A Surge In Holiday Spending

The US unemployment rate fell on Friday to its lowest level since March 2009 (http://www.bls.gov/news.release/empsit.nr0.htm). And on paper...that’s a very good thing. 

But before we get too excited about what that could mean for 2011 holiday spending, consider this: The reason the unemployment rate dropped from 9.0% to 8.6% in the household survey was as much due to the fact that 315,000 people gave up looking for work as that 120,000 people actually found work. It’s a big flaw in the way the US unemployment rate is calculated that the rate can actually go down (so appear to improve) when people just stop looking for work. 

(http://blogs.wsj.com/economics/2011/12/02/why-did-the-unemployment-rate-drop-5/).

The reality is we won’t know the true unemployment rate until those who’ve given up looking for work re-engage in the job hunt and fill out that total workforce denominator (at which time the unemployment rate will actually go up temporarily before then finally coming down as we start seeing that recovery).  But we’re not there yet.

The co-reported payroll employment number is a better indicator of job growth because it comes from a much broader and deeper survey called the payroll survey. But for November that number (120K new jobs created) only matched expectations and is actually below the minimum number (approximately 150K) needed to keep pace with population growth in America. So, unfortunately, not much real gain there. And sadly, there’s probably not much to say about a jolt to the 2011 holiday shopping season either.  

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The New Normal – Light Spending, Heavy Coupon Usage

A few days ago, online coupon site Retailmenot.com released results from its inaugural holiday edition Shoppers Trend Report. A combination of consumer trend data pulled from activity on Retailmenot.com and a survey by Ipsos regarding near-term consumer sentiments, the report corroborates much of what Forrester recently predicted for this year’s holiday shopping season:

  • Growth in overall retail spend will be positive but small. According to the Shoppers Trend Report, only 11% of consumers surveyed intend to increase their holiday spending.  Similarly, the National Retail Federation (NRF) and Forrester predict the U.S. will see only a marginal increase of 2.8% growth in overall retail spending this holiday season. 
  • Coupon use is on the rise. 58% of US online adults say that they are more price-conscious today than they were a year ago.  Not surprisingly, Experian Hitwise has seen downstream traffic from retailers to couponing sites grow 69% in the last three years. Similarly, Retailmenot.com has seen online coupon usage increase 23% in the months leading up to the holiday season.  Seems if there’s a deal lurking out there on the internet, price conscious consumers are out to find it.
  • Free shipping is preferred by online shoppers. 59%of US online adults say that they shop online more often with retailers that offer free shipping.  In fact, according to the Shoppers Trend Report, free shipping is the coupon promotional offer most favored by consumers – preferred by 26% of all shoppers.
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Magnificent Mile - Yes. Multichannel Mile…Still A Work in Progress

Recently two colleagues of mine, Patti Freeman Evans and Martin Gill, put their respective cities’ shopping meccas to the multichannel test.  The question: To what extent were bricks and mortar retailers on Fifth Ave in New York and Oxford Street in London using their physical stores to advertise and promote their digital channels?  

Eager not to be left out...and curious to see how my city of Chicago would fare…I paid a visit to our world famous “Magnificent Mile” to see if/how bricks and mortar retailers promoted a connection to their own digital channels.

As I walked both sides of Michigan Ave (home to retailers such as Northface, Macys and Gap…as well as high-end retailers such as Tiffanys, Louis Vuitton, and Chanel)…I thought to myself, would Chicago be different from London and New York?  Would America’s heartland have a better feel for a large and growing number of shoppers today who may physically “be” in stores but whose shopping “attention” may reside elsewhere?

Some findings:

  • Traditional Brands Disappointed.  Count among this grouphigh-end/luxury brands and more established brands (e.g. Louis Vuitton, Macys).  Which is not to say that all youth-oriented brands excelled (e.g. Zara, Disney)…in fact, a surprising number of them failed to show their multichannel chops (e.g. no URLS in store, no discernable mobile presence). For example, The Disney Store was heavily promoting the “Cars 2” movie on monitors in its store, but I could not find any links anywhere to their content-rich website.
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