Legend has it that Sir Walter Raleigh once bet Queen Elizabeth I that he could measure the weight of smoke. To win the bet, Raleigh placed a piece of tobacco on one end of a balancing scale. He then filled his pipe with an equal amount, smoked it, and carefully tapped the ash onto the other end of the scale. The difference in weight, he said, was the weight of the smoke.
Elizabeth promptly paid Raleigh his winnings, declaring that she had seen many men turn their gold to smoke, but she had never before seen smoke turned into gold.
For brick-and-mortar retailers and consumer packaged goods companies, trying to assess the contribution of the Web channel to offline sales is a bit like trying to weigh smoke: you’re left with the residual evidence of online activity, but what’s that activity really worth? Did the site help to create a sale or didn’t it? Knowing the answer would be like turning smoke into gold. The evidence is that online activity is generating lots of gold in the offline world.
A recent case study by A.C. Nielsen sought to close the loop between exposure to a CPG promotion online and offline purchase behavior: the study found a 76% increase in dollar purchasing among the exposed group and a 9.6% increase in sales. An earlier study by the NPD group found that 97 percent of consumers with Web access use online research to make purchase decisions. And 51 percent of those consumers say they use the Web specifically to choose a product before purchasing it offline.
With cross-channel shopping activity on the rise, the actual value of online to offline purchase decisions appears to be, even by the most conservative calculations, worth tens of billions of dollars a year. But in the metric-driven online marketing environment, real value doesn’t exist until we’ve measured it. To do so, we need to examine how consumers behave in a cross-channel scenario, how retailers and CPGs can do a better job of controlling online to offline activity, and how we can generate the data necessary to assess the complete value of the online channel.
There’s also evidence that cross-channel shoppers are more valuable consumers: those who research purchases online consistently spend more year to year than offline-only shoppers. The emerging portrait of the cross-channel shopper is one with:
higher discretionary income
time and inclination to research purchases carefully
fierce loyalty to brands that consistently treat them well
These consumers move back and forth between channels according to factors of convenience and cost-savings at a given time for a given purchase.
There are, of course, sub-sets of cross-channel shoppers who make purchases offline almost exclusively. In the NPD study, 84 percent of occasional online buyers described their use of the Internet as “I usually shop online and go offline to purchase.” Also, according to a Jupiter study, nearly one-third of teenagers research products online before making purchases, even though a full 89 percent have never made an online purchase. And online automotive research continues to grow exponentially even as online auto purchasing founders. In aggregate, the online to offline path is the most common purchasing pattern among Web users.
The single most important thing that CPGs and multi-channel retailers can do to serve this audience is to fundamentally change how they evaluate the online channel: CPGs need to consider the channel’s role beyond brand support as a strong sales influencer, and retailers need to look beyond the site’s contribution to online sales alone.
This change in valuation amounts to a philosophical shift that can influence all other components of an online marketing strategy, from budget allocation to site features. Once the online space is regarded as an integral part of a cross-channel strategy, companies can employ supporting marketing tactics such as stronger merchandising, value-added content, loyalty programs, and in some cases, online-to-offline purchase and fulfillment. However, in the current online marketing environment, it’s tough enough to allocate budget for direct response marketing with a clear-cut ROI. So how do marketers muster the evidence to invest in this kind of activity?
The types of measurable data on purchase behavior are simple: we can look at actual purchases, or we can look at intent to purchase. In the case of actual purchases, the available means of measuring online to offline are limited. The use of couponing a coupon generated online but redeemed offline is gaining ground as a viable tool of direct measurement. But couponing requires a degree of channel alignment that may be unreasonable for companies that are just beginning to evaluate how their site functions in the customer buying cycle.
The remaining metric, then, is intent to purchase. In its simplest form, this kind of data will emerge from clickstream analysis for instance, users who click directly from a product description to a store locator can reasonably be said to have demonstrated intent to purchase. Savvy retailers and CPGs will maximize the exposure of such available paths in order to encourage users to take the next step.
A more complete picture of purchase intent can emerge from the use of online customer surveys, which capture and quantify not only specific purchase claims but also the overall preferences and tendencies of specific customer segments. The use of intercept surveys, such as an exit survey, is preferable because it captures a better cross-section of data than more passive tools such as a customer feedback form. By the same token, the use of such surveys in e-mail newsletters provides insight into how such communications contribute to purchase intent.
Of course, it’s one thing to gather claim data; it’s quite another to put it to use in building a better customer experience. That’s why constructing a survey that will pull actionable results is essential. Surveying should be approached with the same rigor that governs other types of Web analysis. Once you get a more complete picture of how your Web site is acquiring customers, you can turn smoke into gold.
Jennifer DeVoe is owner and principal of White Horse, a leading Internet
professional services firm focused on delivering measurable marketing
solutions that effectively influence, attract, convert, and retain
customers. Founded in 1980, White Horse has 22 years of experience building
marketing solutions that leverage the power of rich mediaeffectively
integrating audio and visual componentsthe basis for building creative,
highly effective Internet experiences. As company principal, she has been
instrumental in developing long-term partnerships with clients such as AT&T
Wireless, Cisco Systems, and General Motors, leading the development of
Internet marketing strategies. See www.whitehorse.com.
