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Power to the Little People

E-business gives customers new leverage over corporate giants.

The problem in traditional AB testing — where one week you test concept A and the next week you test concept B — is that “by the time you get to the data you need to make a decision, you’ve missed the boat,” Westreich explains. So JoAnn.com opted for “multi-variate” testing, in which multiple page designs were tested simultaneously by San Francisco’s Offermatica Corp., a hosted service that allows companies to rapidly compare different marketing ideas, from pricing promotions to products, by charting the labyrinth ways in which consumers navigate a Website. Hence the discovery that “buy two and save 10 percent” was the landslide winner.

JoAnn.com learned a simple lesson that other E-tailers are taking to heart: consumers act differently in the online world than they do in regular stores. Companies that continue to market to consumers with hidebound retail concepts stand to lose big. Tower Group estimates global E-tail sales reached $360 billion last year and are rising at double-digit percentage increases annually. Forrester Research predicts online sales in the United States will increase at a very healthy 14 percent annual clip for the next five years, and stresses that online sales are but one facet of an online presence. Forrester analyst Carrie Johnson cites a “huge shift in philosophy” as companies realize that the Web is not just a sales channel but an important way to enhance customer service and increase loyalty. For example, Forrester found that 65 percent of consumers have researched a product online and then purchased it offline, accounting for more than $100 billion in in-store sales.

One Click and They’re Gone

“The days of ‘push or pull’ marketing are over,” says Fareena Sultan, associate professor of marketing at the College of Business Administration at Boston-based Northeastern University. “Companies that take an advocacy position, that try to understand what consumers are looking for, create trust. If you’re seen as antagonistic, as pushing products consumers don’t need, you won’t survive. Consumers have other choices. If you make their shopping difficult, one click and they’re gone.”

Customers don’t just vote with their feet; in the online world, they also speak up and spread the word (see “Speak Attack” at the end of this article). Rather than be put off by this, some companies not only facilitate customer commentary, they go to great lengths to encourage it. E-tailer eBags.com, for example, which sells everything from wallets to rolling luggage made by hundreds of manufacturers as well as under its own brand, is building a reputation as a consumer advocate by offering discounts on future products to buyers who post reviews of recent purchases. The company uses this feedback to make product changes — increasing the size of the laptop compartment in a backpack, for example.

Ebags.com doesn’t passively wait for customers to post reviews and ideas but actively solicits such input. “Twenty-one days after someone purchases a product on our site, we send that person an E-mail that says, ‘Other customers like you would love to get feedback on the product you bought,’” explains Peter Cobb, senior vice president and co-founder of the Denver-based company. Customers are queried on the product’s features, price, and whether it matched expectations. Six months later they’re asked how the product is holding up. Ebags.com aggregates this data and offers a quick “x percent of consumers would buy this bag again” metric, a 10-point ranking in five different categories and, often, a long appendix of customer reviews.

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