Engage-Digital

Today we have more choice than ever before. More choice in almost anything we can think of to consume and this is generally regarded as a good thing.

I’m of an age in which my parents were alive during the Second World War and they remember rationing and less choice. The mantra in the UK at that time was “mend and make do”, something that has been dusted off recently as we all struggle with the harshest economic climate since the First World War. Back then being paralysed by choice wasn’t an issue.

The web has had a very significant impact on the level of choice over the last 15 years or so. We have more choice than we know what to do with across such huge range of areas from the media we consume, to the way we search for places to live and holidays to go on, entertainment and means of communicating with other people.

Given the human imagination it would be fair to assume that our capacity to absorb choice would be almost unlimited; they say “if you can think it, it’s probably been done”. Amend that to “if you can think it, it’s probably been done and you can find out about it on the web”. As a group the human capacity for choice is practically unlimited but individually, I think not.

So Google has played a key role in all of this. It’s mission statement being to.. “organize the world’s information and make it universally accessible and useful”. Whether it’s organised it or not is another matter but it has certainly made it much more accessible.

What it means for the retailer

Dial that back now and consider the much smaller universe of an online store. One of the benefits of ecommerce is the lower costs of doing business. These come about as a result of lower overheads due to stock being held in cheap warehouses in business parks and on trading estates instead of held on more expensive shop floors. That also means there’s a lot more space available – Amazon’s warehouses are enormous – and that in turn means a huge selection of stock that can be sold through the online store. So we come back to ever increasing choice for the consumer and how to wade through it especially if you’re shopping online.

What it means for the punter

The fact is, if you’ve decided take up running you’ll probably want a pair of running shoes but if you arrive in an online store and you’re presented with a choice of over 200 different pairs of shoes, being faced with such a huge range may actually be more of a hindrance than a help; back to the paralyzing  tyranny of choice. The end result for the retailer being a no sale situation.

Just as Google has tried to do with the world’s information the key for the retailer is to organise and make stock more easily accessible. More than anything else this will help the customer, more than beautiful product shots,  clever copy or fancy widgets and tools, if a customer can’t find what s/he’s looking for and narrow it down to a manageable choice then there is no deal.

What it means for the website’s store developer

Success means that navigation and organization are co-dependent. Tools like Omniture’s Merchandising, Fredhopper, Endecca or Celebros will all help with both organisation and narrowing down the product search through the mechanisms of both free text search and more importantly guided navigation but there is still the most important job to be done of categorising and tagging products so they can be easily filtered by the customer using these tools.

The point here is not at all about the technology but about the need to create a framework which will do as much of the decision making for the customer as possible with the end result that the final decision, the one to buy, is as simple and straight forward as can be.

With all the usability, analytics, survey, heat mapping tools and many others that are now available for the web analyst to draw on, you’d think it has become almost a matter of form that any questions related to the online shopping process can be answered and that the customer’s decision making process can be exposed but in fact it seems that customers don’t necessarily themselves understand the mechanisms by which they make decisions.

Dan Ariely, a professor at Duke University has done research into what he calls predictably irrational decision making and in his book (Predictably Irrational) he presents an example involving the subscription pricing for The Economist newspaper.

In the example The Economist newspaper offered 3 subscription options:

1. Print plus online for $125
2. Print only for $125 (no, not a typo)
3. Online only sub for $59

This was either a mistake by The Economist or a stroke of genius. Ariely presented this offer as part of an experiment to one set of students and then to another set of students with a modified offer in which he removed the middle option.

The upshot was that when the first set of students were presented with all 3 options the majority chose option 1. When option 2 was removed and the remaining two options were shown to the second set of students the majority chose option 3.

Ariely uses this to demonstrate seemingly irrational decision making but he goes on to explain the principle that option 2 while appearing to be useless and of no value (to the potential customer), in fact had value to The Economist insofar that it’s presence gave the impression that option 1 was really very good value. By removing option 2, the perceived value of option 1 was no longer apparent so people went for the cheaper option.

This has some pretty interesting implications for how product pricing can be displayed and more interestingly how up-sell can be achieved.

In the current trading environment shoppers are more likely than usual to be looking for a good deal. That generally means either cheap or good value and the two aren’t necessarily the same. Being cheaper than the next guy might have more to do with the supply chain and the deals that can be struck by the merchant with his / her suppliers, but demonstrating good value when your offering is not the cheapest on the market can be a pretty tall order.

Ariely refers to the middle option as a decoy but a conjuror or a lawyer might refer to it as simple misdirection. The point is to demonstrate value by creating a benchmark that is close enough but which the customer is easily able to discount in favour of the real offer.

Increasing average order value is hard but with this kind of understanding and a content management system and pricing structure that is flexible enough it is possible.

In The Sunday Times (a leading Sunday newspaper in the UK) on 11^th Nov. 2007, there was a supplement devoted to the Customer Experience Awards 2007. On page 4 of the supplement there was an article written by Andrew Stone and based on work by David Jackson, the MD of Clicktools, a firm specialising in customer feedback. In it the article outlines the top 10 most important lessons for creating a positive customer experience. Whilst it doesn’t directly reference online it seems to me there are clear correlations to be drawn between the two.

With permission from The Sunday Times I am referencing David Jackson’s 10 lessons to draw these comparisons.

1. David Jackson: Three questions form the foundation of customer intelligence: Who are our chosen customers? What are their needs and expectations? How are we meeting their needs?

Online translation: Knowing your target audience is the central tenet of communication on or offline. Knowing what the needs and expectations of your audience is especially important online since the web is both a research medium and a sales and distribution medium. Therefore potential customers find it much easier to shop around if they don’t find exactly what they are looking for initially. Knowing if you are meeting those needs and expectations is first expressed in the Bounce Rate metric which is why it has become one of the flagship metrics in click-stream web analytics.

2. DJ: Understand how customers think.

Online translation: One of the advantages of doing business online is the relative ease with which customer insight can be gathered. There are many techniques for gathering insight online some of which have already been written about on this blog. Web analytics clickstream data, usability studies, online exit surveys, competitor data are just a few areas in which data can be gathered using existing technologies and, in most cases, without having to purloin unsuspecting members of the public who fall in to the relevant target segment.

3. DJ: Trust in your people.

Online translation:In web analysis, and especially click-stream analytics, it is important to give people their lead. It’s very hard to identify what visitors are thinking when they arrive on a site and while there are some fundamental performance indicators that should always be considered when looking at click-stream data, the analyst should always be allowed to disappear down rabbit holes to see what can be flushed out. You may be surprised by what you find out from your web insight team but you should always take it seriously until it can be reasonably refuted.

4. DJ: Work with people who believe in service excellence.

Online translation: Passion for a product or service and the way it’s delivered translates well and can help enormously in putting across a message online. This is all the more valuable on the web where the visitor / potential customer is in control. But, online where service excellence is translated through the web page, it’s important to remember that you design your site for your customers and not for yourself – an easy trap to fall into. So while it helps to have a passionate team it is important to make sure that belief and passion is channeled in the right direction.

5. DJ: Master the art of organisation

Online translation: It is critical to make sure there are strong lines of communication between the web insight team and all the key stakeholders. The first task is always to establish the objectives of the site in the eyes of the stakeholders, in doing so it will provide a clear goal to aim for. This will remove ambiguity and should result in better output internally and so a better experience for the customer. Additionally, mastering the art of organisation within the web insight team can be applied to the disparate techniques for gathering insight which need to be combined to provide a coherent impression of customer need – this as oppose to conducting research using techniques (mentioned in point 2) in isolation. Finally it is important that the insight can be translated into a clear set of actions that everybody involved can identify with.

6. DJ: Make the link to the bottom line

Online translation: This applies in the exactly the same way online as it does offline. In most cases it is standard theory online, in practice many are doing it but because the pace of change is so rapid it’s important to be able to identify as cleanly as possible the level of contribution an individual element will have. When reporting back on performance, filtering out noise from other concurrent efforts can often make proof harder to demonstrate.

7. DJ: Make everything a little better every day

Online translation: Never stop looking at how you can improve the customer experience online. Analysing your performance online isn’t a one-off exercise to be carried out every quarter, it should be an ongoing and iterative process. Some organisations may feel there is neither the time nor the budget to operate in this way so scaling the approach to fit the primary objective is important. Using dashboards which can be easily updated every week or two with the 5 most important performance indicators is the starting point for this. Making sure this is always tied to action that will improve the customer experience is the goal.

8. DJ: Understand that the future will be different

Online translation: I don’t think anybody in the online world has a problem with this, except that sometimes change and new technologies can be bought into with alarming ease and little thought as to how they will really help the customer. The current debate regarding web 2.0 technologies and content is a point in case.

9. DJ: Learn from your mistakes

Online translation: Make changes to the customer experience online but if they go wrong don’t go around wringing your hands and covering your back, learn from them and turn them to your advantage by making sure customers benefit from your learning.

10. DJ: Make things easier for customers

Online translation: This might almost come before #9 in that making life easier for customers online is all about ease of navigation and presentation of important information. This is where changes need to be made either to supporting technologies or to site design. Craig Menzies of Forrester research said during a recent speech in Barcelona that while so many tools and research technologies are available to online marketers, unless used to drive design changes that generate demonstrable improvements the insight they provide is really not much more than a form of customer voyeurism. In the pursuit of insight it’s important that we don’t loose sight of the actual goal.