So, how’s this for an idea: Maybe your best customers are the customers who don’t buy from you.
Wait. Wait. Don’t laugh so hard that coffee shoots out your nose. I’ve thought this out, really. (Better yet, I talked to some people who actually know what they’re talking about.)
First, I’m not saying your best customers are the customers who never buy from you. Those would be your worst customers. (You’re welcome.) What I mean is, say you run an e-commerce operation. What’s your conversion rate? Two percent? Maybe three? Do you ignore the 98 percent of visitors who don’t convert?
Of course not. Those 98 percent (for argument’s sake) are a gold mine of information, a virtual focus group, telling you things about themselves and your sites that you’d never figure out without them.
“You can follow user paths and look at analytics and see where customers are, where they’re engaging, how they’re engaging, how long they’re on your site, how many pages they visit, where they tend to leave,” says Brian Beck, senior vice president of strategy at retail consultancy Guidance. “Studying those things closely, can lead to actionable steps to improve engagement with them, which ultimately can lead to better conversion.”
And the key to building a better conversion rate in the long-term? A better customer experience, says Jay McCarthy, of UK-based Qubit, which uses data to build customer experiences for online enterprises.
“The idea, over time, is we learn about your affinities, your preferences, your behavior and then we can tailor the experience to match this data that we’ve collected over time about you. So they’ll be more relevant to you.” McCarthy, Qubit’s vice president of product marketing, says. “A lot of these customers that you’re bringing on (to your site) don’t convert immediately. They are nurtured over time and then they become, hopefully, loyal customers who have lifetime customer satisfaction and lifetime value to you.”
The truth is that the non-converters — the 98 percent who visit a site, but don’t convert — are simply not converting on that particular visit. Some of them never intended to convert on that particular visit.
Maybe they’re keeping up with the latest trends so they’re ready to buy when, well, they’re ready to buy. Maybe they like your brand or a brand that you carry and they’re checking in. Maybe they’re comparing prices or seeking inspiration for a piece of furniture or a special outfit or something fun to wear on a vacation coming up in a couple of months. (Consider the recent Wall Street Journal story about the amount of time some women research purses before buying, which prompted this radio interview with the story’s author.) Or maybe they’re shopping online and buying in a store.
None of which is to say that conversions are not important. That’s what it’s all about. It’s what retail executives and managers measure themselves and subordinates on. It’s how people make bonuses. It’s the R in ROI. And certainly what a customer actually does buy and how he or she came about buying it is valuable information.
But McCarthy and other experts urge retailers to take the long view.
“You spend a lot of money trying to get people to come to your site, or to one of your marketing campaigns, and yet, the vast majority, maybe 90 percent of your money is spent on acquisition and only 10 percent on retention and lifetime-value-kind-of-work,” he says.
Beck says that, of course, there is nothing wrong with paying close attention to conversions, but in the current digital world, it’s not enough.
“I would say online conversion, as a singular metric, is useful, but if you are anyone except a pure-play online retailer, you have to think differently about conversion,” he says. Conversion is “part of it, but it’s got to be about your overall conversion, particularly if you’ve got 300, 400, 500 stores.”
In fact, Rick Kenney, Demandware’s head of consumer insights, has gone so far as to suggest that conversion rate be scrapped in favor of an orders per shopper metric.
Perhaps not surprisingly, the mobile revolution has fed into this need for retailers to be more thoughtful, more nuanced, when they measure success. Mobile has changed everything. Today, a consumer might visit a site four or five times in a day, while researching a product, never intending to buy on his or her phone.
And then, boom, he or she buys on the laptop at home. Or, boom, he or she shows up in your store to buy the product they’ve been browsing on the small screen.
The trick in all this for a digital retailer is not only knowing that not every visitor is looking to convert, but also knowing what each individual is after on any given visit and then offering the content that meets that need.
It’s a matter of creating human-aided, data-driven systems that know when to send an email, when to offer a promotion, what particular products to show, which products to group together on a page, what product recommendations or related searches to show to each individual visitor.
“That’s the holy grail that everyone talks about — the whole personalization thing,” Beck says. “It’s about addressing the customer need at each touchpoint at the right time. And that’s hard to do.”
Many retailers have a ways to go in learning from their non-converters, Beck and McCarthy agree. But both say there is good news for retailers, too, as big data technology continues its gallop into the future.
“For retailers, web merchants, there are tools that are becoming more and more available, commonly,” Beck says. “It’s becoming democratized in some ways. It’s becoming more accessible from a cost standpoint.”
For instance, Beck mentioned BloomReach’s technology, which helps site merchandisers understand how customers discover certain products and shows whether merchandisers have properly displayed, described and presented those products.
Say, for instance, a retailer saw a significant number of shoppers who searched for “water shoes,” but did not convert on a page that showed them all kinds of boots and footwear designed to keep feet dry in wet weather.
And say a significant subset of those frustrated searchers stuck with it and ended up buying or adding to their carts waterproof sandals and outdoor shoes that were made to wear into water to protect a swimmer or wader’s feet from rocks and such. A retailer would know to expand its website’s thesaurus so that “water shoes” would be associated with “sports sandals” and “river sandals” and more shoppers would find what they wanted.
More retailers are concluding that those tools, like Compass Merchandising, can help them leverage the information they receive from visitors who don’t initially convert — leverage it to ensure that they eventually do.
“You can create lifetime value to your company that is five-fold or 10-fold what maybe that fleeting kind of transaction might be,” McCarthy says.
Which stands to reason, given that those non-converters are your best customers. You may now resume drinking coffee.
Photo of window shoppers by Audio-Technica published under Creative Commons license. Photo of water shoes by Mike Cassidy.
Mike Cassidy is BloomReach’s storyteller. Contact him at email@example.com; follow him on Twitter at @mikecassidy.