Even though they have potentially more to lose from poorly measured marketing campaigns, many retailers are not making the necessary changes to improve the accuracy of their metrics.
According to a survey of more than 300 multi-channel retailers by Web analytics provider WebTrends, the biggest problems threatening the accuracy of retailers’ metrics are the use of third party cookies and the misuse of activity-based metrics like page views or response-based metrics like clickthroughs, to measure demand-generation activities. Instead, marketers should be using visitor-based metrics like unique visitors and deferred conversions, which are tracked over time, according to Jason Palmer, VP of marketing at WebTrends.
Only 10 percent of retailers said they use unique visitor-based metrics over time, while 27 percent of respondents are not consistently measuring demand-generation activities at all. More than 63 percent said they rely on response- and activity-based metrics, such as clickthroughs, page views, visits and orders. Attempting to use those metrics to calculate conversion can lead to double-counting and declining conversion rates over time even for successful campaigns, Palmer said.
“The focus of brick-and-mortar stores has always been around the customer. That’s the direct marketing standard,” Palmer said. “I was surprised at the number of respondents that are measuring the value of a campaign based on clicks and not visitor-based conversion metrics.”
Since visitors do not always convert the first time they click on an ad, the conversion rate would appear artificially low if those overall metrics were used. Instead, associating a visitor’s actions across multiple visits would lead to a better understanding of which campaigns bring in visitors that eventually convert, he said.
In addition, segmenting users, even at the basic level of separating new and returning visitors, can have a dramatic impact on campaign performance, he said. Being able to identify which of those groups responds to certain offers, and knowing where they came from, can make a big difference in conversion rates, Palmer said.
“While overall conversion rate might be 1.8 percent, you might find out that first-time visitors converted at 1 percent and repeat visitors at 3 percent,” he said. “It’s important to begin to use even basic segmentation in order to really know what’s happening on your site.”
The number of retailers that are identifying unique visitors increased from 32 percent last year to 44 percent this year, Palmer said. That’s mainly due to marketers feeling pressure to justify the ROI of each customer, and justify marketing spend, he said.
Even many retailers that are using the right metrics may not be getting accurate results, since the majority of those surveyed are not using first party cookies with their analytics tools, and so are at greater risk of having their cookies blocked or deleted. According to Palmer, the rejection rate of third party cookies can exceed 20 percent, while first party cookies can be as low as 0.5 percent.
According to the survey, the use of first party cookies by retailers grew by only one percent, reaching 25 percent. The majority use third party cookies, which are often targeted by anti-spyware and security applications as a threat. If a retailer’s cookie is rejected, it will be unable to consistently measure customer actions and associate them with a given campaign.
For client Designer Linens Outlet, cookie rejection was cut by more than 97 percent when it switched from using third party cookies to first party ones. Almost immediately, it began getting more accurate measurement of site activity, and found its return visitor count increased by 10 percent, and its conversion rate went up by 20 percent. Because the company was better able to reallocate budget to successful campaigns, marketing costs went down by more than 23 percent while revenues increased by 3.5 percent, Palmer said.
The survey also found a majority of retailers rely on e-mail for demand-generation activities. More than 80 percent of respondents said they regularly use e-mails to build and maintain customer relationships. Most respondents also said they plan to develop a database of visitors’ Web visits to better target e-mail offers based on past searches and site behavior.
Marketers that do that will be better able to serve targeted e-mail messages with an offer based on a customer’s behavior on their site. That in turn will allow the marketer to mail the customer more often, since increasing the number of relevant messages to a customer is less likely to cause them to unsubscribe than increasing generic messages. That kind of targeting is only possible with visitor-centric metrics and first party cookies, Palmer said.
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