I read this great blog the other day via @minethatdata that talked about the differences between catalog and online marketers. You can read the entire article here, but this is the part of the article that caught my attention when thinking of it in the context of web personalization:

“The catalog marketer cares about long-term value, and proves that catalog marketing generates customers who have the best long-term value (which is usually the case), preserving the business model.

The online marketer gets caught up in the multi-dimensional aspect of long-term value associated with multiple micro-channels, finds the problem too confusing, quits, and focuses a disproportionate amount of energy finding ways to encourage a customer to convert to a purchase today. This leads to improvements in conversion that do not translate to improvements in long-term value, causing the online marketer to constantly search for the next big thing”.

I couldn’t agree more. I’m not saying that dollars don’t matter, of course they do, but there is so much more at stake. Too many online marketers are consumed with the now, they (I’m generalizing, I know) are focused on the $ conversion rate on a campaign by campaign basis. They ignore more traditional measurements such as the lifetime value of the customer, brand awareness, and other positive micro conversions that don’t translate into immediate ROI.

It’s as if online marketers are walking around carrying quotas over their heads. Every dollar out is scrutinized and measured against every dollar in. I realize that life time value and brand awareness are difficult things to measure (follow this guy if you need help @jimnovo, or check out @avinashkaushik who wrote a blog recently on this subject). I also realize that explaining and proving out the results of those measurements to those in charge of the marketing budget is even more difficult. Yep, the weight of the quota is squarely on the marketers shoulders. But that’s no excuse. Rather than giving in to the quota and solely focusing on the now, marketers should extend their efforts by embracing measurement methods, technologies and tactics that bring greater value to the lifetime of the customer.

Let’s take web personalization for instance. Vendors who have found some success in this space are typically focused on one of or both of these:

Testing: Whether it is A/B or MVT, the notion that testing out pages to optimize the funneling of users through your site is generally accepted as a benefit. This evolved out of the web analytics industry which emphasized a continuous improvement framework.

Conversion Optimization: Personalization vendors in this space are focused in optimizing the tail end of the purchasing cycle (the now). Product recommendations, shopping cart abandonment, product discounting, these are all forms of personalization where the goal is to persuade users to add more items to the cart, increase the average order value and ultimately to hit that checkout button now.

I have no problem with these forms of personalization. If done well, they do work. The first helps site owners build the best possible pages; and the second helps increasing that conversion dial within the context of the now.

Should marketers be doing these things? Absolutely.

Should marketers limit their use of personalization to these things? Absolutely not.

In addition to the types of personalization mentioned above, it should also be used in the context of providing the most relevant message to the visitor that is on my site right now. If that visitor is in the early stages of a purchasing cycle, then offer them messaging that makes them feel comfortable about the brand, offer them product reviews, newsletter signups, any type of messaging that makes them feel comfortable with you and your product. This will increase brand awareness, loyalty, and eventually will translate in a purchase and hopefully subsequent purchases in their lifetime.

By simply focusing on the end of the purchasing cycle you are focusing on the now and you are ignoring a number of other conversations you could be having with your prospects and customers simply because of the fact that you have a quota over your head.

It’s time for marketers to look beyond the quantitative quota and bring the virtues of the qualitative to the table – session wide dialogue, brand awareness, and loyalty are all virtues that need to be brought to the forefront as the previous generation of marketers did before us. It’s time to bring personalization to your business and to convince everyone around you that the measure of success for personalization and online marketing should not solely be focused on the now but rather the lifetime value a customer brings to your business. It’s time to think beyond the quota.

I’m on month three here at Sitebrand, and man, how time flies when you’re having fun.  I find one of the most interesting things to take in, is the company pitch and core values when you’re new.  Rarely can you experience this in such an unbiased fashion after you’ve spent time with a firm.  So I wasn’t surprised to hear the buzz around web site personalization.  Coming from the audience measurement space, I was no stranger to the idea, but was anxious to hear what Sitebrand had to say about it.  Let me illustrate with a bricks and mortar example.

This past weekend, I was walking through our local big box hardware store; I needed furnace filters, excitement at its best.  I rounded the corner of the furnace aisle and was greeted by a salesman.  He very quickly realized my intention and prompted me with ‘What size filters are you looking for?”.  Nothing remarkable about that you say.  But ask yourself, how does that compare to the online experience?  The fact that I entered the store obviously meant I was a visitor and the fact that I walked down the furnace aisle meant I could be segmented.  But it was the combination of those facts along with a relevant message that made the experience truly personal, and that’s where I’m going.

Personalization isn’t just about segmenting users, and it isn’t about delivering a unique message to a visitor because you can.  It’s about optimizing the conversation you’re having with your visitor.  It’s about having a dialogue rather than a monologue. The ability to segment web traffic is no different in the online world than the ability to stand in the furnace aisle and whistle Dixie.  The key is combining a set of likely visitor expectations with the information you have, to deliver you guessed it: the right message to the right visitor, at the right time.  I wasn’t asked whether it was my first visit to the store, nor was I directed to the humidifiers section.

So what’s the takeaway here?  It’s simple, don’t get lost in the technology, or with the variety of methods and techniques to get in front of users.  Sure, we now have the ability to stand in that online furnace aisle, and that’s a great thing for Marketers, but that’s not the end of the story.  Success always comes down to relevant messaging, segmentation just places you in the aisle.

After I had the right furnace filter in my hand, the salesman kindly asked if he could help with anything else, “no” is what I said, so he pointed me in the direction of the checkout counter.

I was having lunch the other day with a web analytics friend of mine. He shared with me the fact that several of his clients who are in the online luxury space all have one thing in common – visitors who are subscribed to a newsletter have the highest conversion rate.

Hmm, ok. Well I suppose that’s interesting, but it’s not the sort of Avinash inspired metric that I’d want to tweet about.

The following day I asked our services team, “what is the main value that Sitebrand (personalization) brings to our online luxury customers today?”

It comes down to this: luxury companies typically have a multi-visit shopping cycle, and they look to us to help influence and shorten that cycle.

Depending on which stage of the cycle a visitor is at, we can target personalized messaging to persuade them to the next stage of the cycle. This shortens the process and reduces the chance that they fall out of the cycle.

Why do they have a multi-visit shopping cycle?

If I’m buying a ring, or any high-end product in any vertical, typically I want to research the product, I want to be an informed buyer – I’m not spending $50 here, we’re talking hundreds or thousands of $$$. In some cases it’s a once in a lifetime decision – like how many times in your life will you be buying a wedding ring (once hopefully)?

What can you measure?

So if you’re an online luxury e-tailor, and your visitor opts into your newsletter, it’s a measure of their commitment to you, you’re one of the contenders. So a newsletter is simply one more checkbox to fill along the multiple visit sales cycle. There are many other customer indicators that indicate commitment, willingness, and interest. Have a look, correlations between purchasers and other high-value tasks exist – your analytics will tell you these.

How does personalization help influence and shorten this cycle?

So now you know the business objective and you have the measurements in place.

“So what… so what do you do about it” (Sorry, another Avinash quote)

Some would argue that you can shorten the sales cycle by discounting the product or offering up deals earlier on in the process. I suppose, but isn’t this trying to fit a square peg in a round hole? For one thing, you’re leaving money on the table, and secondly, you’re trying to force something onto a customer that he or she is not ready for. This could result in lower margins on sales and potentially returned sales.

So I say – Focus on the customer!

Make them feel comfortable. Build confidence. Build a relationship. An opt-in newsletter is only one method to build that trust. Customer testimonials through text, imagery, voice and video; product reviews from both vendors and customers; customer support, email and live chat are but a few examples that do this.

If you’re ‘number of visits to purchase’ rate is 4.5, then spend the first 4 visits building that confidence and trust. This is the time to build brand, loyalty, trust, it is the time to focus on the customer and not on the sell. In visits 4, 5 and 6, offer them the incentive, persuade them towards the cart.

With Sitebrand, promoting that newsletter in a timely and effective manner is just one small example of how we can influence and shorten that sales cycle. Remember, not all of your visitors are at the same point in the purchasing cycle, so make sure you speak to each differently and gently help persuade each visitor segment to that next stage and subsequent purchase.

Rely on your analytics to determine your rates and correlations.

However, don’t rely on measurement alone. Rely on optimization and personalization to continuously improve the right message in front of the right person at the right time.

I can remember times where everyone believed we couldn’t have enough online stores.  Selling online was the next BIG thing.  Everyone started their own little shop and became online marketing experts.  It was easy and cheap.

What happened?  The reason growth in e-Commerce is threatened, slowed, or stopped altogether isn’t because the market is saturated, it’s because there’s been a failure of management.

Every major industry has once experienced significant growth.  The ones that made the right decisions grew, the others… well, here’s a simple example.

There once was a time when railroads were the hottest and trendiest way of transportation.  The railroad industry didn’t stop growing because the need for passengers and transportation declined.  Year after year, more people were traveling, just like there are more people buying online today.

Sitebrand says don't treat e-Commerce like railroads!

People didn’t move away from trains and towards cars, trucks, airplanes etc… the reality is people stopped using  trains.  Railroad companies let their customers leave because they saw being in the railroad business as their top priority, rather than being in the transportation business.  They were railroad oriented and not transportation oriented; they were product oriented and not customer oriented.

Do you see were I’m going with this?

Assuming growth is assured by an expanding population or by the adoption of technology might be as fatal as believing if visitors find your site; they will buy from you.

Over the last few years, most online companies haven’t needed to think, at least not a lot.  More and more people were buying more products and services online.  In times where everyone was spending, there wasn’t a growth problem.  If thinking is the intellectual response to a problem, then the absence of a problem leads to the absence of thinking.

Weird? Well I’m a technology guy, that’s how we rationalize.

So let me come back to my railroad example.  Online retailers finally have to understand that they can’t be railroad oriented.  Their business is not to perfect their SEO, find more ways of driving traffic or analyzing why someone didn’t buy.  They have to be transportation oriented.

It all starts with the customer.  Everything else are tools to help you take good care of what is important in your business: your customers.  Tools can be dangerous and can be misused if you don’t ensure your customers are happy.  Streets were built to bring people to trains and were later expanded so people could use cars and not trains (Don’t you feel that Google sounds a lot like those streets?).

You think we would have learned from our mistakes with railroads?

Think again.  Review how happy your visitors and customers are.

Look at your bounce rates or ratio between new versus returning visitors and tell me that you have not failed so far.  Now tell me that you didn’t think further than buying more keywords in the past.

So far you’ve built the trains, tracks and streets that bring people to your train stations.  You’ve looked at reports that tell you visitors come, look into your trains and leave to take the bus or go home or… who knows.  You don’t even know if they actually wanted to take the train, ah… I mean buy a product.

Put the customer in the center of your business.  Use review tools like Powerreviews to ask for opinions.  Use Sitebrand to personalize & optimize the session.  Help them find what they are looking for with tools like SLI-Systems.  Make them feel welcome and special.  Give them the feeling you have when you get on an airplane, first class from Hong Kong to New York.  You get pampered.  Give them the first class experience they deserve.

Don’t give visitors the lousy second class train ride experience with stops at every milk can.  Don’t make the same mistakes the railroads did…

A colleague of mine – who we’ll refer to as “naD” for anonymity sake – recently told me my blogs are verbose. I’ve never considered myself to be loquacious before, but I suppose there’s a first for everything. Am I really of the garrulous kind?

Anyways, this all came full circle as some co-workers, naD and I were caught up in a rousing game of lunchtime Scrabble via Facebook. Without divulging any further information about my lunchtime habits, I got thinking, with so much emphasis on social media, what web 2.0 medium is most effective for e-commerce companies? I had an interesting conversation with another co-worker recently regarding social media and despite the emphasis placed here in the last few years, it’s very uncontrollable. I’ll get to that shortly…

Full disclosure: I realize it will differ for each company and that this blog is probably one of 2,000 blogs that will touch on social media today. And while there are numbers of books and blogs from experts like Dave Evans (Social Media Marketing: An Hour a Day, and Dave, if you are reading this, I don’t own this book yet and December 25th is right around the corner), this is a take that directly affects Sitebrand users or those further looking into web 2.0 strategies with personalization, targeted content and other marketing strategies. It’s a look at segmentation, how to work with open environments (users are free to say what they want, when they want – regardless of validity or truth) and avoiding the “boil the ocean” mentality.

Hypothetical example here… let’s assume you are an online electronics retailer selling everything from alarm clocks to MP3 players.

You are up to date with all the Facebook’s, Linked In’s, Twitter’s (this itself can be daunting, I know) and a specific intent is established for your internet marketing plan. You know you want to use Facebook and Twitter for different promotions. Those could be two vastly different kinds of visitors, right? Going back to a comment I made earlier, you can’t control what’s being said about you and any preconceived notions that go along with it, so how do you deal with this, without having a face-to-face conversation with every visitor? Since my example has us selling the coolest widgets and gadgets, understanding your visitors based on where they are coming from is just as important as anything else on your site and the need to segment your audience and dynamically message them truly begins.

The traffic coming from your hourly/daily tweets trust your promotions or the source it came from (and let’s suppose your analytics tell you nearly 12% of your traffic is from mobile browsers). Your landing page could offer minimal images and focus on messaging/links that load quickly and since I’m in ultra-merchandising mode, focus on the latest in smart phones and Bluetooth headsets. Since that trust is there (or at least higher than most first time visitors), you can focus on what the visitor should buy, not why. And that’s just for first time visitors. When they come back, you can target these same visitors to help increase brand awareness and drive home non-financial conversions/goals. Ultimately, ensuring they’ve seen your great promotions, seen why you are a great company and changing any preconceived notions they may have had about you before. This is your chance to get into your visitors mind and represent your company the way you want. The power of targeted messaging, eh?

For traffic coming from Facebook, you know this is either from paid ads or a link from a user profile. Either way, they aren’t as connected to you and your company as the Twitter crowd. Seems like a good opportunity to segment, right? One way or another, you’ve paid for this customer to be on your site, so it needs to count and needs to capture the visitors attention/trust. At this point, having a banner run through the entire session for these visitors (clickable or not), telling them the site is secure, potential refund info, shipping info based on geography/location might be worthwhile. Maybe the message changes and talks to the visitor based on their click patterns or the fact they came from Facebook, who knows – the sky is the limit here. Since it’s a more general crowd, you could opt to show an array of your different products and special sales. Or perhaps you want to focus on company branding more than particular promotions and quick conversions. Personalization and visitor segmentation give marketers a window to brand like never before. You can drive home your message in a conversational way. Imagine having your customers line up to have a face-to-face conversation with you. I’m sure you can make them a believer in your company (at least you could for me… I know how convincing our Sitebrand blog readers are) and isn’t that the whole point of a webpage in the first place?

If all this sounds cooler than a $4 sweater on Christmas, then hold onto your hat: I’ll be running a product demonstration webinar this coming Wednesday, December 17th @ 2pm EST (BTW, they are only 29 minutes long!). In the new year, I’ll be running these webinars bi-weekly, so this Wednesday’s presentation will be the neonate demo. I’ll be talking about web 2.0 integration with Sitebrand,  showing its ease of use and effectiveness. If your conversion rate is lower than 4% and you want to get more out of your existing traffic, I’d love to meet you. Remember: the tools your company uses to tap into your visitors represent the kind of company you are and the kind of customers you are after.

To everyone who can’t make it, happy holidays and see on you on the other side (2009).