INSIGHTS FOR AGILE ECOMMERCE

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1 INSIGHTS FOR AGILE ECOMMERCE How to remain relevant in the age of the always-on consumer AN EBOOK POWERED BY SAILTHRU

2 Neil Capel CEO & Founder, Sailthru At Sailthru, we provide brands with both the tools and strategies needed to create truly personalized, immersive customer experiences. When Mary Meeker, former superstar Morgan Stanley internet analyst, and current partner at Kleiner Perkins Caufield & Byers, released her annual Internet Trends Report in May, we were thrilled to see her data promote the use of personalization and an overall approach we believe in as it relates to successful ecommerce marketing. This ebook summarizes key elements from Meeker s 164 slide report and provides actionable insights specifically for ecommerce crafted by our team of experts. Inside you ll find: discussion on the importance of using analytics to make marketing decisions, including the possible repercussions of neglecting to do so directives for how a company can get started with deploying data-driven marketing, including examples of companies that nailed the process and benefited from the results highlights on mobile and the importance of brand messaging displaying properly no matter the device tips for boosting revenue through content that is relevant for your customers Meeker s report underscores that if ecommerce brands are to break through to today s younger demographic that they must embrace an omnichannel approach and personalization. Enjoy and Cheers, Neil Capel CEO & Founder, Sailthru

3 TABLE OF CONTENTS: What Gets Measured Gets Managed Taking the Analytics Plunge 3 WHY IT S WORTH IT 4 LEARNING FROM NETFLIX 5 HOW TO USE ANALYTICS TO OFFER THE RIGHT PERKS 6 Be Screen Agnostic Being Realistic About How Users View Your Brand 9 REMOVING FRICTION FROM PURCHASES 9 DON T DEAD-END MOBILE VIEWERS 10 COMPETING FOR ATTENTION 10 Re-Imagining the Content Value Proposition Learning From Social Applications 13 Using Video To Test The Waters 13 Variety Is The Secret Sauce To Holding Customer Attention 14 Data Science and Predicting the Future of Marketing So, What Now? It s Time to Get Started.

4 What Gets Measured Gets Managed

5 WHAT GETS MEASURED GETS MANAGED What Gets Measured Gets Managed The first step towards making good use of available technology is recording your customers actions. By capturing user data and analyzing behavior patterns to identify what actions are taken by those with a positive response (conversion) and those with a negative response (i.e. opt out), your company can augment a customer s experience in real-time, thereby increasing revenue and lowering churn. This may seem like a standard course of action for any company that relies primarily on internet traffic for revenue, but, as Meeker points out, only 1% of data in the Digital Universe is analyzed even though 34% of it is useful. Simply put, there s no reason to limit oneself to simply measuring the aggregated traffic that comes to your website, as technology is now available that enables you to constantly survey and learn from each and every customer that interacts with your brand across multiple online channels. Gartner, comparatively, found that brands spend an average of 21% of their marketing budget collecting data, but that the majority find it very difficult to make their data actionable. 1 Further, it was found that while 64% of brands planned to make use of analytics, only 8% had deployed a Big Data solution by the end of Forrester found that most companies analyze an average of 12% of their data. 3 These disparate numbers indicate that even collecting data on data collection is difficult. KEY INSIGHT: Marketing today is an extension of data science. If you don t analyze consumer data, then it s impossible to learn anything from it. Even worse, you ll be leaving money on the table. According to a McKinsey study of more than 250 engagements over 5 years: Those that use Big Data and analytics effectively show productivity rates and profitability that are 5-6% higher than those of their peers Companies that put data at the center of the marketing and sales decisions improve their marketing ROI 15-20% By listening to your customers, you re able to increase your share of wallet. Collecting and analyzing the data that s available allows you to know what your customers want before they ve even considered alternatives. 4 1 Bill Gassman, Andrew Frank, Jake Sorofman, Highlights From Gartner s Data-Driven Marketing Survey, 2013, gartner.com, (April 9, 2013). 2 Gartner, Gartner Survey Reveals That 64 Percent of Organizations Have Invested or Plan to Invest in Big Data in 2013, gartner.com, (September 23, 2013) 3 Milan Vaclavik, Why 2014 Will Be A Big Year For Big Data, Forbes.com (January 16, 2014) 4 Big Data, Analytics, and the Future of Marketing & Sales, McKinsey,

6 WHAT GETS MEASURED GETS MANAGED Ecommerce brands have a higher level of analytics adoption than other industries, with the most popular tool being Google Analytics, which over half rely on exclusively according to Econsultancy. The overall adoption rate makes sense as the bottom line for ecommerce brands relies on online purchases, meaning influencing consumers to choose one brand s product over others is essential. Ecommerce companies are more advanced in their use of Big Data and analytics, but there s plenty of room for growth as the landscape of datadriven marketing opportunities is constantly evolving and the breadth and depth of what marketing technologies allow us to measure are growing by leaps and bounds. Taking the Analytics Plunge What is keeping brands from making use of the information available? At Sailthru, we often hear prospects say that there is just too much data, that it can t all be made actionable. The reality is that it s not realistic for all data to be processed in-house. There are data science tools that will do the heavy lifting. Companies such as Sailthru are able to collect implicit and explicit data from your customers and prospects as they interact with your brand, and distill that data into comprehensive user profiles which reveal preferences that are lost in the aggregate. By having detailed profiles at the individual level, brand marketers can develop the proprietary insights needed to develop more effective strategies. The only requirement is a willingness for brands to make use of the data and marketing technology available to them. The task of adopting a data-centric marketing strategy may seem daunting, but there are many ways that an ecommerce company can approach it. We ve seen incremental lifts resulting in millions of dollars in new revenue for our clients. Once a brand is collecting data, it s easy to start identifying customer trends, preferences and needs, which allows for more effective, personalized marketing. For example, s that are delivered by geographic location, age, gender, or other easy-to-capture data points. These tactics garner appreciable increases in conversions, as common sense content offerings - such as not showcasing women s sandals to male subscribers - are now automated. The ultimate goal is to be dynamically personalizing content on a 1:1 level, so that your marketing and messaging are unique for every individual user. Imagine how much more effective your campaigns would be if they directly targeted the interests and behaviors of your audiences. 3

7 WHAT GETS MEASURED GETS MANAGED WHY IT S WORTH IT As more information becomes available, the contrast between brands who get it, and brands who don t is increasingly stark. We ve noticed that marketing organizations that do the best job follow what we call The New 4 P s of Predictive Analytics: Personalize content, and meet each customer s specific wants and needs. Preempt disengagement automatically by regulating how frequently customers receive messaging and promotions based on longterm studies of their behavior. Predict a customer s actions by analyzing previous behaviors and creating future marketing programs automatically based on the next behavior. Prevent customers from opting out by sending messaging at the right cadence, with the right calls to action. Across our own client base, we ve seen a 5% - 20% decrease in opt-outs for companies that live, breathe and market by The 4 P s Framework, as well as massive increases in Sailthru's 4P Framework for Preempting Disengagement Personalize Content, , website, app Leverage behavioral, interest and purchase data (if applicable) Prevent Provide the right content at the right cadence Engage with the right calls to action Preempt Create re-engagement trigger communications Perform longitudinal studies to determine long-term impact Predict Analyze previous customer behaviors Understand signs of disengagement conversion, purchase frequency and lifetime value. Our clients follow the flow of each customer from their desktop, to their mobile, and into the store and personalize each and every person s brand experience to maximize the effectiveness and enjoyment of each engagement, optimizing their lifetime value. For example, BustedTees, uses the New 4 P s of Predictive Analytics to ensure that they send messages to users at the time that they are most likely to open , click through and purchase. Sailthru s Personalized Send Time feature allows BustedTees to automate this approach and has delivered a 5% increase in open rates, an 11% increase in clickthrough rate, and a 8.2% increase in revenue per thousand s sent. 4

8 WHAT GETS MEASURED GETS MANAGED LEARNING FROM NETFLIX Netflix is a company that excels at personalization through analytics. The online video juggernaut makes use of viewing data analyzed alongside customer demographic information in ways that not only improve user experience, but also drive new revenue opportunities by seamlessly and naturally integrating testing into their interface. Netflix s ability to determine what the viewer wants to see next is arguably the biggest factor in its success. By providing the best user experience, they become the de facto choice for television and movie streaming. They do this by recording and analyzing every action viewers take - including pauses, rewinds, fast forwards, ratings submitted and devices used for viewing - of more than 2 billion hours of programming watched each month. 4 These insights were taken a step further with the creation of the popular show, House of Cards, which was the result of an analysis of what characteristics would make a show popular. This analysis impacted all elements of the series including casting, choice of director, and the decision to buy the rights to an existing series. 5 What Netflix shows us is that when customers enter into a relationship with a brand, they do so with expectations of the experience. Because customers are now always on, thanks to their smartphones and tablets, there s a rising expectation that companies will know exactly what they want, when, and how. By paying attention to the data at your fingertips, it s easier than ever to know each purchaser on a personal level and to engage with them on their terms. The bottom line is that consumers are benefiting from relationships they have with brands that observe their interests and tailor their content. Yet many ecommerce companies continue to use only the most basic segmentation. These companies that fail to leverage customer interests will find their marketing efforts, revenue, retention and churn continue to deteriorate. 4 Yehuda Koren, The Bellkor Solution to the Netflix Grand Prize, (August 2009). 5 Mark Sweney, Netflix gathers detailed viewer data to guide its search for the next hit, theguardian.com, (February 23, 2014). 5

9 WHAT GETS MEASURED GETS MANAGED HOW TO USE ANALYTICS TO OFFER THE RIGHT PERKS But what if your product isn t customizable? What could you possibly do with analytics if you, for example, work for a pharmacy? Analytics don t only indicate what product customers want or make sure a color scheme suits them - they can shed light on every aspect of the experience, even what discounts and offers would meaningfully impact conversion. For example, Meeker points out that Free Shipping is heavily in use today, driving over 47% of online transactions, and that same day local delivery - currently thought to apply almost exclusively to perishable goods - may be the next big thing across a variety of consumer purchases. This trend can be seen with New Yorkers already becoming accustomed to companies such as Net-A-Porter delivering within 5 hours of their purchase, the rise of delivery companies such as Instacart, PostMates, Drizly, and delivery.com, and the move from larger retailers such as Amazon and Walmart rolling out same-day deliveries one metropolis at a time. The value of collecting data and analyzing these decision triggers is that companies are then able to see how their brand benefits over time by offering various perks, instead of focusing on the initial cost and simply hoping for a positive outcome. Some tests an ecommerce brand may run are:? How much is my decision for or against free shipping affecting my bottom line?? What kind of discounts are most effective? Should I offer more timebound ( 20% off until midnight! ) or floor sales (20% off $200)?? Are there ways I can tweak my promotion that won t affect sales? How different was the result from offering 10% off to offering 20% off? Each of these tests can help a brand determine the discounts that net the highest conversion rate with the highest average order value, which increases each customer s lifetime value. All marketers have personal opinions on what approach works best, but at Sailthru we work with each and every client to determine the best approach. In real-time, our testing structure allows ecommerce clients to test up to 4 treatments for a single campaign and then automatically send the winning approach, which is selected based on whichever variable is the goal (response rates, revenue generation, etc.). In the long-term, one feature of our Advanced Analytics platform is the ability to measure the impact of strategies like incentives and discounts on customer retention and lifetime value. Imagine how you would transform your promotions strategy if you knew that you could offer a 10% discount to consumers, rather than a 20% discount, without impacting lifetime value over the long haul? 6

10 WHAT GETS MEASURED GETS MANAGED Proactive measurement and data management is the only way your ecommerce company can get ahead of the issues at hand. By analyzing what customers love the most and what drives conversions, your brand s upcoming offers, discounts, and product recommendations can be better tuned to the individual preferences of customers, helping to increase transaction volume and customer loyalty. We recommend that all marketers begin collecting the right data now so they can develop user profiles that are truly actionable. While the information that is most important to any particular brand is based on their industry, some points that almost every ecommerce company should collect are in Figure A on the right. Your brand s specific offering will determine other data points. For example, a company that delivers food would be interested in allergies and dietary preferences, whereas a PC gaming firm would want to record customers operating systems and entertainment preferences, such as whether they enjoy adventure simulators or first person shooters FIGURE A OUR RECOMMENDED DATA TO COLLECT GENDER ANNIVERSARY OF SIGN-UP DATE BIRTHDAY LAST PURCHASE The metrics that matter for your company are the same as those that determine whether a purchase is made, even if not directly. Start with identifying the factors that go into purchase decisioning and work backwards from there. ACQUISITION SOURCE AVERAGE ORDER VALUE PURCHASE HISTORY OVER TIME CUSTOMER LIFETIME VALUE PROPENSITY TO BUY KEY PERSONAL AND PRODUCT INTERESTS - Color Preferences Over Time, Size (If Applicable), Etc. 7

11 Be Screen Agnostic

12 BE SCREEN AGNOSTIC Be Screen Agnostic The discussion of how to optimize ecommerce revenue opportunities almost always includes statements about adapting your brand to mobile and creating experiences that work and look good on specific devices. Being Realistic About How Users View Your Brand REMOVING FRICTION FROM PURCHASES The importance of a brand s content presenting properly on a variety of screen sizes is highlighted early in Meeker s presentation. She shows the exponential and explosive growth of tablets - a device many did not foresee; one which became popular very quickly. Additional data suggests that mobile devices will see a doubling of ecommerce activities by 2018, 6 and that tablets already account for the majority of online purchases. The need for a flexible user experience is further supported by a survey that Sailthru conducted in the UK, which showed that 57% of online shoppers preferred to make a purchase on their home computer or tablet, Today, brands need to create a customer experience that is reflected by a totally connected journey across the channels and devices a customer uses. and that over half of those same people make purchases mostly from bed. These actions, even in bed, could be taken from any device - laptop, smartphone, tablet or television. Why does this matter? In the same study, we found that 42% of online shoppers say they have abandoned purchases because they were too difficult to complete on their device. These consumers wanted to give a brand money, and tried, but found themselves unable to do so. This gap in users who convert from mobile is alive and well, and every ecommerce brand needs to implement strategies to counteract the gap. Responsive, Screen Agnostic design is one of these keys. KEY INSIGHT: You re leaving a lot of money on the table if your strategy doesn t approach its user experience across all channels. Focusing on one screen is no longer a viable option. According to Pew Research, Americans as a whole are embracing devices of every kind, and integrating online communication into their every day life. Brands that aren t available on mobile effectively shut their doors to incoming customers. Mobile Adoption Rates Smartphone Adoption: 2014: 58% of American adults 2012: 45% of American adults Tablet Adoption: 2014: 42% of American adults 2012: 19% of American adults 7 6 Steve Norton, Forrester: Mobile Phone and Tablet E-Commerce to More Than Double by 2018, blogs.wsj.com, (May 12, 2014) 7 Kathryn Zichuhr, Older Adults and Internet Use,

13 BE SCREEN AGNOSTIC DON T DEAD-END MOBILE VIEWERS Screen agnosticism isn t only important in the home, and applies to more than just purchasing experiences. Meeker presents that social networks are no longer only accessed on PCs, but rather follow users throughout their busy days across various mobile devices, browsers and native applications. As brands distribute more messaging through popular channels such as Pinterest, Twitter, Snapchat, and Instagram, it s important to keep in mind that those receiving the messages will want to interact with the brand on their device of choice. If they re successfully acquired as a customer, they ll revisit the brand on other devices - after all, we live in a multi-platform world - and these experiences, too, should be connected to the total customer lifetime experience. COMPETING FOR ATTENTION Customers not only use a variety of devices, but also interact with multiple screens at once. Meeker shows that 84% of mobile device owners use them while watching television, a statistic that has doubled over the past two years. They re on social media, catching up on news, and researching products they may be interested in, all while watching their favorite shows. This not only impacts those advertising on television, but also those online, as consumers become increasingly fickle when deciding what is worthy of their attention. By having a second screen - possibly a third - added to the television viewing experience, an entirely new set of opportunities and threats are introduced to brand messaging. You have the opportunity to better engage customers, but also the risk of losing them if you fail to deliver relevant content. For all of these reasons, ecommerce brands must focus on making the customer journey as easy, yet as connected, as possible, no matter what platform customers chose to use. Our client, jewelry retailer Alex & Ani, increased their online sales over 250% in 2013 by adopting a screen agnostic, omnichannel approach. Another client, Country Outfitter had such a great response to their new marketing strategies they were able to earn back their investment in Sailthru s platform in just one month through increased revenues attributed to decreased cart abandonment and increased engagement. For your marketing to be effective, you need to capture data across all channels and give your customers the same experience that you, yourself, most likely expect from other brands. 10

14 Re-Imagining the Content Value Proposition

15 RE-IMAGINING THE CONTENT VALUE PROPOSITION Re-Imagining the Content Value Proposition With the increasing use of smartphones and tablets showing no signs of slowing down, the real potential for growth for ecommerce companies is in mobile. However, adjusting marketing is not as simple as putting money into another basket, as today s consumers are already jaded against advertisements that resemble common online promotions (banners and pop-ups). They re used to being constantly talked at, and have learned to tune out and focus by determining if a message is for them specifically, or if they re being lumped into a segment. We all tune out generic messages, but if a message is truly relevant, tailored to our interests and personalized based on previous behaviors it stands out and gets our attention. In order to close the ever growing mobile conversion gap, brands must make mobile personalization a true priority. To start, work to personalize push notifications and SMS messages on your consumers mobile devices and embed deep links to your app in marketing. KEY INSIGHT: Customer lifetime experience must be the driving factor behind every major brand decision. Follow your users as their online behavior changes, and you ll not only resonate more deeply with your audience, you ll also be able to learn about what keeps them interested and excited about your brand over the long haul. Want to find out more about the Customer Lifetime Experience? Visit: Mobile conversion studies demonstrate that in-app conversion is much higher than mobile site conversion, so work to get your consumers engaging with you where they are of increased value. 12

16 RE-IMAGINING THE CONTENT VALUE PROPOSITION LEARNING FROM SOCIAL APPLICATIONS The trend towards personalization is affecting all aspects of social applications, not only for users but for advertisers. For example, Facebook reacted to the trend not only with changes to its core user functions and app unbundling, but also by changing its ad network activity, encouraging native ads, and even making moves to educate consumers on how to get rid of ads they don t like in favor of seeing more relevant ones. While this may seem like a hit to the companies that distribute their messaging through the platform, at the end of the day it will make ads that viewers do see more effective. The capriciousness of modern mobile users can be seen starkly by the evolution of the app ecosystem, specifically the growing trend for unbundling of services, such as with Facebook, Path, and FourSquare. What ecommerce brands can learn from this trend is: Users are increasingly fickle, and will move on the moment they sense a decrease in value, such as general or mass market content. The old saying stands true - don t put all your eggs in one basket - content must come in multiple formats. Retention and ease of experience are linked; work to remove any friction from the user experience just like Facebook decided to do when making the choice to unbundle it s messaging app. Customers will click away, turn off, or ignore your messaging if it s not relevant to their interests. There s a lot of noise to compete with, so you better be talking directly to them with information they care about. USING VIDEO TO TEST THE WATERS One channel that brands have been slow to adopt is video, which Meeker highlights as a great way to reach a broad audience while still collecting valuable data. A well done YouTube campaign can cover the same audience that a television ad would have a decade ago, and it provides much more customer data. A brand is able to see the number of skips and clickthroughs directly resulting from an ad playing, as well as monitor web and app traffic during the campaign. Video can also go a long way in creating an immersive brand experience, as you have the opportunity to command the viewer s imagination for the duration of a piece - especially if it s brand messaging instead of a specific advertisement, such as an entertaining Vine, a quick Snapchat, a Twitter video ad, or a Facebook video that ends with a question to which your audience can respond. 13

17 RE-IMAGINING THE CONTENT VALUE PROPOSITION Video content is immersive. As such, it s a great way to test out if your brand messaging is effective. The medium is as close as brands generally get to speaking directly to their audience, but it s also traditional enough for companies that are just starting to use analytics. Even comparing how many views your material gets across channels will give you an idea of where your audience is online, and you re able to follow video through social networks and see a path of how people learn about your brand VARIETY IS THE SECRET SAUCE TO HOLDING CUSTOMER ATTENTION Every consumer is unique, with individual motivations behind purchase decisions. So what s next after automating personalization? Variety. Say you re running an campaign. Each highlights products or services that you know, according to data, a given consumer will be the most interested in. The comes at a time that has, historically, been when that individual is most likely to read their messages, and on a day they are most likely to make purchases. What could possibly be missing from this strategy? Variety. You re only contacting the user through one channel. Even the most successful campaigns are only opened 20-30% of the time, and for ecommerce usually that number is closer to 10%, even with personalization. If you back up this well thought out campaign with omnichannel mobile, social and online marketing endeavors, you re much more likely to recover them as they navigate around the web, check their social networks, etc. A great example of a 14

18 RE-IMAGINING THE CONTENT VALUE PROPOSITION brand that does this is Houzz, which Meeker mentioned in her report. The brand is great at staying top-of-mind with its variety of content, offering up editorials, photos, active discussions, and professional services on top of its already impressive number of products. Because of the amount and variety of highquality content the brand produces and curates, it s easy for homeowners to become engaged, simply by browsing and being inspired by the range of home design projects. By having such a large viewer base, they re able to attract the attention of the best home improvement professionals. Having great content allows them to use one audience to attract the other. To step back in time in terms of marketing analogies - the goal today is to provide both sizzle and steak. Sizzle is the flashy messaging that draws viewers in, but it does nothing if there s no actual steak, which in modern marketing is content that they can bite into and use, such as how-to videos, articles, and discussions. But how I like my steak is different than how you like yours, the cut, the size, the temperature; so we recommend that Houzz take their approach a step further by wholly personalizing the experience across all channels. For example, you might be interested in designing a new kitchen this year, and perhaps a home office next year. Someone else might be interested in window treatments, while others are researching how to update a guest bedroom. Houzz already has this variety, and personalization would allow Houzz to highlight their entire content library by serving relevant content to each individual user. Check out the site and imagine just how more likely you would be to return if the experience responded directly to your interests and those carried through the entire online ecosystem as you search, browse and pin on the mobile app and engage via social media. 15

19 Data Science and Predicting the Future of Marketing

20 DATA SCIENCE AND PREDICTING THE FUTURE OF MARKETING Data Science and Predicting the Future of Marketing Meeker s report quantifies in black and white the need for ecommerce companies to respond to the omnichannel opportunity. The statistics from our own clients when they ve acted on the trends in this report are awe-inspiring. Many clients come to Sailthru with little to no data analysis protocol or omnichannel strategies in place, and they have seen massive revenue impact from adopting technologies that essentially make their data work for them. While statistics that support the argument for adopting data-driven marketing may seem exaggerated, they aren t. We re at a historic turning point for the marketing industry, and it s clear that analytics are the new normal. Companies that get on the bus early get a head start on knowing and pleasing their customers - they will have a larger share of wallet as a result. KEY INSIGHT: Data-driven marketing automation is the way of the future. The sooner brands can predict what their customers want, the more successful they will be. According to Gartner, 70% of the most profitable companies will manage their business processes using real-time predictive analytics or extreme collaboration by % Increase in Monthly Revenue 150 % Increase in Click Throughs on their Advertisements, and Tripled the Average Time Viewers Spent on the Site 400 % Increase in Revenue 9.5x Return on their Advertising Spend Resulting from Custom Audiences Powered By Sailthru and Facebook Ads 17

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