Marketers Look Away from Buying Customer Loyalty and Towards Building It, Says WebTrends Survey
Wednesday, 09 August 2006
WebTrends Inc., a market leader for Web analytics and Marketing Performance Management (MPM) solutions, has unveiled results of its second annual "2006 Online Retail Holiday Readiness Report," which surveyed 300 Internet and multi-channel retailers about key trends and online strategies they are focusing on for the upcoming holiday season.
Overall results indicate that retailers are shifting away from price-based promotions to engage loyal customers and towards relationship marketing initiatives such as e-mail marketing and search engine marketing, which allow retailers to understand visitor intent and leverage behavior-based insights to target customers with relevant messages that strengthen relationships.
Fewer Retailers Cast a Wide Net
This year, twice as many respondents (23 percent) indicated that they will not be using price-based promotions to generate online revenue from loyal customers during the holidays, compared to 11 percent in 2005. Even the most popular holiday marketing promotion-free shipping-has dropped in popularity, from 62 percent of retailers using it in 2005 to only 45 percent in 2006.
Similarly, while suggested items, gift idea centers and featured sales item pages remain the most popular site features to generate revenue from loyal customers, the percentage of businesses using these has fallen from last year. The only features that received a boost year-over-year were personalized promotions and live chat. In fact, three times as many retailers (18 percent) are opting to use no site features this year, compared to 6 percent last year.
Retailers Indicate E-mail Marketing Is #1 For Holiday Demand
Overall, retailers ranked e-mail marketing as the most important demand-generation activity for holiday success, with Search Engine Marketing (SEM) and Search Engine Optimization (SEO) ranking second and third. Reflecting this importance, the biggest increases in marketing spending for the holidays will be in e-mail marketing (52 percent), SEM (46 percent) and SEO (38 percent). The biggest decreases in spending will be in online banner ads (17 percent), print advertising (16 percent) and broadcast advertising (14 percent).
Eighty percent of retailers use regular customer e-mails to build customer relationships, and the activity that the highest percentage of retailers plan to do in the future is to develop a database of clickstream-based information for campaigns targeted to customers' interests. Retailers are clearly choosing marketing strategies that enable them to target prospects at the moment of intent and reach customers with cost-effective, highly relevant campaigns.
Retailers Face Relationship Hurdles
Retailers are becoming more sophisticated as they look to search and e-mail marketing as ways to hook into visitor intent and cultivate valuable relationships. However, 27 percent of respondents don't consistently measure demand generation activities, and 63 percent still evaluate campaigns using response metrics (clickthroughs) and activity-based metrics (page views, visits), all of which lack the visitor-centric insight necessary to target customers with highly relevant messages.
To attain the foundation necessary for relationship marketing, more retailers need to understand their underlying measurement methodology and ensure it can accurately track unique visitors over time. Survey findings show small gains to the percent of retailers adopting best practices, including a 1 percent increase in retailers using "true first-party cookies" (25 percent) and 1 percent decreases in the number using "vendor's first-party cookies" (9 percent) and "third-party cookies" (12 percent). However, this year, a greater percent of retailers don't know what they are currently using to identify unique visitors-44 percent, compared to 32 percent last year.
"As retailers focus on online marketing initiatives to reach qualified prospects and convert them into loyal customers, they need to utilize integrated, visitor-centric performance metrics to provide the basis for accurate campaign evaluation and optimization, as well as the insight necessary for relationship marketing initiatives," said Greg Drew, CEO and president, WebTrends Inc. "We will continue to make significant investments in WebTrends solutions, services and best practice education efforts to ensure businesses have the solid foundation they need in order to optimize marketing performance and build stronger, more profitable customer relationships."