Why Etail Marketing Requires New Key Performance Indicators

“If you’re not measuring, you’re not marketing,” and “measure everything” are marketing mantras that took hold a while back. The principles are valid, but too often the tsunamis of data they created left many marketers searching even harder for actionable insights. In searching for the needle in the haystack, we seem to have made the haystack bigger.

The best practices approach is to isolate the most relevant data, establish key performance indicators and incorporate them into scorecards, which can be ingrained into the business processes of the organization. This approach has served CPG marketers well in food, drug, mass and convenience channels, and was extended into managing the business in supercenters, club stores and dollar stores. But what about the etail space?

The Etail Space is Different
There’s a land grab taking place in etailing, now the fastest growing channel for consumer packaged goods marketers. True, only an estimated 2% to 4% of offline CPG sales have moved online so far, but it’s the CPG sales that etailers are counting on to drive traffic to their sites day-in and day-out. A generation of consumers who grew up on the Internet is coming online. And they have the discretionary income needed to dramatically reshape the retail landscape. In fact, what we have learned is that even within this highly attractive group, there are key distinctions, according to a new online shopper study from e-tailing solution and Catapult Marketing. There will be a huge advantage to the brands and etailers who are the first to crack the code on these new shoppers.

Forrester reports that 47% of the U.S. population is on the Internet several times a day; 69% have purchased goods or services and paid for them online in the past 90 days. Clearly, there’s good reason to be bullish on online sales for CPG companies. But unlike the last new frontier for CPG marketers, which consisted of dollar stores, club stores, and supercenters, the etail space is truly the wild, wild, west. The rules are still being written. As such, it requires a different approach to measuring performance.

The New Metrics
Etailing requires a fundamentally different set of KPIs. Online, marketers need to be able to assess the availability of their products. This is the blocking and tackling of etailing: getting the assortment right, monitoring and ensuring there are no out of stocks, and ensuring images, descriptions, pricing are all correct. It’s easy to underestimate the effort this requires, and it’s the reason why leading CPG marketers have dedicated teams to manage this. The cost of neglect is huge. An out-of-date product image on Amazon.com will be seen by more consumers in one day than may see it all month—or year—at the local supermarket.

As important as availability is visibility, having 75 hair care SKUs on a given etail site does little good if they show up on the last page of the site search results for “shampoo”. According to Google, nearly 90% of purchases are made from the first page of search results. If a brand shows up on page two it’s at a distinct disadvantage. If it shows up on page three or beyond, it might as well be invisible. In addition, site search engines can be notoriously fickle. A search for “disinfecting sprays” can yield wildly different results than “disinfectant sprays” on the same site.

Finally, marketers need to have a means of quantifying the overall quality of visibility on a given site–including secondary locations. Etail merchandising offers an array of opportunities on virtual endcaps, category displays, lobby displays, and site navigation graphics. But before an investment decision can be made, marketers need to understand the ROI of each.

The Solution: A Quality of Visibility Index
The solution is to determine a comprehensive visibility index that takes into account availability, visibility, share of visibility, correct brand imagery and secondary presence of brands on individual websites.

For marketers getting started in the online space, this can provide a baseline for strategic account segmentation and inform decisions about where to focus resources. For those marketers further along, it provides metrics that track all the merchandising variables responsible for the success of a brand online.

The New World Order
Big brands have long had numerous advantages in the brick and mortar world. However, the online space is still maturing, and many of the advantages of size and scale are still developing as well. The “infinite aisle” found online can favor the niche brands that focus efforts on obtaining visibility. The tactics they use—paying less attention to share measures, and focusing on availability and visibility is a strategy that will work for brands of any size.

It’s clear that the growth in CPG is going to be online, and the CPG industry needs to settle upon an industry standard for measuring online presence. CPG marketers need to decide if they want to play a role designing this industry today, or be content to compete tomorrow in a space defined by their competitors.

Gregory Grudzinski is the director of data services and analytics for etailing solutions. He can be reached at [email protected].