Due to the shear size of this article, Greg decided to break it into two parts. Part 1 covered the statistics on New Zealand online retail sales and other Global statistics impacting New Zealand Retailers. Greg also discussed some of the common hurdles New Zealand Retailers face when trying to grow the digital channel.
Part 2 is solely focused on the digital pillars required to nail the basics and lay the foundations for growth. If you are interested in following the Powerpoint presentation while reading part 2, you can download the presentation by clicking here.If you missed Part 1 click here.
Succeeding in the Digital Age
The 6 Pillars of growing a Digital channel
Whether you are just starting out or looking to build on what you currently have, the following 6 core pillars of digital success are your short term focus.
These pillars are all about focusing on the basics. If you can effectively deliver on all 6 you are laying the long-term foundation of a strong robust channel.
Pillar 1 - Strategy
Because the plan aligns to business needs, ultimately making it strategic, you simplify decision-making for everything including decisions around the other 5 pillars.
This unified plan binds together the pillars and all individual activities (strategic tactics), which brings them to life.
This is the blueprint to your business growth and it ensures the success of your digital evolution.
Pillar 2 - Technology
Many retailers and businesses become intimidated by technology because it is something they do not understand. Technology is a business-enabling tool and is a big part of the unified plan (strategy). The purpose of technology is to support the business.
Technology selection and implementation goes wrong when there is no blueprint guiding the way. Many businesses will take a new technology and adjust their business processes around what the technology has to offer. This is backwards. The technology is meant to wrap around the needs of the business.
For example, if the business has a strategy focusing on the needs of their customers, when it comes to technology selection (such as a new eCommerce shopping cart), the technology must abide to this need.
If you decide to rush, and try to save money in the short term, this is what you end up with….
A powerful engine that is unable to drive the business forward.
Pillar 3 - Usability and User experience
This is all about ensuring customers can find the product they are looking for quickly and easily (usability) and enjoy the experience while they are on their own journey (user experience).
It’s really important to understand the distinction between usability and user experience because the goal is to blend the two together.
Usability is goal orientated, ensuring the customer can get from A to B as quickly and frictionless as possible. It's all about ease of use.
User experience is more emotional with the focus being to deliver positive interactions in order to develop an affinity to the brand/retailer.
To illustrate the contrast, consider the analogy of a motorway (usability) vs. a twisting mountain road (user experience).
A motorway is usable since it has minimal oncoming traffic, enables you to get from point A to point B in a fast manner and has consistent signage, hence requiring little learnability. A motorway is highly usable and effective, but it’s boring.
In contrast, user experience is highly emotional. A twisting mountain road is less usable but, because of its scenery, the smell of nature and the excitement of the climb, it conveys a pleasant user experience. It may take twice as long to get from A to B, but it was a great journey.
Why is it important to understand this distinction? Although user experience requires more effort to do well, its results have a far greater impact.
When done properly, user experience effectively enhances the relationship between the user and the brand. This is because true user experience goes far beyond giving customers what they say they want, or providing a checklist of features.
This is not advocating all sites becoming "eye candy”. Far from it. How often have you come across sites filled with enormous heavy images, music in the "ackground and lots of movement? The site takes forever to upload and you can’t find what you are looking for.
The challenge is to bring together the perfect blend of usability and user experience to deliver a seamless, intuitive amazing buying and/or information gathering journey for all consumers to achieve their goals (whatever it may be).
Examples of best practice usability
Eye tracking studies
Eye tracking studies by both Google and Jakob Nielson recognise consistent eye patterns across various pages of various different website pages with different content.
In the example below you have (on the right) a page full of content, an eCommerce product detail page (in the middle), and a Google results page (on the right):
Other than the subtle variations of each you can conclude the eye starts at the top left hand corner of a website and is why the logo is always top left.
The eye moves from left to right at the top of the page then drops into the center of the page. This area is known as the "active window” the most critical piece of real-estate on the page, the area where visitors can view content"without scrolling.
This eye pattern continues on with every page a consumer selects in his/her micro actions, however when they view the second page and beyond, their eye no longer lands at the top left hand side of the page where there logo appears (they no longer require this validation), their eye lands on the lower left section of the page then immediately moves to the middle of the active window.
Every page must have a call to action (CTA)
When a visitor lands on a page there must be obvious actions for them to take. Whenever you look at a page on your website ask yourself, "What action do I want the visitor to take on this page?” That action must be obvious. Consumers want to be taken on a "ourney, not left guessing what they must do to get to the next page.
Consider all the strategy and planning grocery stores undertake when they stock and layout their aisles. This is their "planogram". Usability is the website's "planogram".
Navigation is always Plan B
Due to the eye tracking studies defined above, consumers are more prone to using navigation options in the body of pages instead of navigation options found in menus.
One of the most critical pages to get right is the home page. Any website that has products on their home page are assuming what consumers want to see. It is too early to be introducing products at this stage.
The purpose of the home page is to move consumers deeper into the site looking at relevant content as soon as possible.
To test this hypothesis, a test was applied to the existing Swanndri website. The navigation of the site is repeated in the body of the home page.
A heat mapping software was used on the current Swanndri site to measure where consumers were clicking on the Swanndri home page once the navigation was installed in the body of the home page.
The numbers don't lie.
The software represents where consumers are clicking on the home page in the form of what appears to be "confetti". It clearly shows very strong activity in the body of the page:
Go to the Swanndri site and see for yourself. Where would you click?
Examples of user experience
Merchandising products to a very high level:
- Great content introducing your products.
- Great images (multiple images).
- Other book recommendations.
- Book reviews from critics and peers.
- Video of the product in use or in the case of Booksellers, video testimonials.
Social proof is a psychological phenomenon where a consumer looks to the actions and opinions of others as assurance (or proof) the decision they intend to make is the correct one.
Social proof is 1 of the 6 key principles of influence, as researched by Robert Cialdini for his book titled, "Influence: The Psychology of Persua"ion”.
Consumers look for social proof before completing a purchase. Peer generated social proof has proven to be more influential than celebrity endorsements. People understand celebrities are in it for the money.
Your site is your sales person selling for you 24/7
Why do you think physical retail converts on average between 20% to 40% (globally) and eCommerce only converts between 2.5% and 3.5% (globally)? Because good sales people adjust their pitch based on the verbal and visual cues set off by the consumer.
Your website does not have the luxury of reacting to cues. It must anticipate the consumer’s buying journey.
Getting usability and user experience right is part of the puzzle of aligning to consumers.
Example of building a user experience merely through images. Swanndri is in the final stages of a website upgrade and the CEO has been kind enough to allow the sharing of the new design before the site goes live. This new design focuses on building an experience for its target consumer's.
Before (this is how the site currently looks):
The current site is very usable, but lacks the emotional attachment.
After (this is what the new site will look like in August 2014 once its released):
It's safe to conclude this new design will have an impact. But while it's an extremely attractive home page, it's also usable.
Pillar 4 - Digital Marketing
There are two key elements to digital marketing: acquisition and retention
Once you put your site live its like opening a store in the desert. Therefore the immediate challenge is to get consumers to your site.
There are two core forms of marketing strategy used to achieve this: Push marketing and Pull marketing.
Push Marketing is mass broad messages that have high cost and low ROI.
This marketing method is very hard to measure. Remember the old saying, "we know 50% of our marketing works which just don’t know which 50% it is". That’s because none of these initiatives are accountable for their behaviour and/or outcomes.
Push marketing measures its effectiveness on potential reach or "impressions” ie. "300,000 people listen to this radio station so the charge will apply to this estimated potenti"l&"uot;.
Push marketing is interruption based, meaning marketers push messages whether a consumer wants to see it/hear it or not.
Pull marketing is being visible only when customers identify a need which you can fulfill. Pull marketing is lower cost, has a much higher ROI, is completely measurable and transparent, and is permission based meaning the customer initiates interactions with businesses because they have identified a need and is looking for help in filling it.
In today's world where the consumer has control, the goal for marketers is to get found when consumers are looking for your product/service...
Not get in their face when they are not looking for you.
How can you make pull marketing work for your business?
Using Google Adwords to grow acquisition
It's important to first understand there are two fundamental methods to being visible in search engines: the paid method (Google Adwords), and SEO (search engine optimisation).
Google Adwords is big business for Google. In 2009 internet ad revenue was $58.7bn compared to $132.0bn for TV. But the former is predicted to rise 10.7% annually to reach $194.5bn in 2018, just $20bn behind TV advertising. Google Adwords comprises around 90% of Google’s total income.
Google gives away free tools to provide you the information necessary on when and where you should be visible in Google. The reports shown in the presentation came from Google Trends and Google Keyword Planner.
The "Stephen King” example. These Google tools provide data showing approximately 2,000 monthly searches in Google"New Zealand for "Stephen King” and/or "Stephen King bo"ks”.
Meaning these two terms are being typed in to the Google NZ search box 2,000 times. If you have a range of books that could satisfy this consumer type this represents an opportunity.
It is this line of thinking that reduces the need to worry about demographic data. You don’t really care if someone is aged 40, likes long walks on the beach, and owns a poodle. What you care about is what they are looking for and when are they looking for it. These tools from Google provide this information.
The next challenge is presenting your offer in Google, grabbing their attention amongst the competition, and for these consumers who click on your link in the Google results page, it becomes critical you send them to very relevant pages on your website.
If someone types in "Stephen King books” in Google, clicks on your advertisement, and you send them to your home page where there is no me"tion of "Stephen King books”, they will immediately leave your "ite.
Being "relevant" in Pull marketing means you send the "Stephen King book” traffic to a page on your site titled "Stephen King Books”, and below this a list of the books y"u have on o"fer.
This page is called a "landing page” and is a critical element to your acquisition strategy. There is a science to creating ideal landing pa"es but for now, its important to understand this concept.
This is the basics of advertising in search engines (Google).
Greg recently wrote an article specifically on the power of landing pages and how to use them with Google Adwords.
SEO (search engine optimisation)
SEO is the free listings found in the Google results page. When it comes to foundation laying in digital, its important to focus on the basics for this discipline as well.
SEO fundamentals. If you are following the recommendations stated above such as:
- Your business has the right technology which complies to Google’s requirements i.e. URL strings, site maps, page structure (H1’s).
- You focus on improving the user experience with good quality content.
- You drive social proof initiatives such as product reviews.
- You build landing pages to align to the demand of your paid advertising campaigns (Google Adwords).
SEO is happening automatically!
If you align your content to the demand (ie your target market) you are organically developing an SEO plan that will add value.
There is no need to overcomplicate this discipline. As long as you are creating content your target market wants to see, you are applying SEO.
In the early days the two fundamental methods to build an ongoing attachment to customers is via Email marketing and Social.
Email marketing is the most cost effective revenue-generating tool there is (assuming you have a database to communicate too).
Key elements of a great email marketing campaign:
- Create your emails to open on Smartphones. Over 50% of emails are now opened on smartphones.
- Strong calls to action. Make the actions you want people to take very obvious i.e. "Buy Now”.
- Continuity. Whatever message you are saying on the email, make sure you ar" also saying it on your website.
- You always want to drive traffic back to your site.
- Pick an email marketing tool that is easy to use and provides you "speed to market" capabilities.Mailchimp is a great example of a powerful low cost email marketing tool perfect for non-technical non-design orientated people.
There is definitely a place for Facebook in the early days, but its important to understand its role. Don’t go into it thinking ROI.
In the early days Facebook becomes effective when you have an owner and/or employees who are passionate about the products/services and their work. People can sense it and want to be apart of it.
There are many small Retailers who have enormous Facebook communities but there are no short cuts to getting this right. It's important to be aware of the fundamentals of Facebook conduct.
Very recently Facebook has applied some game changing rules which dramatically reduces your organic reach making it very difficult to grow quality communities.
In order to be truly effective in Facebook and its use, read Greg Randall's article on Facebook's changes andhow it directly affects your business and what conduct you must now undertake in order to effectively reach and grow your community.
Pillar 5 - Multichannel
Why is Multichannel important?
Because consumers are in control, they are going to engage with you on their terms. This translates to the need for retailers to be available to consumers in more than one touchpoint (i.e. physical store).
Each retail touchpoint needs to have an appreciation of the context of a consumer’s needs. In Part 1 there are comments around the context of the consumer and how they behave differently on each device. This becomes very relevant when developing a multichannel offering.
Both the physical and digital channels need to be ready to engage in a manner desired by the consumer. This builds loyalty.
How does a multichannel offering build customer loyalty?
Studies have proven customers are less likely to leave a brand/retailer if that customer engages with them via 2 or more channels.
Why? If a customer has a bad experience with you and they only interact with you via one channel, they have much less to lose.
However, if a customer purchases from you in store and online, and follows you on Facebook, there are far less likely to leave. They have more to lose and feel their bad experience through the one channel was a one-off because their other experiences are great.
Multichannel is a proven strategy in building loyalty and customer lifetime value and a key differentiator when up against international retailers.
Read more about how to build loyalty and customer lifetime value in this article by Greg Randall titled, "The top 7 strategies Retailers use to build customer loyalty in the digital age".
Read more about multichannel strategy and why its important in this article by Greg Randall published in NZ Business Magazine in April 2014 titled, "Multichannel Retailing the Future for New Zealand Retailers".
Pillar 6 - Continuous Improvement
Since digital is a business channel it takes time to grow and evolve. For many retailers it takes longer because it is a business discipline they are not familiar with.
A key to the ongoing management and development of the digital channel is the constant monitoring of its performance and making changes to improve non-performing areas. This is the basics of a Continuous Improvement discipline within the business.
This is a cyclical process consisting of:
Measure site performance. You can’t manage what you can’t see. You must have the tools to not only capture data, but capture the right data. Google Analytics is another free Google tool and is extremely powerful.
Interpret the data. You must understand what the numbers are representing. This can be hard, and in many instances requires training or partnering with an analytics specialist.
Make decisions based on insights. The insights highlight performance issues and/or new opportunities. With data, you no longer need to guess or make assumptions. This data allows you to form a hypothesis in which testing can occur.
All decision-making relating to the site (and the business) comes from the data.
Implement changes. Once you have decisions made, actionable changes can be implemented. When the changes are made, you start the cycle again.
Continuous improvement cycle:
- You measure site performance (capturing the right data)
- You gain insights (performance issue or opportunity)
- Decisions are made to make changes based on the insights (hypothesis).
- You implement the changes.
- Once the changes are completed you start the process again by measuring site performance and determine if the changes had the desired effect.
If the changes didn't positively affect performance your hypothesis was wrong, but that is not necessarily a bad thing. You now have more information to try something else.
Because all decisions made and actions implemented are strategic you have a greater likelihood these changes will add value.
However, with no strategic direction these changes become ad hoc and without direction and is why many times this pillar adds no value and delivers no forward momentum.
Now that you have seen the 6 pillars and how they are meant to work it also becomes clear the impact and power a unified plan makes.
The ability for all pillars to work together and build towards a unified plan is powerful. The plan needs to be unified because all pillars co-exist and need each other to be effective:
- The plan defines the technology.
- The technology enables the usability and user experience.Usability and user experience drives new customer acquisition.
- Technology supports and powers multichannel activities.
- Continues improvement is pointless without a technology that has a flexible frontend merchandising layer.
This article and presentation is meant to get you excited. There are many opportunities for you to capitalise on. Even though digital (and eCommerce) has been around in New Zealand for 10 plus years, its all still new.
Only now is the momentum really gathering.
You know where you are in your own digital evolution and now you know where you need to be. Take calculated small steps and focus on the basics and in time your channel will grow.
Thanks again for your time.
Learn more about Greg Randall.
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