February 06, 2006
How To

How hpshopping.com Increases Gross Margins While Winning Marketing Awards -- Four Specific Tactics

SUMMARY: You might think after having been a leading ecommerce site for almost 10 years now, there would be little left to test or improve. Yet this past year, hpshopping.com's marketing team found ways to increase some email campaign conversions by 50% and search landing page conversions by 25%. Discover how in our interview with Catherine Paschkewitz, hpshopping.com's Director of Consumer Marketing.
Last fall hpshopping.com won the Web Marketing Association's WebAward for best eretail site yet again for the fifth year in a row. When you've been successful for so long, how much can you really improve year over year to increase ROI?

Catherine Paschkewitz, hpshopping.com Director of Consumer Marketing, told us tests in four specific areas helped her team improve conversions -- and gross margins -- considerably this past holiday season. Here's how they did it.

-> Tactic #1. Search ROI improvement

"Data is the intellectual property" of a business, says Paschkewitz, and data and analytics are the core things she focuses on to improve search ROI.

Paschkewitz's team had always tracked search's success based on revenue. But to raise ROI this year, they studied gross margin data. "We took into account that different product categories have different profit margins," she explains. So instead of lumping every category together when looking at search ROI, they divided search terms into product category -- desktops, laptops, supplies, printers -- based on margin.

By doing that, the team was able to bid more aggressively than before in some categories and improved profit margin by over 10%.

Plus, they also tested landing pages for SEM and other online ad clicks. Unexpectedly, test results indicated hpshopping.com does best when it sends clicks to a page containing more than one item.

The team experimented with sending users to a product page with a single computer (based on the search term used) versus a specific page for the series of computer versus a series comparison page that includes other computers. The comparison page won out. "We got a 25% increase in conversion and an increase in average order value when we sent them to a page that included more products," says Paschkewitz.

But beware of over-analyzing, she warns. When you're constantly investigating all areas, it's a matter of discipline to analyze only what is of immediate interest. If you really want to understand behavior patterns of people who use search to come to your site, you can look at all the search terms that brought them there before they finally bought. "But that's not something I would have started with. I started with the stuff where you don't have to make so many assumptions. Then we go to the next step we can build from."

-> Tactic #2. Email testing

"We do a lot of testing," Paschkewitz says. Three core areas:

o Frequency

Normally, hpshopping.com opt-ins receive emails every other week or so, but beginning this past November and through December, Paschkewitz's team accelerated the pace of emails to every week. "We had record sales in that time," she says. "We're still analyzing data, but we had phenomenal results."

Luckily, at the same time, open rates and clickthrough rates remained consistent, as did unsubscribes. That said, when the holidays ended, the team throttled back on frequency again.

o Personalization and event-triggers

hpshopping.com's emails can be targeted by user. "We built a model based on all the different things they're browsing to predict what should be the content of the message," Paschkewitz explains.

Based on that model, her team designed an email campaign that included three offers: a notebook offer, a desktop offer and a printer offer. All three offers were in every message -- so everyone was exposed to the same offer -- but the order of the offer was changed based on the model. "The response rate doubled, as did the sales," she says.

Emails are also personalized with recommendations based on past purchases. If a customer has bought a printer, the recommendations might include supplies for that specific printer.

hpshopping.com also sends event-based emails or emails automatically generated after a specific "event." If you bought a notebook, for example, you'd receive an email that would focus on accessories and/or warranties. "It's done through rules-based templates," Paschkewitz says. "That's the only way you can make it work. Otherwise it's just not cost effective."

The same personalization carries through on the site for email clicks and other return visitors. And the site remembers what you browsed last time, what supplies are compatible with your printer, and what other people -- who bought the same product you bought -- purchased.

o Reminder emails

"We did reminder emails for sales campaigns we had sent via email," says Paschkewitz. "They were dirt cheap, not a lot of work, and increased conversions by 50%."

The reminder emails were sent a week after the sale emails, when there were about five days left on the sale. The reminder varied: sometimes it was exactly the same creative with a "sticker" over it that said "Five Days Left!"

They've also tried clickable text messages, and those have worked, too. "Clearly, there's a big opportunity there," says Paschkewitz. Now she plans to dig more deeply into it to see "what else we can do."

-> Tactic #3. Tracking interactive catalog conversions

While other ecommerce sites have wondered at the wisdom of continuing to have an interactive catalog because they tend to get little use, Paschkewitz has found that some people really like it, and essentially it's just another way to navigate the products.

Although the catalog doesn't get heaps of traffic, it sees a strong conversion rate and average order size, plus it's inexpensive to create.

"There are some people more comfortable shopping through an online catalog," Paschkewitz says. "It only costs us a few thousand dollars each time and the sales we see mean a fantastic ROI."

-> Tactic #4. Affiliate data feed cleanup

"Even though we're the manufacturer, not everyone is going to match our SKUs," she says. She put a process into place that informed affiliates of updates and made sure that everyone was on the same page when it came to available products. That initiative doubled sales as well.

Useful links related to this article:

Omniture, hpshopping.com's Web analytics firm: http://www.omniture.com

Epiphany, hpshopping.com's customer relationship management firm: http://www.ssaglobal.com/epiphany/epiphany.aspx

Yesmail, hpshopping.com's email partner: http://www.yesmail.com

Note: hpshopping.com is a member of Shop.org, a forum for retailing online executives to share information, lessons-learned, new perspectives, insights and intelligence. More info at http://www.shop.org

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