Webogram Power, Part 1

We’ve all done it. We’ve entered a store planning to purchase a single item — a set of bags for the vacuum cleaner or perhaps some tomato paste. Then, before you know it, you’re at the checkout with vacuum cleaner bags, a new vacuum cleaner, extension cords, optional attachments, an extra two-year warrantee, and maybe some tomato paste.

Was this an accident of fate? No, it wasn’t! You may have tried to excuse yourself by explaining away the extra purchases, but, from the retailer’s point of view, your shopping spree was the outcome of a very well-planned exercise — upselling. This good old-fashioned term should not be neglected, because its successful practice separates effective retailers from mediocre ones — at least in revenue terms.

To date, the tool most often used to drive the upselling phenomenon has been the “planogram.” A planogram is a detailed and thoroughly thought-through map that determines where every product in an establishment should be situated. It illustrates not only in what area every product should be placed but also on which shelf every item should be accommodated. Shelf by shelf, aisle by aisle, the planogram assigns selling potential to every item in a store. These plans are typically the result of decades of tests and help retailers understand what does and does not drive sales.

Check out any well-known chain, such as 7-Eleven or Target, and you’ll quickly realize the product-positioning pattern repeats itself in every store. If you were to place a price on such a planogram, it would be worth millions. The planogram is the most potent tool available to retailers who wish to increase their conversion rates.

But, hey, hang on! If brick-and-mortar retailing values planograms so much, then think about the Web. How might the online planogram look? Well, actually, not unlike the offline one. The only difference is that surprisingly few Net-based companies are working in a systematic way to optimize their conversion rates. In fact, I’d claim that close to 50 percent of online retailers are still resisting the dire need that should be spurring each and every one of them to think about their sales generation in a new way.

Let me start by asking you a simple question: Do you know what your site’s visitor path looks like? That is, do you know from whence your visitors have come and to which page they are proceeding? If you’re familiar with your visitors’ paths, do you know how much time they spend on each page, what they read, and what they ignore?

I know your visitors’ paths are tricky things to investigate, analyze, and understand, but that’s exactly what you have to achieve to build your online planogram — your “Webogram.” This step-by-step plan will help you optimize your conversion rates.

Typically, a planogram is built on the basis of hundreds, if not thousands, of interviews with consumers. Often, a research team will have monitored consumers’ in-store behavior, observing, for example, which aisles they tend to race down when picking up milk and understanding which products families favor. They look at both pedestrian staple products, such as cereal, sugar, and eggs, as well as inspirational and spontaneous items, such as candy (often placed, as a result of such studies, next to the unavoidable cash register).

Planograms have enabled us to predict almost 95 percent of purchasing behavior, not only because humans tend to shop similarly, but also because shops all over the world have designed their stores in response to those planogram findings. The more every store looks the same, the more the consumers’ expectations are met, and the more their shopping habits are trained to respond to the ubiquitous arrangements now assigned to supermarket products.

With these very familiar facts in mind, I’m sure you can understand the value of knowing exactly how your customers behave on your site. One major difference between on- and offline retailing, and a major advantage the Web has over brick-and-mortar, is the Web site’s potential to customize the Web page environment. The look, content, and structure of a site can be massaged and altered in response to every visitor’s profile. To translate this unique opportunity into offline-world terms, this would be like visiting Target on a vacuum-cleaner-bag-buying mission and finding that Target has redesigned its store to accommodate only vacuum-cleaner products.

The downside of customization, obviously, is it could cause you to miss out on cross-selling unrelated products. But cross-selling as well as upselling could be the beneficiaries of your Webogram research.

And that’s what next week’s article is all about.