With Website Optimization and Personalization, Chief Marketing Officers Can Marry the Art and Science of Merchant Intuition

Meet the Modern-Day Merchant Prince

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Meet the Modern Day Merchant Prince

The 19th century dry goods magnate Alexander T. Stewart was wildly successful because he knew both his customers and the numbers.

Stewart intuited that placing cases of merchandise along the sidewalk in front of his New York store would create buzz and draw crowds. At the same time, he understood the math of lining up low-cost wholesalers who would enable him to undersell competitors.

Stewart’s combination of skills and acumen made him the third richest man in America and earned him the apt title “The Merchant Prince.” Since his time, the business world has seen a succession of merchant princes (and princesses, as any Tory Burch fan will tell you) – people who combine instinct and analysis to achieve customer engagement and sales success.

Who will be the merchant royalty of the future?

Certainly, the innate and experiential gifts of a Stewart or a Burch will likely be part of the package. But also, as apparent in the $42.3 billion in U.S. online sales during the 2012 holiday season, the ability to capture online customers and their dollars will be as crucial to retail triumph as the bricks-and-mortar magic of store layout, location and vibe.1

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Meet the Modern Day Merchant Prince

But conquering ecommerce requires a number of traits: the right corporate culture; data, and lots of it; and the analytical capabilities to translate that data into a winning online experience. Corporate leaders are hungry for such insights. In fact, 72% of CEOs are making major changes in their organizations to deepen understanding of individual customer needs2.

With what they have on their plates today, however, CEOs may find it significantly challenging to deal with the volumes of information and develop the insights needed to guide critical decisions regarding the digital marketplace. Who within the organization has the resources to give it a go?

The chief marketing officer (CMO) may be the prime prospect to assume the role of merchant royalty. To succeed in that role, the CMO will need to strike the right balance of retailing art and retailing science.

2- http://public.dhe.ibm.com/common/ssi/ecm/en/gbe03485usen/

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Meet the Modern Day Merchant Prince

Customers are online and on the move Online shopping is expected to continue growing healthily. Forrester Research estimates cyber sales will increase from $226 billion in 2012 to $327 billion in 2016, up 45%.3

The use of smartphones and other mobile devices to guide buying decisions and make purchases is also experiencing robust growth. Forrester estimates mobile commerce will reach $31 billion by 2016, a compounded annual growth rate of 39%.4 Nearly a third of consumers already have shopping-related apps on their smartphone. Heading into the 2012 holiday season a majority of smartphone users planned to download apps for coupons, comparison shopping and price checks.5

3- http://www.internetretailer.com/2012/02/27/e-retail-spending-increase-45-2016 4- http://www.forrester.com/Mobile+Commerce+Forecast+2011+To+2016/fulltext/-/ E-RES58616?objectid=RES58616 5- http://www.pricegrabber.com/about.php/about=press/article=261/ 6- http://econsultancy.com/us/blog/10914-why-are-conversion-rates-so-low- infographic

Retailers want to capitalize on these trends, of course, and are making significant investments in online capabilities. That spending, however, skews heavily toward driving traffic.

For every $92 spent acquiring customers, only $1 is spent converting them6.

This disparity may not matter to a business with a popular product line and devoted customers who value the ability to make a purchase with as few clicks as possible. But many other retailers need to optimize and personalize the online experience so their site is more engaging than their customers’ sites; so that customers come to highly value and trust the information, products and services available on the site; and so the site becomes a reliable gateway to cross-selling, up-selling, and other avenues that produce sales growth.

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Meet the Modern Day Merchant Prince

Testing and personalization – balancing science and art As in every aspect of business today, data and data analytics are foundational to the science of online retailing. Relevant data can come in various forms, including data on the individual behavior of current website visitors – which web page or search term brought them to the site; what time of day and day of the week they visit; what business they’ve done with the company previously; what research they’ve conducted; what product categories interest them. All of these can help produce the next “best content” to show the person.

This data can be enhanced and augmented from other sources, such as customer relationship management (CRM) data, which can help align the customer’s offline and online experiences. Loyalty card data can provide additional insights.

Increasingly, social media data can be highly valuable in tailoring content for both Web and mobile device visitors. How useful might it be to learn that someone who likes or interacts with the brand is about to get married? Have a child? Take a trip?

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Meet the Modern Day Merchant Prince

Using analytical optimization and personalization tools to evaluate all of this data, retailers can develop a view of what customers want.

As in every aspect of business today, data and data analytics are foundational to the science of online retailing. Relevant data can come in various forms, including data on the individual behavior of current website visitors – which web page or search term brought them to the site; what time of day and day of the week they visit; what business they’ve done with the company previously; what research they’ve conducted; what product categories interest them. All of these can help produce the next “best content” to show the person.

This data can be enhanced and augmented from other sources, such as customer relationship management (CRM) data, which can help align the customer’s offline and online experiences. Loyalty card data can provide additional insights.

Increasingly, social media data can be highly valuable in tailoring content for both Web and mobile device visitors. How useful might it be to learn that someone who likes or interacts with the brand is about to get married? Have a child? Take a trip?

Just as a bricks-and-mortar titan understands how to showcase items in a store display or send a scent wafting through the aisles, the merchant royalty of the online world will combine intuition and data to drive traffic and sales. They will blend their own instincts with the testing and targeting insights generated by their analytical gurus to determine what products are likely to interest a customer. And then they will be able to design the display, showcase and offers based on each customer’s preferences, giving customers their own personalized store tailored to their individual needs and thus stimulating greater interest and, ultimately, stronger sales.

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Meet the Modern Day Merchant Prince

The timing and tools for capturing such insights have never been better. Consumers are constantly online today, whether on desktops, laptops, tablets or smartphones. Applying increasingly sophisticated algorithms to Big Data, retailers can generate highly personalized content, offers and product recommendations and a targeted experience that turns an ember of customer interest into a burning desire to buy.

Site merchandising and product information tools enable customers to dig deeper and understand what a product is about – whether a piece of apparel will fit, for example, or what a particular stitching looks like. User-generated content – customer ratings and reviews, the rants and raves of social media friends – add to the rich mosaic of information and insights influencing buying decisions.

In such ways, the online royalty will strike the right balance between the intuitive and the analytical. But that won’t necessarily be easy, because it requires a unique understanding of marketing, merchandising, data, analytics and web design. It also requires an organizational structure that encourages – in fact, demands – creativity and innovation.

So who, then, is best equipped and positioned to wear the royal robe?

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Meet the Modern Day Merchant Prince

The case for the CMO In any business, ultimate authority and decision-making is in the hands of the CEO. And as noted earlier, seven out of 10 chief executives are transforming their organizations to better understand customer needs.

But with CEOs’ limited bandwidth, someone else must guide efforts to understand customers and parlay that knowledge into the right online and in-store experiences. In most companies, the CMO is best positioned for the task. Maintaining the analysis operation in IT could lead to overemphasis on data or reticence to conduct the intensive testing required for new product offerings and display concepts. Placing responsibility with sales may mean too much reliance on relationships and too little trust in the data. Having the CMO in charge can help increase the likelihood of striking the right balance of art and science.

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Meet the Modern Day Merchant Prince

Succeeding in such a role will require the CMO to address several priorities:

Buy-in and collaboration. Especially in companies with both offline and online operations, it is critical to reach out to people who have different views on what should drive the business and find ways to collaborate.

New skill sets. CMOs can’t do this alone of course. They need people with the skills and tools to analyze data, draw the right conclusions, and then take action on that data. They need designers and creative departments with the mindset to come up with many different ideas rather than a single “best” idea. They will want to share ideas with customers, discover what they like and don’t like, and then learn and respond by continually refining what they offer.

Unending organizational curiosity. It’s also important to establish and nurture a culture of testing, measuring, learning and iterating, rather than relying solely on guesswork and subjective decisions. With such a culture in place, the business can start using data to evaluate everyone who visits the website. It can tailor ideas and content to inspire different market segments and customer personalities.

Even stronger focus on the customer. Ultimately, companies can develop the ability to engage with every person they encounter. And those that do so first can establish deep customer loyalty and value.

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Meet the Modern Day Merchant Prince

If you are interested in speaking with someone at Maxymiser, please email info@maxymiser.com

Thriving in an offline-online worldWe’ll never know how Alexander Stewart would have approached online shopping, mobile apps and social media. But it’s a fair bet he would have understood the power of algorithms, the value of testing and tailoring online offers, and the potential of social media to find, engage and build relationships with customers. At the same time, he wouldn’t abandon his instincts. As he did a century and a half ago, he would ascend to the ranks of retail royalty by combining art and science.