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Jun 06, 2002
Case Study

eretailer Uses Metrics to Grow Sales More Than 100% Year After Year

SUMMARY: Founded by former Olympic skier Jim Holland, BackcountryStore.com started out as a teeny homegrown ecommerce site in 1996 to become a profitable online powerhouse today. The secret behind their success? Well, they did not take any loans or VC money. Instead every marketing campaign had to pay for itself, and metrics rule. Includes data on how a free shipping offer affects sales conversion rates, and what kind of art makes a pop-under really successful. (You might be surprised.)
CHALLENGE

One afternoon in 1996, two-time Olympic ski jumper Jim Holland got together with his pal John Bresee founder of the Wasatch Canyon Reporter sports newspaper. Holland had just finished his last Olympics and was wondering what to do next.

Bresee had already been bit by the Internet bug (his was one of the first local newspapers to have a Web site) and he urged Holland to consider starting an eretail store for skiers.

Holland thought, "Why not test it?" So the two friends popped up a little homemade Web site selling just five skiing-related products. A few days later they made their first sale. However, they did not actually have an inventory yet, so Holland went down to a local store, bought the item, wrapped it up and mailed it off.

From this humble beginning, a profitable online store grew, and grew, and grew.

However, unlike most ambitious eretailers of that era, Holland refused venture capital. In fact, he refused to go into debt at all. BackcountryStore.com would be an entirely self-funded bootstrapped venture. Each marketing campaign and site upgrade had to pay for itself.

By 2000 the site was doing well enough to afford a full-time Director of Marketing. Holland's hiring philosophy is simple: Only hire people who care deeply about the gear the store sells. The copywriters who write the product descriptions for the over 2000 SKUs on the site, the customer service operators, everyone are all people who use the gear themselves and feel passionately about it.

Holland remembered Dustin Robertson, a college student he used to see a few years before at various Utah skiing hangouts with his nose buried in marketing textbooks. He tracked down Robertson, who had become a relationship-marketing executive in Connecticut working for big-time clients like Kraft, Kellogs and Nabisco, and convinced him to move back to Utah in early 2000.

CAMPAIGN

Robertson had not worked directly in Internet marketing per se before, but he knew there were three keys to success: measurement, measurement, and measurement.

"Our main goal was to affect conversion rates -- we live and die by it. I read stats that only 39% of eretailers look at their conversion rate. That's amazing," says Robertson.

Unfortunately, at the time BackcountryStore.com was one of that 61% of sites not measuring conversion. Robertson immediately researched tech options from a cost and usability angle, and wound up choosing WebSideStory's lowest level of site metrics tools. "It gave us pageviews, unique visitors, some referring info, real basic stuff," Robertson says.

The data was enough to prove both which marketing campaigns worked and that it was worth investing in tech to get more metrics. In late 2001, BackcountryStore.com upgraded to WebSideStory's HitBox Enterprise to analyze visitor traffic patterns and HitBox Commerce to focus on real-time shopping patterns.

Realizing this would result in an avalanche of data that his small IT department was not trained to cope with, Robertson also hired the services of WebSideStory's in-house consultant Eric Peterson to come in for a day and a half and help IT tweak the system to produce useful reports and a metrics measurement plan for BackcountryStore.com's specific needs.

Robertson's measurement efforts paid off over the years by enabling BackcountryStore.com to raise sales through five types of tactics:

#1. Gaining shoppers by using search engine-centric tactics

Unlike most eretailers with loads of SKUs that rely on dynamic content serving, BackcountryStore.com is built as a series of static Web pages. Robertson discovered this had a profound impact on the site's search engine rankings, and that shoppers arriving from search engines were more likely to buy than others.

(The store is planning to switch to a dynamic content system later this year, but is budgeting for more search engine optimization tech and services to make up for the loss of static page benefits.)

BackcountryStore.com's CEO Holland was one of the early adopters of paid search engine campaigns (PPC) through Overture and later through Google. Robertson says, "Jim kept seeing big money bills, and he was concerned. He wanted to know if PPC was really working."

After metrics proved Overture campaigns paid for themselves "quite easily," Robertson extended the campaigns, adding on more and more keywords (in fact recently he sent a bulk data feed of BackcountryStore.com's entire SKU listings to Overture).

He maintains tight control over these campaigns by using a PPC bid management system called GO TOAST combined with Hitbox Commerce to automate PPC bids and make sure each campaign converts profitably.

"GO TOAST saves us a couple of grand a month," says Robertson. "Anyone not using a program like it is shooting themselves in the foot. If you're trying to do it by hand, you're getting burned."

Initially he found that Google AdWords PPC campaigns were not always as profitable, it was pretty hit or miss. However, Robertson says results have improved markedly since Google began feeding its paid listings to AOL in May.

Interestingly, Robertson also credits search engine-centric marketing tactics for the success that many of BackcountryStore.com's affiliates have with their own campaigns.

BackcountryStore.com provides affiliate management system Commission Junction with a data feed of products, including the product name, a short description, price, an image URL and a URL linking to the product on the site. Affiliates pick up these product listings from Commission Junction and use them to build their own online stores offering BackcountryStore.com products.

Robertson explains, "A lot of them are building these static pages and letting them get indexed really well through Google. One of our most successful affiliates who's making $30,000 a month is doing that optimizing." Affiliates also often conduct PPC keyword campaigns as well.

#2. Maximizing main design elements to grow sales

Robertson also started measuring how key design and navigation elements would affect conversion rates. Results were stunning.

For example, he learned that visitors who click on the "Free Shipping" link to get information about it, ended up converting at an astonishing 9% rate. (Most sites are very happy with a 3% conversion rate.)

He also learned the visitors loved clicking on the "On Sale" button to surf discounted overstock items. This led to greater profits because often visitors would either add On Sale items to other products they were already planning on buying, or they would end up buying a regular-price item if the On Sale section did not have a product in their particular size.

The last big surprise was from the Search function. Turns out visitors who use the site's Search convert at a "much higher percentage" than those who do not.

Partially this is because BackcountryStore.com switched from "horrible really slow" search tech last fall, to search powered by Atomz. Robertson says happily, "It looks at synonyms, it catches misspellings, it can handle the volume, it works flawlessly."

Armed with these metrics, Robertson tweaked site design, placing Free Shipping, On Sale and Search in a prominent spot at the very top of every page of the site. He also added a Free Shipping link on every individual product page that qualifies for the offer (the price must be $50 or higher).

#3. Tweaking product page design to grow sales

Robertson also tested clicks and sales conversions from specific elements on product pages. He learned that:

-> Warmer graphics matter. "Images that have color and pop off the page lead to higher click through rates." For example a picture of sunglasses with a warm glint on the lens would win over a picture of sunglasses with flat black lenses.

-> Those corny $.95 price endings raise sales. CEO Holland always felt that prices ending in .95 cents were kind of silly: Why not be straightforward and round up to the whole dollar? However, after visiting a brick and mortar Walmart one day recently Robertson decided to test taking that nickel off.

"It's had a pretty dramatic effect," he admits. "We're having more sales because of it."

-> Tweaking your click-to-buy area can grow sales. "We try to look at the best ecommerce sites to see what they're doing," says Robertson. "Amazon's the leader, and they donít use just a button, they use an entire area as an order area."

Robertson developed a similar "Place Order Here" area at the upper right of each product page that includes links to the privacy policy, shipping information and return policy in order to make shoppers feel more secure.

With the help of his designer, he has also tested a variety of colors, including green, blue and orange, for this area to see which converts the most sales.

#4. Gathering opt-ins for an email newsletter

Since one of BackcountryStore.com's founders is a professional writer, the idea to start an email newsletter to grow customer relations and drive traffic back to the site was a no-brainer.

Robertson knew the most effective way to gather opt-ins was by using a pop-under but Google does not allow its PPC advertisers to have any pop-ups on their landing pages. Robertson compromised by moving the pop-under to deep inner pages that Google ads did not link directly to. And he added a special sweeps offer to attract opt-ins from the home page. The sweeps offer changes monthly.

Again, he carefully measures results, and learned to his amazement that the pop-under art he personally hated did far better than the art he loved. "We had a really professional pop-under created that looked nice, but people thought it was an ad and just closed it. So we put back up our old really graphically unappealing one. It looks stupid, but it works."

#5. Compensating for a dreadful shopping cart

Ouch! Robertson had suspected that he was losing potential orders during the check out process because BackcountryStore.com's shopping cart is an el cheapo one they bought for $800 years ago, and its design and navigation are awkward and counter-intuitive.

It was still a horrible shock to learn from HitBox's Commerce reports that BackcountryStore.com's cart had "a horrendous 80% abandonment rate." (Note: To put this in perspective, plenty of other eretailers have a similar problem.)

This discovery galvanized the management team to take three proactive steps:

-> Making the toll-free phone number more prominent throughout the site so people could call in if the cart did not appeal to them.

-> Adding a Liveperson link to instant chat with a customer service rep on every product page in the site. Robertson made one key change to this link though, "Everyone else using Liveperson has this lame sterile picture of a person with a headset. We use Backcountry Bob. He's hard core, he's the mountain man."

-> Deciding to budget a significant amount for a new shopping cart (coincidentally being built by the same guy who did the code for the old one years ago) to launch this fall.



RESULTS

BackcountryStore.com's sales grew 107% in 2000, 153% in 2001, and 115% in the first half of 2002 partially as a direct result of Robertson's changes to the site and marketing campaigns based on the metrics he had collected.

27% of total sales now come through the toll-free phone number on the site. The Liveperson button has also been highly effective. Robertson says, "We see sales from it every day, and we're able to upsell people through it. It works really well for us, we keep increasing the number of seats."

25% of revenues are driven by affiliate sales and this number is growing. (Note: This is a significantly higher percent than most sites we've profiled.) Robertson credits the site's affiliate incentive plan for much of this success. Affiliates' commissions grow from 6-11% as their sales grow.

In recognition of how important affiliate income has become, BackcountryStore.com spends a lot of time and energy schmoozing them. Robertson sends top affiliates special gifts at Christmas, and he has just hired a marketer to focus 100% on affiliate relations. In addition he frequents affiliate chatroom aBestWeb (link below) and posts his top 10 selling products there on a regular basis to inspire them.

Robertson says, "These guys are like gold to us. We'll send them to Vegas if we have to. We'll do anything it takes."

When we asked him if he was glad he gave up his corporate marketing job in Connecticut for a hands-on job in Utah, Robertson laughed, "I love gear. I love being outside. I'm so glad I moved back. Man, I love coming to work every day. It's great."

That is more impressive to us than all the fancy metrics in the world.

LINKS:

http://www.backcountrystore.com


An affiliate site:
http://www.tomsbackcountrystore.com/


Vendors and services mentioned in this story:
http://www.websidestory.com

http://www.gotoast.com

http://www.commissionjunction.com

http://www.atomz.com

http://www.abestweb.com

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