Balancing Algorithmic and Anecdotal Insights

Yes, I am a marketing geek at heart. I get excited by elegant, algorithmic answers to the messy, complex questions of how to help consumers buy. At the same time, the power of a few conversations with actual customers to get to the reality of things is astounding.

Today I spoke with Phil over at Cleverset, a company that has some exciting predictive modeling software. Here's what they say about it on their site:

Our dynamic behavioral models analyze past and current behaviors of each customer to predict what your customers want to buy. Each customer is presented with Product Recommendations that are tailored to their current shopping session.

Does it work? Don't know yet, but I'll be testing it to find out. At the same time, I'm talking to customers, looking at chat transcripts and reading order notes to ensure that marketing efforts are relevant to customers' reality. It may not be elegant or statistically significant, but it keeps me from floating off into some theoretical neverland of consumer behavior.

Making Better Category Pages

Here's another practical article from Bryan Eisenberg of FutureNow Inc. It's called Three Steps to Creating Better Category Pages

Read it, look at the examples, and do what he suggests. Most PPC advertising is spent driving people to your category pages, so it makes sense to take a good hard look at how well they are (or are not) meeting your customers' needs.

Tax Nexus for Ecommerce

No, it's not a marketing topic, but it's a vital one, especially if you're new to ecommerce.

Sales tax is for sales occurring within a given jurisdiction. State & local governments can only enforce taxes within their jurisdictions. This is why if you have facilities (a tax nexus) within a jurisdiction, you must pay local taxes on sales that happen there. Conversely, you needn't collect sales taxes on behalf of states where you don't have nexus.

In this context, nexus is interpreted as the connection that links the vendor to the state’s sales tax rules. Underlying Constitutional provisions of the nexus requirement include the Due Process Clause, to treat taxpayers fairly, and the Commerce Clause, to reduce impediments to interstate commerce.

So far, the Supreme Court has ruled that keeping track of over 6,000 state & local tax jurisdictions is an unreasonable impediment to ecommerce businesses, and thus placed the (largely unenforceable) burden on the consumer to pay a use tax to their home state on internet purchases.

Some states are forming agreements to collect each others' sales taxes, so merchants may have to collect for neighboring states in the future. Also, the Streamlined Sales Tax Project (SSTP) is an initiative by over 35 states to create a common framework for collecting sales taxes, so that the "unreasonable impediment" argument will no longer be a valid protection for ecommerce businesses.

This is a good, easy-to-understand summary of the relevant issues by Neal Sessions and Matthew Williamson from the Georgia State University law school, and it includes links and references: Sales and Use Taxation of Internet Transactions

DISCLAIMER: I am neither a qualified accountant nor any kind of expert on state & federal tax laws. This is simply what I've learned through hands-on experience and research. Before you make any decisions regarding tax laws and whether they apply to your business, you should consult with a tax attorney well-versed in current rulings on taxation of ecommerce transactions.

Are You Ready for Web Video?

Growth of video over the web is exploding, and you should pay attention. I can see your eyes glazing over from here, but wait! The reason video is booming on the web is because it's now cheap and easy to do. That wasn't true 2 years ago.

Do you need to stand out from a crowd of look-alike competitors? Are you working with an ad budget that doesn't allow for splashy brand advertising in People Magazine? Then get creative and make use of your customers' fast connections to the web and thirst for more information.

How would you make compelling video of a sofa or dining room set? I can think of dozens of ways, but the main thing to remember is that you DON'T need Madison Avenue production values or professional actors. You just need a clear vision, some creativity, a digital camcorder and some tolerance for embarrassment.

Is Ecommerce a "Computer Thing"?

Is your IT Manager also your Director of Marketing? Does your building contractor also pick your carpet and paint for a new store, and then teach your sales staff how to close? Silly questions? Not so long as there are merchants who still believe the first person they should talk to when they decide to sell online is "the computer guy". No, the first person you should talk to is the marketing guy. In this scenario, Mitch Speers is "the marketing guy".

The technology behind an ecommerce store doesn't determine its success as a business any more than the choice between a metal or tile roof determines your store's close ratio. The success of an online furniture store is determined by the same things as your physical stores.

1. A unique selling proposition (USP) that sets you apart from competitors, and a brand promise that builds on that USP to help the right prospects choose your store
2. Advertising and promotion that trades on your USP to cost-effectively drive the right prospects to your store
3. Merchandising--selecting the right mix of vendors, styles, products and price points to appeal to your target consumer and differentiate your store from the competition
4. Store layout and signage that guides prospects through your merchandise mix in a way most likely to result in sales
5. Sales people who can qualify prospects with questions and then use the prospects' answers to close the sale
6. A store manager who can see what stops prospects from buying and can then make changes to increase the close ratio
7. Back-office processes that make it easy, pleasant and quick for the customer to pay and be on his way
8. Logistics and vendor relationships that allow you to set realistic customer expectations for delivery
9. Customer service processes that keep good deals from going bad between the order and final delivery to the customer's home, and encourage repeat purchases

Your customers will never know or care how your product database is turned into a web page.

They want to buy the right product from a store they trust at a fair value. Making decisions about navigation structure and page layouts happens about 10 steps into the engagement, and should be based on empirical research, not gut feel. The days of shooting from the hip and hitting your target in furniture ecommerce are, unfortunately, over.

To persuade prospects to buy from you online means understanding that customer and translating that understanding into a store that they want to buy from. This includes design, layout, product copy, photography, marketing and a hundred other factors that together form a persuasive system to sell furniture online.

Shopping online is nearly as mainstream as shopping at the mall. Don't abandon your hard-won business sense in the face of a new sales channel that happens to manifest as images on a computer screen. You probably don't know how to install an electrical system in a new store either. Who cares? You can turn on the lights and sell furniture, and you can apply most of the same concepts to selling online.