Essential Business Tactics for the Netby Larry Chase
While aware of the Web's potential, most businesses and corporations are unaware of exactly how to mine it to reduce costs and increase profits. This book reveals how to do precisely that. Businesses both large and small will learn how to reduce costs of travel, printing, handling, postage, distribution, purchasing, and other operating costs, as well as lower costs and improve the efficiency of recruiting new employees. They'll also learn how to use the Web to test new products, services and ideas while increasing customer loyalty, how to mine information about competitors and existing customers as well as prospective clients, how to establish a brand identity, and more.
Includes Companion Web Site with... Chapter-by-chapter resource listings, and updates for the book.
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Chapter 6: Retail: Setting Up Shop On the NetAdding Value with Cross-Merchandising
No matter how your online store is constructed and maintained, you've got some very interesting possibilities to amortize the investment you've made in the solution itself and the advertising it took to get shoppers to your site. Cross-sells and upsells are two ways to help your customer spend more money at your site. Not only can products be suggested from content pages, but you can also predict what your customer might be interested in based upon the product they are looking at.
Of course, sophisticated merchandising technology will do so automatically, but a more homegrown solution can also be effective. You can look at each of your product pages and imagine what else the customer would be interested in, and then suggest that product with a link to it. For example, every page of your store that features a hiking boot could cross-sell a sports sock. You can also incorporate upsell suggestions, which encourage the customer to buy more of whatever he or she is considering-instead of buying one pair of sports socks for $10, a promotion could offer three pairs for $25. A recent trip to the Speedo store here in New York City serves as a good parallel to realworld cross-selling. I went in to buy a bathing suit. The second one was half price, so I bought two. That allowed me to save additionally on swim goggles, so I bought a pair of them. At this point, the dollar amount of my purchase entitled me to buy anything else in the store for 40 percent off, so I bought a day pack. By the time I got out of there, I had spent over $150! 1 went in looking to spend around $30. They got me.
One of the easiest ways to add e-commerce to your site is to participate in an affiliate program or an affiliate program network. Basically, an affiliate program, or associate program, is a sales and marketing tool that a retailer can use in order to extend their products and brand awareness into the sites of others, thereby tapping into much more traffic and a much wider audience than they could reach at their site alone.
The most popular affiliate program on the Web is the one offered by Amazon.com. Just about anybody with a website can recommend books that might be of interest to their site visitors. Amazon.com pioneered the affiliate network concept by empowering site owners to link to specific books within the Amazon.com site. Whenever a visitor clicks on the link and purchases a book, the site owner receives a commission for the sale. Amazon.com has created proprietary technology that tracks and analyzes affiliate sales to the purchase level, rewarding those sites that perform well with higher commissions. The site owner benefits from the revenue stream, the site visitor benefits from the ability to directly purchase books of interest to them quickly, and Amazon.com benefits by having hundreds of thousands of sites promoting Amazon.com through the affiliate network.
What if you want to sell more than books? An affiliate network is the answer. Affiliate networks are companies that bring together dozens of retailers that wish to offer affiliate sales opportunities. The affiliate network then goes out and finds hundreds of thousands of websites to participate in driving traffic to the retailer's site by placing generic banner ads or specific products from the retailer on the affiliate's site. Affiliates are rewarded (usually with a commission) when their site visitors click through to purchase on the retailer's site as a result of the affiliate promotion.
Each site owner can apply to sell products from any number of retailers in the network. If you have a website about alternative medicine, you might apply to sell aromatherapy candles from retailer 1, vitamins from retailer 2, and exercise equipment from retailer 3. Your site would be reviewed by those three retailers, and if approved, you would simply link to store banners or specific products of interest wherever appropriate within your site. Again, you receive a commission whenever one of your links results in a sale, as visitors will click through your link to purchase on the retailer's site. Affiliate networks have built very sophisticated technology to link and track the retailers and site owners, site performance, product sales and commissions, and are responsible for making the entire relationship run smoothly.
One of the disadvantages of affiliate programs is that the retailer will want to establish a relationship with the customer that you have just sent to them. Therefore, you must constantly update your content and affiliate links in order to encourage your site visitors to buy specific products. Otherwise, the next time they need an aromatherapy candle, they will go straight to the retailer's site-there's no reason to link once again through you to make future purchases. Therefore, to keep your commissions coming in, you must work hard to continually merchandise products and links throughout your site.
LinkShare (http://www.linkshare.com) is one example of an online affiliate network. You can either initiate the offer to other websites via LinkShare, or, as an affiliate you can see what other deals and percentages other sites are offering you for referring business. In either event, LinkShare offers a good index as to who's offering what team-selling programs on the Net.
Affiliate programs have exploded over the past few years, as they do offer an efficient means to connect merchants with affiliates that would like to sell products online. "We'll see more and more emphasis on training for both merchants and affiliates," predicts Dr. Ralph Wilson, industry veteran and publisher of WilsonWeb (http://www .wilsonweb.com) (see Figure 6.8). "That's the weak link. Ninety-five percent of all affiliates have one main business plan-set up a site, put up affiliate links, and get rich quick. But they have no traffic."
Lack of traffic leads to lack of sales, which leads to unhappy experiences with affiliate programs for both retailers and affiliates. According to Dr. Wilson, education is in order for both parties to help affiliate programs succeed. "Merchants need to identify which affiliates are valuable to them," emphasizes Wilson. "Merchants must then contact the affiliates personally and encourage them to join their affiliate network. They must then create a personal relationship." This personal, ongoing relationship between retailer and affiliate is like the relationship between a manufacturer and its sales force. Is the sales force left on its own to do whatever it wants? Never! The sales force is the backbone of the company, responsible for knowing as much as possible about current and future products, the company, and the market. Manufacturers spend millions of dollars to educate their sales forces on an ongoing basis. In contrast, says Wilson, "Typically the merchant's attitude is 'Let's spend as little money as possible on this.' But if merchants would work to build relationships with their key affiliates month after month, then everybody wins."
Wilson has advice for affiliates as well. "Affiliates, like all e-commerce sites, need to develop realistic expectations and work on creating a good customer experience." This can be a challenge, as affiliates are essentially driving traffic and sales to the merchant's sites. Affiliates are also not necessarily skilled retailers who are able to lead their site visitors to a sales opportunity. How can affiliates create more successful and profitable customer experiences?
- Present e-commerce opportunities in support of good content or information. A sea of links or banners to products with no contextual relationship to the site or to customer's needs is simply a bad retail strategy.
- Focus on core offerings. Rather than being a department store or portal for every product under the planet (there are already enough of those), develop a special niche and concentrate on developing the best content, information, customer experience, and product selection in your market. Loyalty will follow.
- Don't forget about marketing! Once you have established a niche offering, you must let the world know about it, or you will be the best site that no one has ever heard of. Learn how to market your site in Chapter 7, "Online Events, Promotions, and Attractions."
Promote your niche, not your store. Aim to be the very best micromerchant on the Web. And do it.
Greg Helmstetter and Pamela Metivier, authors of Affiliate Selling: Building Revenues on the Web (Wiley, 2000), suggest that the site owner answer the following questions before entering any type of affiliate program:
What are your goals?
- Is affiliation the backbone of your business model, or is it a supplement to other revenue?
- Will your site be big or small?
- How many products will you place on the site?
How frequently will the products change?
- What impact will merchandising have on your management and production teams?
- Will you integrate product links with content tightly, loosely, or not at all?
- Will your editorial plan, design, or navigational scheme require major alteration?
- Will the boat float? (How much will it cost, and how much will you make?)
By defining your expectations and the potential impact on your business, you will be in a better position to evaluate programs and initial results. The authors stress, "As soon as possible, stop planning and start experimenting! Any test data you collect will help you move forward and plan with confidence. Where possible, base your assumptions on data that is generated from your site. Data from other sites can give hints, but unless these sites are very similar to yours, and are visited by a similar audience, then the data may be misleading."...
Meet the Author
Larry Chase is an international Internet consultant, author, and speaker. He has consulted with Fortune 500 companies such as Con Edison, New York Life, 3Com, and EDS, as well as some of the Internet marketing pioneers themselves, like Hotel Discounts, Auto-By-Tel, and 1-800FLOWERS. Since Chase saw the potential of the Net early on, he was prominently featured in the pivotal Business Week cover story, "How the Internet Will Change the Way You Do Business," way back in November of 1994. The New York Times, USA Today, Inc. magazine, Bottom Line Business, CNNfn, CNBC, plus scores of trade magazines and newsletters regularly seek him out for his insights. Reviews from Larry Chase's Web Digest For Marketers newsletter, (http://wdfm.com), which is read by more than 150,000 people each month, have been syndicated to Advertising Age, DM News and Business Marketing magazines. His columns and seminars are seen worldwide.
Chase started one of the first of two commercial websites in New York City. Prior to that, he worked for New York's most celebrated ad agencies as an award-winning strategic copywriter. After working on consumer brands such as Heinz, Volkswagen, Polaroid, CBS, and Avis, he chose to focus on high-tech products and services, "since there are always new and unique selling propositions worth writing about." Chase worked for technology clients such as AT&T, Compaq, IBM, Digital Equipment Corporation, GTE, Xerox, NYNEX, and "just about anything that had an 'x' in it." He specialized in technology ten years before it was fashionable to do so: "Now, it's chic to be geek."
Chase lives and works in New York City, and can be reached via email at email@example.com. For more information on Chase and his services, visit his firm's website at http://www.chaseonline.com. If you have questions thereafter, call 212-876-1096.
Eileen Shulock is an Internet marketing, e-commerce, and merchandising expert. As Vice President of Retail Strategy for Knowledge Strategies Group, an omnitailing development company, she works with clients to generate maximum sales and establish meaningful and long-lasting customer relationships via the Web, kiosks, mobile and wireless applications. She has over ten years of real-world retail management experience with some of the world's most successful specialty retailers and manufacturers, and more than six years of experience in the Internet business, where she has worked in the areas of online marketing, public relations, business strategy, and e-commerce development. For over five years Shulock has also been the managing editor of Web Digest For Marketers, and is publisher of the newly launched eTrendWire. As the former director of Webgrrls International, she continues her role with the organization as the volunteer director of Webgrrls New York City, the founding chapter of the 40,000-member network. Shulock is a frequently published author and speaker. She lives and works in New York City and can be reached via email at firstname.lastname@example.org.
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