Reach for your ecommerce buzzword bingo card and you’ll see ‘website optimisation’ and ‘conversion analysis’ bang in the middle. Behind the industry buzz there is a genuine commercial challenge:how do you turn your visitors into customers and increase the profitability of your web channel? Retargeting is one technique to help deliver results.

Retargeting is the process by which a website owner contacts a customer who has abandoned their conversion (whatever that conversion might be) in order to continue the communication and encourage that customer to take further action. Retargeting is more popular in the US than the UK. However, UK companies are starting to wake up to the commercial value that retargeting via email can play in their website optimisation.

Having had the opportunity to work with and learn from the brains behind SeeWhy, I asked founder and conversion optimisation blogger Charles Nicholls to share his expertise on the value of retargeting for UK web owners.

Do you think retargeting is carried out by the majority of UK retailers? If not, why is this?

Retargeting time impactIn general, no. I don’t have any specific data for the UK. There are some UK retailers in the ecommerce sector that are using ad retargeting to good effect, but even so, penetration is low.

Where it is done, it tends to be far from optimal, with a few exceptions. For example, one leading UK ecommerce company follows up on abandoned shopping carts by email 7 days after the event. Needless to say, this isn’t very effective, and in the majority of cases, the business has gone elsewhere. A real time follow up is seven times more effective than one 72 hours later, and three times more than one 24 hours later

What is stopping retailers embracing retargeting as a core marketing investment?

There are several factors at play:

  1. It’s an emerging area, and is growing fast in the US. The UK tends to lag a bit behind.
  2. Ad retargeting is most usually offered by ad agencies as an afterthought, tacked onto the bottom of a significant branding campaign. Since it often receives no special focus, it tends to get lost.
  3. Concerns about privacy. There’s a feeling that Europe is more cautious, through privacy legislation doesn’t really impact this area.
  4. Optimising retargeting across multiple channels (email, ad, call centre) has traditionally been harder than it should be.

What are the commercial benefits of re-targeting?

You don’t need a mathematician to work it out. A £200m retailer with an average shopping cart abandonment rate is losing £1.2m per day due to abandonment. Very small changes in conversion can have dramatic financial dividends.

Up to 50% of abandoned shopping carts can be recovered, making this the highest ROI in the industry. Disney in the US generates $2 for every remarketing email they send.

What are the customer benefits?

If it’s done well, it provides great customer service. If it’s done badly, it’s intrusive and frankly annoying. The two most important elements to get right are tone and timing.

In terms of tone, it’s about delivering great service to help the customer, not slapping them over the head because they didn’t purchase.

Timing is key, as in order to be relevant to the visitor, you need to stay in step with the customer’s actions. This means a real time follow up and intelligent visitor tracking; anything less risks becoming irrelevant and annoying.

    How can you track and evaluate the financial impact?

    This is easy, using your chosen web analytics tool. Assuming you’ve set up your retargeting correctly, you should be able to see the incremental impact easily using any of the web analytics tools.

    Does re-targeting mean giving people financial incentive to come back and buy within a time period?

    Not necessarily. In fact you need to take care that you do not train the customer to expect an offer. In general, best practice is as follows:

    • Immediate first follow up, no offer.
    • Service tone, helping the customer not selling.
    • Multiple emails, typically two or three. Some in the US send as many as six.
    • Any offer should be made on the last email.

    For example, eLoan in the US does and immediate follow up to abandoned loan applications by email. From the first email alone, without any incentive, 26% go on to complete their application. The second is almost as effective as the first, and the overall conversion rate for the campaign is 46%.

    Who do you think does this well in the UK and why?

    The poster child for email remarketing is Amazon, including in the UK. In fact it’s so subtle that most people don’t realise that it is remarketing at all. Customers have grown to accept and value it.

    The fact that 30% of Amazon’s sales are as a result of their product recommendations is testament to the effectiveness of this technique. Recommendations are promoted both in session, and also extensively following a session based on browsing behaviour.

    How will re-targeting evolve in the next 12 months and how heavily will this be influenced by the US market?

    Data shows a significant tactical swing towards remarketing in the fourth quarter of 2009. We will have to see whether this is a tactical response to the imminent holiday season, or a more long term shift. There’s no doubt that there is significant latent demand and it’s growing fast as is shown by the chart below based on a survey conducted in August 2009.

    Retargeting market growth 2009

    This is mirrored by a general trend in the advertising space for tighter targeting. For example Behaviourally Targeted advertising is forecast to account for 23% of all online ad expenditure in 2012

    There are several factors contributing to this growth:

    • Tight marketing budgets and a ruthless focus on generating sales.
    • Many marketers have found that after spending lots of time tuning their websites, conversion rates remain stuck. Post session approaches are where the action is.
    • Technology maturity, it’s now much easier to do that it used to be.

    Outside of much more widespread use, the other key driver is towards real time retargeting. Emailing visitors several days after a shopping cart abandonment is increasingly considered in the US as not best practice. The time delay means that the communication is simply less relevant to the visitor, and therefore much more likely to intrude and be considered annoying.

    What technological constraints should retailers be aware of?

    It’s stating the obvious, but you can only email a visitor if you’ve captured their email address. No email address, and your only retargeting option is advertising. 

    The other limitation is that real-time remarketing, while offering clear benefits has traditionally been the realm of only the largest ecommerce sites, where IT resources can be thrown at data capture, rules and integration efforts.