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Jonathan Wall is the marketing director at Dabs.com, the online technology retailer bought by BT in 2006.
Here, we ask him about the company’s latest efforts around acquisition, conversion and retention, including a current project to digitise its print catalogues.
He also gives us some interesting thoughts on cashback affiliates and shopping comparison sites, as well as the good stuff IT manufacturers are doing to support retailers like Dabs.
Why are you currently converting your print catalogues to digital? What types of products do they work best with? And what are the main challenges?
The key thing is we have seen more and more catalogues being transferred into the digital format. The recent launch and success of iGizmo (Dennis Publishing’s interactive consumer technology magazine), and one or two others, have shown us how appropriate they are for technology products and how to use Flash interactivity in a catalogue. Our customers, although they are very web-oriented, still want that look and feel of a print catalogue.
Also, some things we may have had problems with putting on our website for usability reasons, we can put in there. Alongside that, we have got over one million B2C customers now but we can’t necessarily send them all print catalogues every month.
Some customers might not have bought something recently but still might be interested in the products. Our recency and frequency modelling might tell us not to send them a print catalogue, because of the cost. But having a digital catalogue available means that our higher value customers will potentially get a print catalogue a few days earlier and the customers with a lower prospect score will get a digital catalogue now. There are also environmental issues around the printing as well.
What kind of response and conversion rates do you see from catalogues? They’re pretty powerful, right?
Absolutely, yeah. Every year we look at the marketing budget and would love to stop sending catalogues out. But on the consumer side, they are an absolutely integral part of our marketing campaign.
When we send catalogues to customers, they generally come back and buy from us. Email is a big part of our retention campaigns but in terms of conversion rates, it doesn’t have anywhere near the same effect as sending people a physical catalogue.
You said recently that you are spending less of your budget on price comparison engines. Why?
If you look at it over the last 12 months, it has reduced as a percentage of our overall marketing. That’s been a natural reduction as their performance has reduced a little bit. We see it as a cost of sale. So therefore as the cost of sale increases we optimise our feeds, which means we will get fewer sales as we are sending them fewer products.
We have seen this as a trend over the last year to eighteen months. You only have to look at the likes of Kelkoo and others that have seen significant decreases in market share. Some, like Shopping.com, have done well in traffic but haven’t done as well in quality of traffic and that’s as important to us as volume.
I was looking at some visitor stats this morning and our visitors from them have reduced dramatically. But our revenues haven’t reduced dramatically. They have stayed quite consistent, which tells me that we are doing a good job of optimising our feed and they are doing a good job of starting to improve their traffic quality.
It was absolutely at the lowest point towards the end of last year and I think they all realised they needed to improve quality. We talk to them consistently about that and they are all working hard to improve.
How are they going about that?
I think that’s for them to discuss but if you look at some of the bigger players that either have owners or syndicated deals with big media owners, what they are finding is those syndicated deals aren’t bringing the same quality.
With some of the bigger players, their key driver maybe two or three years ago was natural search and they spent lots of time and energy getting themselves up the natural search rankings. That was delivering quality traffic. Recently, they seem to have been more bothered about just getting the visitor numbers up. I think it’s a balancing act for them between quality and quantity.
Are comparison sites becoming more open to CPA deals?
We have been talking to price comparison engines about CPA deals for five or six years but I think they are all starting to become more open about talking about those deals.
There are a few price comparison sites in our affiliate programme where some are on CPA and some on CPC. Obviously, we would love them all to be on CPA but at the end of the day, we will measure it all back to cost of sale, regardless of whether they are on CPC or CPA.
What’s your perspective on the rise of cashback sites?
They’re certainly a large part of our affiliate programme and we’ve looked at what value they provide. They definitely generate revenue but you have to look closely at how much of that revenue is incremental to your business. That’s something we are looking to do in the future; working with them more closely to generate incremental business for us.
How are Google Checkout and Paypal working out for you? Have you seen any uplift in click through rates on your PPC ads since adopting Checkout? Has it had a positive effect on your Quality Score?
We went live with both Checkout and Paypal at the same time. Paypal has a huge installed base – 11m customers in the UK, I believe – so we’re seeing a higher percentage from Paypal. But Checkout is standing up pretty well in terms of average order value and how much customers spend.
We very definitely saw an increase in our quality score when we went live with Checkout. It wasn’t like we doubled our CTR immediately but there was a noticeable increase. Now, I would expect that to lower as more merchants adopt Checkout. We were a little worried that we would see people just clicking through to find out about Google Checkout, but we haven’t seen any lowering of the quality of customers clicking through.
I can’t divulge it but we now have a significant percentage of our revenue coming through alternative payment methods like Paypal and Checkout, and we are now looking at what other methods we can offer in the future. We are talking to several prepay providers. Payments are a really interesting area at the moment and we will be keeping an eye on it.
Do you treat higher value customers differently to lower value ones? How?
We do, more so on the B2B side, which is half of our business. If you look at high value customers, they are generally B2B customers and we would look at their pricing and give them an account manager.
On the consumer side, really the only area we look at is whether to send them a print catalogue. We were one of the first online players to have air miles and a rewards programme but at the end of the day our customers are very price led so it’s hard to service them and offer them loyalty of value.
Can you give us some examples of good and bad practice when it comes to manufacturers’ use of the online channel?
HP has always been at the forefront of this. Many of our American manufacturers have done a good job, as well as Toshiba. They generate demand because they have customers visiting their site as a first point of research, and a lot of them are partnering with price comparison engines to have a price checker on their site. They are driving qualified and highly converting traffic to us.
Do you see any multichannel opportunities out there for the company?
About four or five years ago, we opened a store in Liverpool Airport. It didn’t fail – it didn’t make any money either - but we closed it in the end because we didn’t see a huge amount of customers coming back into the site.
Also, it’s harder to go multi-channel from an etail model than from an offline model because of the margin mix. It doesn’t feel right to raise your prices from a single digit or low margin model.
For us, the multi-channel opportunities will probably come around doing kiosks in shopping centres, which we have done with BT. We are also looking at a few exhibitions this year. That’s the side of multi-channel we’ll follow, rather than owning bricks and mortar.
Are you using marketplaces like eBay and Amazon? If so, how?
We’ve talked to Amazon several times but don’t seem to have been able to come to a commercial agreement that’s suitable for us both.
With eBay, we use it occasionally for old job-lots of stock. We have trialled putting new stock on eBay but although there is demand there, we will generally sell it for less than we get on Dabs.