Developing a new digital strategy can be a daunting experience, especially considering the lack of case studies and benchmarks out there.
We spoke to Sharon Shaw, e-commerce manager at Standard Life, and Avenue A/Razorfish's Adrian Gans about their experiences of strategy creation, including budgets, KPIs, incentives and structures.
When developing a new digital strategy, how do you start? What models are out there for you to base it on? We recently developed a wheel framework for acquisition, conversion and retention, but what approach did you use?
Standard Life and Avenue A/Razorfish have used an Attract, Convert, Support, Extend model, which is very similar to the E-consultancy framework, though its meaning is evolving as the role of digital changes within the organisation. Measurement and optimisation are fundamentals in both.
Building the model, we combine existing business and brand strategies with primary and secondary customer research, competitor audits and innovation trends.
The customer research covers online attitudes and behaviours and cross-channel preferences and needs. The competitor audit includes a SWOT analysis of our own site and an evaluation against business objectives and user expectations.
Someone said the evolution to digital is ‘a bit like global warming’ – we all know it’s happening but fixed goalposts or yardsticks are hard to find. What references and benchmarks can you use for targets and comparisons?
The boon with digital is that it is so measurable. As such, setting financial targets and comparisons is easier than in traditional media. ROI stands out as the most obvious measure for individual projects, varying for brand campaigns and e-commerce builds (but always positive!).
Overall, we like to look at the percentage contribution digital makes to total sales volumes and we can set a benchmark target of around 15% for a mature multi-channel retail business.
Strategically, the aim is to reference the customer experience online and across channels to make sure it is consistent and mutually constructive. This can be measured through online and offline surveys, and increasingly through ‘buzz’ metrics on the social web.
Standard Life is considering using services like eBenchmarkers to compare site performance with competitors. It provides metrics for our site in comparison to aggregated scores across all their registered sites.
What are the key success metrics and what reliable data is out there to compare ‘like with like’?
Ultimately, success in e-commerce is measured through improved profits across sales and marketing activity.
Conversion rates and basket value are therefore the most important numbers for the site, followed by (and related to) campaign ROI and/or CPA. Natural and paid search performance are key traffic generation metrics.
Other measures include dwell time to evaluate customer engagement with rich media, and a recency-frequency model to score customer loyalty. For reliable data, we refer to the IMRG, Hitwise, comScore, Mintel, eMarketer and TGI.
What are the challenges and opportunities of moving towards multi-channel measurement and integration?
Both the biggest opportunities and biggest challenges lie in the integration of online and offline systems and databases.
We know that allowing each channel the same view of the customer and their transactional history can drive KPIs up, through delivering a consistent and personalised customer experience at every touchpoint.
But it is rare that such integration can happen easily as most organisations have developed their online and offline architectures in isolation.
Which leads us nicely on to the other key challenge – getting the budget, staff and (most importantly) board level buy-in to undertake the large-scale business change needed to deliver an effective multi-channel proposition.
Where should e-commerce fit into the overall budget – should it have its own P&L, or is it a cost centre for other business units?
It really depends on the organisation, its objectives and how far it has already gone with e-commerce.
A dedicated P&L is great for new e-commerce ventures that don’t rely too much on other channels. The autonomy and flexibility of financial control allow the channel to change and grow at pace.
A more mature online channel that has significant crossover with offline will at the very least need to share elements of their P&L with other business units.
For instance, if an initial enquiry is made online and a sale is converted from the lead by telephone, who gets the credit?
A sensible approach would be to give the telephone centre 75% and the website 25%. If the telephone centre has a code to give customers when they go online, the reverse can be true. The point being, the P&L should be used to encourage a symbiotic relationship between channels.
If e-commerce is solely a cost-centre for other units, decision making will be slow, political manoeuvring common and the team fragmented.
Where should e-commerce sit in the organisation and who should be the senior person responsible for it?
We strongly recommend a dedicated team run e-commerce. The channel requires people with appropriate skills and experience to drive it forward and a mandate to give it their complete attention. The integration with the rest of the business should happen through collaboration on the ground and only through reporting lines at the most senior levels.
The organisation at the senior level is a point of some debate. It is fairly common in retail for a Commercial Director to take responsibility for e-commerce sales but the marketing team has a significant input and interest.
The online marketing budget to advertise and attract customers is growing all the time and there is a powerful need to integrate communications and the customer experience across channels.
One approach is to create a multi-channel role responsible for all online activity and how it is integrated with the rest of the business. This role could report into the Sales & Marketing Director or directly to the MD.
In terms of incentive structures and targets, if each channel has its own target, how do you avoid channels competing with each other to the detriment of the overall organisation’s goals?
The challenge here is to motivate and reward the team that is tasked with growing a new channel without upsetting other channels that may be experiencing slower growth. The P&L attribution is a key factor but incentives can also help.
Most companies reward on total business performance to target first, followed by an individuals performance.
One way to motivate a channel team might be to introduce a middle-tier related to the channel performance to target, a factor that will give them a boost if they see strong growth in their area.
Do you have any tips on staff recruitment and retention – finding and retaining the right skills for a reasonable price?
The main issues for digital workers seem to be the environment in which they work, the variety of their work and their opportunities for personal development.
With a dedicated online team there is a great opportunity to create a fun and fast-paced workplace that feels dynamic and creative (even for the techies!). There is a risk of giving people repetitive work when administering a site so it is also important to make sure staff have a chance to try their hand at different tasks and project work. Back this up with the security of good HR and corporate benefits.
Finally, don’t forget that the digital world doesn’t stand still. Give all the team plenty of exposure to the latest research, emerging trends and breakthrough technologies.
When a large business is going through a major reorganisation, what are the main ways this can impact upon the e-commerce/digital marketing team? What types of demands are placed on the team by different business units?
The biggest problem tends to be a freeze on investment and/or significant change. Digital teams are expected to carry on delivering business as usual but won’t be given the opportunities to make often long-awaited improvements until the reorganisation is complete.
Projects get put on hold and the team feel stuck in limbo. Strong leadership is needed to keep everyone on track.