Tag: Customer Experience

Participation Is Not Passive

Elvis has left the building and he took the audience with him.

The only people left are fellow participants. Social media has made everyone an author, creator, director, developer, editor, critic and media outlet. There are millions of voices, but they are all saying the same thing – listen to me.

Participants do not consume passively. They do not sit silently ready to have their eyeballs converted into cash. Participants participate. They create their own original information, entertainment and art. They remix their own version of mainstream pop culture – copyrighted or not. They post their thoughts, publish their fears and fact check faster than any newsroom. They share with their friends to discover the quirky and interesting, making it an instant blockbuster- at least for 15 minutes.

Participants have ideas to be declared. Each of them is a market of one. Collectively they are a trend, a publishing powerhouse and a voice to be heard; a voice that has something to say. Participants have changed the way media is published and interactions are monetized. But more broadly and importantly, they have changed the flow of global information from top down to bottom up. They are changing the tone and tempo of the conversation.

Who’s Listening

While there are so many buzzwords surrounding this topic – social media, Web 2.0, conversation – many are overused, misused and misinterpreted.

The word conversation comes up over and over, but it’s a concept that is as old language itself – maybe even older. It is not a new construct invented by the social media advocates.

And while the medium for conversation has changed and evolved over time, the fundamental human need for conversation remains the same. We want to connect to each other. We want to express ourselves. We want to hear authentic voices engaged in a dialogue with us. Everyone wants to be heard and feel valued.

But who is doing the talking is also important. The conversation between customers and businesses must include people that are empowered by businesses to make decisions. This is not just about your support staff or marketing department interacting with customers. CEO’s, vice presidents, product managers, and other executives must be part of the conversations.

The Art of Conversation

It’s also what is said and how it is said that is key. With social media, you must treat these conversations as you would any face-to-face interaction – act like you would at a dinner party. After all, this is a social setting like any other. You say what you would say in any face-to-face conversation at a dinner party. Respond respectfully to criticism. Escalate the feedback. Act on it. Thank people for compliments. Elevate them. Ask them for more information. Reward them for their efforts. Empower them to spread the word.

That all sounds great, but ultimately for businesses, it’s about the return on investment or quantifying revenue generated by these conversations. At this point, it’s hard to put a specific value on a human connection or word or mouth. But imagine the value if all this “idle chatter” was publicly documented, archived and spread around to thousand of friends and connections. With social media and the web, it is.

The return on investment is nothing short of identifying your weaknesses in a rolling and real-time focus group. It is finding your friends in the marketplace and turning them into evangelists for your product or service. It is the new marketing – one-on-one influence of your market.

More importantly though, it’s beyond influencing your market; It’s about your market influencing you – shaping your product or service. It’s about making your stuff worth having a conversation about.

Getting Started

First, do some homework. Read some books – The Cluetrain Manifesto and Naked Conversations – are a good start. Then move on to Blink and Now is Gone. Then get off the beaten track. Start using the tools and services your market is using – Facebook, MySpace, Twitter, Seesmic and FriendFeed, to name just a few.

But having a Facebook profile or a presence is not enough. That’s just like walking into a dinner party. The next step is finding someone interesting to talk to. Participate. Find Facebook groups that matter. Search Twitter for people talking about your company, product, service, industry, competitors and pain points. Respond to them. Listen to them. And respond again. You just had a conversation. A dialogue between two participants where one communicates something, the other digests the information and responds.

It’s not magic, but it is magical. It is basic. It is human. And it works.

Blurring the Lines

Recently, I posed my question to a diverse audience: “At your company, who is in charge of social media marketing? Raise your hand if it’s the marketing group.” A few hands went up. “The public relations team?” A few hands again. “Market research?” Once again, only a smattering of hands was raised. “So I guess most of you aren’t using social media at all?” I suggested. “Must be your lawyers are in charge.” That struck a chord. Laughter all round.

So, who’s in charge of social media marketing at your company? At many companies, no one’s in charge because the legal team is still assessing the risk. The first thing to do is to fi nd an appropriate executive to accept the risk. That tells the legal team that you’ve heard their advice but that you believe the business value of social media outweighs the downside. But who is that appropriate executive?

It’s Marketing

It seems obvious. If it’s social media marketing, shouldn’t you put the marketing folks in charge?

Perhaps, but whether that’s a smart decision depends on what kind of marketing people you have. Traditional brand marketers steeped in television advertising might struggle a bit with social media marketing. Word-of-mouth marketing has migrated online to be christened viral marketing, but most marketers have never lifted a finger to get customers to talk to other customers. Marketers accustomed to paying for advertised messages might be shocked at how much harder it is to foment word of mouth.

Social media marketing depends on your customers wanting to tell other customers something good about your product or service. What you’ve been paying media outlets to say about you won’t cut it. You need a message that is interesting, entertaining, appealing, and just plain hard to keep quiet about.

It’s rare that trained marketers pull this off. As discussed in my last column, Blendtec launched a terrific viral marketing video series, obliterating iPods and other unlikely objects in its blenders. But it was not a marketing plan that started the series – grinding up weird stuff was part of their product testing.

Marketers who’ve grown up screaming, “Act now and get, free, an ice crusher!” doubtless have little chance of getting their messages listened to, much less passed on.

It’s Public Relations

So, if not marketers, then should it be public relations? Or Corporate Communications, as they so often like to be known nowadays? Good reasons exist for such a decision.

PR folks have long faced the problem of enticing others to pass along their messages. PR people have spent their careers talking editors, producers, and reporters into covering their “news” and getting customers to pass along a story seems like a similar challenge.

Moreover, social media requires listening, not just talking, which any good publicist knows how to do. Tracking what’s being said about your company in cyberspace is just as important as in mainstream media. Someone who knows how to respond to a media crisis has valuable skills that can be employed when the blogosphere and message boards light up over some issue.

But PR people have limitations, too. For one thing, they tend to respond to a problematic press story based on how much influence the source possesses. They burn the midnight oil when the New York Times prints something, but don’t break a sweat when it’s the Picayune Press. That approach works fi ne for mainstream media, but it’s harder to judge the effect of a customer’s opinion in the social media space.

A public relations professional might not be the best person to assess its influence.

It’s Market Research

So, who could gauge the importance of a customer’s opinion? Perhaps market researchers, because they have spent their lives understanding customer feedback – divining the importance of opinions based on prevalence.

Market researchers use focus groups, surveys, and other techniques to tease statistical signifi cance from the noise of customer feedback. They collate the information and analyze it so that your company can take action. Surely that’s the right kind of experience, yes?

Well, maybe not. After all, market researchers are great at listening but not terribly experienced with sending messages. They don’t know how to convince an audience, preferring to find out what the audience thinks without contaminating their opinions. Marketing depends on getting customers to buy what you are selling, which requires some persuasive powers.

It Requires Cooperation

So, we’re back to where we started. Social media marketing requires the persuasiveness of a marketer, the media savvy of a PR pro, and the listening ability of a market researcher, all rolled into one. Now, maybe you’ve got someone like that lying around at your company, but I’d call that a long shot. What can you do instead?

Break down the walls. It’s not easy, but social media marketing, like many types of Internet marketing, require that you abandon the traditional barriers that cordon off each profession from one another.

Perhaps you need your market research people to learn to use reputation monitoring technology to listen to the Internet conversation about your company. They can use their well-honed analytics expertise to assess the meaning and importance of what your customers are saying.

Then you need your communications people to step in. Some of that Internet chatter might be coming from blogs – your PR folks can help you treat them like press. But they can also use their experience to concoct the kinds of messages that customers will pass along.

Your marketing team can work with the market researchers to understand what kinds of stories might persuade your target markets, and your PR folks can help design them. In fact, IBM has just reorganized all three teams under the same executive – more companies might take that same approach.

Now, will having your teams work together solve all your social media challenges? Of course not. Even the best teamwork will leave you with normal challenges of crafting appealing social media campaigns. But at least you’ll have every possible person working together to do so.

Incentivize Your Audience

Budgets are tightening, and advertisers need to boost ROI- fast. The social Web is gaining value not only as a medium that delivers measurable results, but also as a resource for gaining insight a company can use to make all of its advertising (TV, print, online) more effective, to increase ROI across the board.

Social media is known for its wealth of useful information. Using relevant analytics can pinpoint audiences and learn more about them. Need to reach adults who are interested in European travel? How about people in Los Angeles who like spy novels? Done. You can even aggregate more information along the way and optimize your ads as you go, to fine-tune your reach and make your campaigns more effective.

But as important as such targeting is – and it is significant – there’s another valuable aspect to social media: the level of engagement of the consumers with the social “medium” itself (compared with any other medium – TV, radio, print or even traditional online).

People choose to spend time on social sites. They’re not passive observers – they’re active participants. They’re playing games, sending messages, reading blog posts, poking their Facebook friends, commenting on someone else’s photo, and the list goes on. They’re typing, thinking, laughing, and conquering their enemies (only in the games, we hope). They’re engaged.

Use social media to provide access to enough data about demographics, traffic, interests and social actions to pinpoint a target audience and understand them better, and the attention that users give to this medium while they’re engaged.

What you get is the potential to gain unprecedented levels of information about your audiences and your messages by offering people incentives to give some of that attention to you.

The Payoff: Increased ROI

The idea of incentives isn’t new. Most of us have handed over our contact information for the chance to win a trip to Hawaii (or name your destination), or responded to a handful of survey questions to get a free soda with our next meal. The virtual world is no different. In this virtual economy, people still have wants – someone playing a game wants extra points, someone with a virtual pet wants extra gold to buy toys for it, someone in love wants to send a gift of a dozen virtual roses.

The new opportunity for advertisers is to apply the principle of incentives that we’re all familiar with offline to the virtual economy. Offer game points, gold for virtual pets, or a free gift, in exchange for taking a certain action.

It’s in this action where the real gold lies, thanks to the two characteristics of social media mentioned above. No longer are the actions limited to collecting a consumer’s mailing address or surveying for opinions that aren’t tied to any demographics.

The action is to view your ad (banner or video) and answer a few questions about it. The incentive is whatever the publisher is offering as a reward (the points, the gold, the gift, anything).

The payoff to the advertiser is intelligence that will help you increase ROI within all types of advertising.

Your survey can be designed to measure consumer perception:

Awareness – Who has heard of my brand?
Attitudes – How do people feel about my brand?
Favorability – Do people like my brand?
Intent – How likely are people to purchase my products or services?
Preference – Do people prefer my brand or products over others?

The right analytics partner can couple those results with user demographics like age, location and gender, along with interests and social actions. For example, anonymous User A is a 45-year-old woman who lives in St. Paul, reads murder mysteries, plays Scramble on Facebook and says she is “very likely” to see the next James Bond movie.

That is a significant amount of actionable intelligence for any company. In our fictional example, using aggregate (and always anonymous) audience information, the movie studio might discover that while it’s been concentrating ad dollars on reaching the male audience, perhaps there’s value in targeting females that match certain demographics.

Beyond its significant value as an advertising channel in and of itself, the social web is becoming a giant testing ground for companies to discover who their audiences are and how to more effectively reach them – from any medium.

The social space is evolving into a place that offers advertisers an efficient way to understand audience behavior and perception – and to reach people with precision targeting like we’ve never seen before. You couldn’t ask for a better incentive to get social.

The Importance of Follow-through

I am not a golfer- but I rented some clubs and hit at a driving range for the first time a few months ago. I had no clue what I was doing, but I happened to be standing next to someone who was in the middle of a lesson. I watched closely and tried to apply what the trainer was telling his student to make my swing better. After a few tries, I was consistently driving that sucker over 100 yards – with some sense of control to boot. I realize this is no great feat, but I was thrilled! This was much better than my initial attempts – some of which went backwards (don’t ask…).

Anyway – one of the main points the instructor kept mentioning was the importance of following through with the swing.

“You’re not following through,” “make sure you follow through,’ “what happened to the follow through?”

I began thinking about how follow through is critical for success in many sports. In basketball you have to follow through with your shot – in baseball you need to follow through with your swing.

Of course, the principal of follow through is not limited to sports, but I had not previously seen what a structured concept of following through would look like for the business of Web design. This became a topic of conversation at Sostre & Associates for quite some time. We pride ourselves on doing a great job of planning and consulting and developing so that a site is ready for launch, but the general consensus internally was that we could do a better job following through with that site after launch day.

With that in mind, we created a short checklist of tasks to perform post-launch for every website we create. These follow through items go beyond just making the site functional, and help ensure that it’s really successful.

Let the Data Design for You

One of the most important tenets of Conversion Design is to look past best guesses, best practices, and intuition. Oftentimes, the keen eye of an experienced designer can get things right most of the time, but proper use of your Web analytics data will steer you in the right direction all the time. Reviewing your website visitor data to discover what your users want, and then designing specifically for them is one of the most effective, and often overlooked, follow through activities you can engage in. I often recommend Google Analytics.

First, because it’s one of the most robust systems out there (especially at this pricepoint – free) and second because it allows you to schedule reports to be emailed to you daily, weekly, or monthly. This is a good way to get into the habit of reviewing your data regularly.

I also use Crazy Egg (www.crazyegg.com) to run heatmaps whenever we make layout or non-standard content changes to a site. Heatmaps analyze visitor clicks to a page and display the data as brightly or dimly colored areas based on number of clicks. They help you see how visitors interact with your site in a whole new way and can illuminate common sense design flaws that you haven’t noticed before.

Keep it Fresh

I’ve seen it time and time again where a site launches and does really well, but then it doesn’t get updated for a while and performance starts to slip. Almost imperceptibly if you aren’t keeping close tabs. One of the reasons for this is that users start to get nervous if they feel like a site isn’t being updated or maintained. They get the impression that “no one is home”.

Update highly visible areas such as prominent photos or content on a regular basis. If your site isn’t the type that gets updated,consider including some automated sources such as displaying RSS feeds from related sources to help users feel like the site is up to date.

Keep the Traffic Coming

For the final point in our list, we all know that an optimized, up to date website does no one any good if users can’t find it. Therefore your follow through wouldn’t be complete if it didn’t include monitoring your website’s status with the search engines.This includes evaluating and maintaining titles, descriptions, keywords and/or tags, backlinks, social bookmarking, and more.

With all the sites out there (Google, Digg, Technorati, etc”),it would be tough to follow through with every single one – lucky for us there are several services out therethat can provide the majority of this critical information about your site very quickly. You can try www.Web-SiteGrader.com, or www.XinuReturns.com for examples. Running a report every quarter or so will help avoid any issues that might otherwise go unnoticed.

Just like sports, if you can learn to follow through consistently, your efforts will be much more successful. Remember that each site is different so you will want to add items to this list as time goes on.

Finally, for a quick follow-up – in the last issue, we showed how consulting firm, Think First, could use wireframes to spec out the content before moving to a full redesign.Their existing site looked nice, but offered almost no explanation of their services of unique value proposition.For good measure, we took some time this issue to finish the job by turning the wireframe into a full homepage mockup.

As you can see, the redesign stayed true to the wireframe and kept a lot of the same look and feel elements from the existing site. This is to show that a successful redesign isn’t always about colors and graphics.The core of Conversion Design is to display and organize the elements in such a way that they accomplish a desired goal. In this case – educating Think First visitors on what they have to offer.

Would you like to get your website made over for a future edition of By Design Makeover? Send your name, company, contact information (phone, email, etc.), a brief description of your business and its goals, and, of course, your URL to bydesign@sostreassoc.com. Please put “Revenue’s By Design Makeover” in the subject line.

Passing the Test

In the May/June Affiliate’s Corner column, I wrote about the ways super-affiliates prefer to be approached by affiliate program managers and merchants for the purpose of program recruitment.

Wooing a super-affiliate over drinks and dinner with offers of exclusive landing pages, significantly higher-than-advertised commission rates, or showering them with free product samples will certainly get their attention, but it does not guarantee that you will get the heavy hitters to join your program, however.

Even if your product is a fabulous fit for the affiliate’s audience and your commission rates are more generous than your competitors’, no super-affiliate will send copious amounts of targeted traffic (read: their highly valued subscribers with whom they’ve worked hard to develop loyal and lasting relationships) to your site unless it first passes an affiliate’s Merchant Site Test.

This test evaluates many aspects of the site from both the affiliate’s and a visitor’s perspective. I personally start with factors that will affect a visitor’s experience, and keep the following questions in mind as I peruse a merchant’s site for the first time.

Does the site load quickly or does the server bog down under graphic-laden pages? If there is a Flash home page, is there an obvious “skip intro” link or am I forced to watch the video to the bitter end? Is the site attractive and professional in appearance or are there broken links, graphics and scripting errors? Is the sales page comprehensive and well written, or is it fraught with spelling and grammatical errors or “holes” in the sales copy?

I also check to see whether the site uses excessive newsletter sign-up popups or advertising fly-ins. Do site preview pop-ups such as Snap Shots block my view of the text each time I cursor over a link? Does a new window open every time I click a link? Although I may understand a merchant’s motivation for using such tactics, I am more concerned that visitors to the site will find such intrusions confusing and/or annoying to the point that they are likely to exit the site and kill any chance of a sale.

Appearance, functionality and copy rarely pose problems with professionally designed and maintained sites. Nor are they an issue for ClickBank affiliates who can code links to send traffic directly to the order form. However, having to bypass a merchant’s home page means that pay-per-click arbitrage isn’t an option for some affiliates, while others will have to write sales copy rather than a product review. Although some affiliates may be willing to make that effort to promote one exceptional product, most will pass on the program if the merchant offers a diverse or large selection of goods.

Another significant factor that I will evaluate is search functionality. Visitors must be able to search for and find what they want quickly and easily. For example, does a clothing site let visitors drill down to choose between designers, color and function, or does a click on the “Dresses” link slowly load a page that displays 50 thumbnails of cocktail, evening and wedding dresses?

If the visitor can find a product that she wants to buy, good affiliates will check to see whether the order process is functional, intuitive and secure. Does the site post a “Hacker-Safe” logo and a privacy policy? Are shipping policies and prices easy to locate, or does a customer have to go through the entire order process to determine the cost to ship to Canada or if GST and PST will be added to her order? Can the customer ship to an address different from the billing address and can she have that dress gift wrapped for her cousin in Amsterdam?

What happens if our customer has questions about either the product or her order? Is there a sizing guide or a customer FAQ? Does the site offer order tracking? Is there a contact link, Live Help badge or telephone number displayed on every page for support?

I’d be thrilled to see all but the last item on that list, as a prominently posted telephone number that encourages phone orders means that potential commissions will be lost through traffic leakage.

Traffic leakage occurs at any point on a site that allows visitors to leave the site without making a purchase through the affiliate’s link. Affiliates that pay for their traffic are particularly sensitive to this problem, and most affiliates will not join a merchant’s affiliate program if there is any leakage at all.

Phone orders must therefore be tracked to the referring affiliate – which does not mean asking your customers from which site they originated. Merchants who aren’t equipped with the technical wizardry to track phone orders should allow affiliates to send their traffic to a version of the site that does not post a phone number, and trust that their super-affiliates’ promotional efforts will more than make up for any sales that may be lost by doing so.

Most traffic leaks occur when merchants link to other sites that may be of interest to their visitors, or to partner sites with which they have reciprocal link agreements. Traffic leakage also occurs when a merchant with two or more online stores links to those other sites without compensating affiliates for sales from any and all of their stores.

The most offensive type of outbound link traffic leaks are affiliate or contextual advertising links (i.e., Google Adwords ads) from which the merchant hopes to profit. Most affiliates consider this practice more “traffic theft” than traffic leakage and will not only not join the program, they will also warn other affiliates of the merchant’s commission-stealing practices.

That’s not to say that as a merchant you shouldn’t promote other merchants’ products. You should. But do it on the back end or from within the secure area of your site, only after your own affiliates have had a fair chance to earn a commission for sending traffic to your site.

As you can see, the Merchant Site Test is comprehensive and super-affiliates are picky to the nth degree! If any aspect of the site misses the bar, most super-affiliates will go on to consider your competitor’s offer and promote their products without so much as a TYBNTY (thank-you-but-no-thank-you) note for your time and treats.

If you’re lucky enough to have a super- affiliate take time from her busy promotional schedule (or lounge chair) to explain why she’s chosen not to join your program, consider implementing her recommendations as soon as possible – and let her know as soon as the changes have been made.

Don’t stop there

Visit a Web developer’s forum and ask for feedback about your site. Ask your site visitors for their comments and suggestions as well. Check the affiliate networks for clues about what your competitors are doing right. For example, ask yourself how a merchant that pays only 8 percent commissions has an EPC that is triple that of the merchant who pays 12 percent. Do your own Merchant Site Test to find out why affiliates love to promote their program.

Getting just one super-affiliate on board can substantially increase a program’s earnings. The first super-affiliate in a program will generally use this advantage to heavily advertise the site or product using pay per click.

As other super-affiliates join the program and competition between affiliates increases, most will rise to the challenge and step up their promotional efforts using a diverse array of creative methods. Exposure to both the product and the affiliate program tend to increase exponentially at that point – which makes for very happy merchants and managers.

When you design your site with a view to building long-term relationships with visitors and potential super- affiliates, you too can get that kind of happy – perhaps even rich.

Rosalind Gardner is a super-affiliate who’s been in the business since 1998. She’s also the author of The Super Affiliate Handbook: How I Made $436,797 in One Year Selling Other People’s Stuff Online. Her best-selling book is available on Amazon and www.SuperAffiliateHandbook.com.

Ringing IN and Hanging UP

In the old days, a telephone came in two designs and had one ring. With the rise in cell phones, the styles are endless and so are the types of rings you can make the phone chime. There are master tones, ringback tones, polytones, monotones and they all have a price. Users can download them over the Internet and program a ring to sound only when mom or that special someone calls. Users can also send a ring out to someone to let them know who is calling. But they aren’t cheap – as much as three times the cost of one hit single from iTunes. But that hasn’t stopped people from buying the tones in droves.

The music industry loves that users will pay a premium for the 30-second melodies and still come back for more. What the industry doesn’t like is the Florida Attorney General office, which has it in for certain ringtone sellers over the Internet. Whether or not Florida officials can make a civil case for deceptive practices, the damage is done. When sites such as Blinko.com, Jamster.com and DirtyHippo.com are accused of bait-and-switch tactics by offering supposedly free ringtones that are not free, every ringtone seller over the Internet takes notice, as do consumers.

Ringtone affiliates, sites that sell ringtones and networks with ringtone sellers in their lineup are all concerned about the black eye a few misbehavers are leaving on a growing sector of the digital music revolution.

“No reason for one very bad apple to ruin it for everyone,” Steve Richter, president and general counsel for Media Breakaway, says. Media Breakaway owns CPA Empire, a network that was at the center of a ringtone firestorm a few months ago when it was discovered that an affiliate’s website offered free ringtones when, in fact, they were not free (the free tones only came with a paid subscription). CPA Empire noted that within an hour of identifying the affiliate’s website, it was pulled down. “We had no idea that this was running,” says Richter. “We took a pretty severe action against this affiliate. Any of our affiliates that are discovered to violate our terms and conditions, we take action immediately.”

Tarnished Reputation?

Matter closed. Or so it would seem until another online network is targeted. The coverage this issue has received sheds light on the power a few individuals have on the whole reputation of a budding digital music phenomenon and how hard it will be to police the vast reaches of cyberspace.

“It’s a highly competitive market and a burgeoning industry,” says David Haverly, senior executive, Mobile Vertical, at MIVA. “It’s very hard to break through.” He says that, “technically there are no free ringtones. But websites must be clear that to get the free ringtones you must buy a few; say 10 or more.”

That is what caught the attention of the Florida authorities. The alleged bait-and-switch tactics – when a seller never intends to sell consumers the advertised thing so that it can sell them a more expensive other thing – are pretty much illegal in most states. In the case of Florida, its civil investigation means that the upshot will probably not lead to criminal charges for the companies under the microscope, but can lead to accusations of fraud, which means if someone wants to sue the companies, they could have a pretty good case.

“The content provider industry has guidelines to not blur what they are getting,” says Haverly. “Sometimes, in fine print you see that if you sign up, you get the free ones.

Our goal is to give a quality experience. We have to say when an affiliate is not clear.” With a ringtone affiliate reaping as much as $15 for every new customer, the incentive is there to cut corners.

If more investigations in other states are opened, the reputation of all of digital music sales over the Internet could take a beating at a time when the ringtone market is at an all-time-high. Revenues for ringtones have more than doubled year-over- year, says JupiterResearch. Ringtones brought in about $420 million in 2006 and JupiterResearch predicts the pot will grow to $724 million by 2009. In 2005, more than 24 million people downloaded ringtones to their cell phones; that’s about 13 percent of cell phone users, according to eMarketer. IDC predicts that more than 54 million people will download a ringtone by the end of this year.

An Alternative for Record Companies

For the record companies, this is good news in the wake of its falling sales of music CDs since 2000. When Nielsen’s SoundScan launched the tracking of mastertone sales in December of 2006 (mastertones are portions of the original recording, whereas polytones are just the melody played by usually a keyboard. SoundScan has tracked polytones since 2004.), the numbers surpassed the sales of single-track songs, and in many cases at three times the price. When the first polytones numbers arrived in 2004, Geoff Mayfield, director of charts at Billboard, has said he was “floored.” The ARC Group in London has predicted that global sales of ringtones will surpass $5.2 billion in 2008 – that’s more than 10 percent of all digital music sales. Internationally, the numbers are equally big. The Wireless World Forum estimates there will be 28 million Indians under the age of 24 with cell phones by the end of 2007, and nearly 15 million in the U.K. That spending on ringtones comes to $23 million by the end of this year.

Also, with artists and their labels pulling in less from pure CD sales, other means have to be explored – such as ringtones. David Bowie was one of the first to release unique music to subscribers over his Bowie.net network. Some artists are dipping their toes into ringtone-only releases. Snoop Dog releases ringtones on his website, to name just one artist. “[CD] sales are so down and so off that, as a manager, I look at a CD as part of the marketing of an artist, more than as an income stream,” artist manager Jeff Rabhan recently told The Wall Street Journal.

Yet some vocal affiliates continue to be wary of the return ringtones offer. One forum poster stated that “I really don’t trust most of the merchants that offer ringtones; their websites have that spyware feel.” He also stated that he had “recently checked my stats and I had a measly amount, which was less than the meager $10 I made last year.” Other voices on the Internet second that sentiment. “Making money with ringtones has never worked for me,” a forum entry states.

“I’ve tried the high-paying offers; I tried the low-paying offers. I bought ads with PPC through AdWords and AdBrite and still lost money.”

In the short term, affiliates say, the term “free” always gets a higher place in a search engine result and that alone will make it hard to rid the ringtone universe of the “few bad apples.” One affiliate states that “this is actually good for some of the little ringtone affiliate players out there like myself. I always hated complying with the [terms of service] by removing the terms ‘free, no cost,’ etc., from an ad when my competition clearly wasn’t following suit. Makes it a little harder to compete and slims the margins up for a lot of markets.” Another says “all these guys are at the top of search results because their ads get much higher [clickthrough rates] than publishers that are doing the right thing and are staying away from using the word ‘free.'”

Leads from ringtones are also at an all-time high, offering no incentive to “fly by the rules.” Some affiliates in 2006 generated as many as 1 million clicks and 100,000 leads through ringtone keywords. The payout per lead has fluctuated anywhere between $5 and $15 per lead.

The Search Effect

The continued battle for high-ranking ringtone search results has had an impact. Antivirus maker McAfee rates the keywords “ringtone” and “free ringtone” in the top 10 of the most dangerous search terms to use, just after “free screensaver (per chart pg. 62)” and “Kazaa.” Clicking through to sites resulting from these searches is more likely to send the user to questionable sites or install adware or spyware, McAfee states. One of the most popular “scams” is a “free” tone site that checks a terms of service box for you when you enter your phone number. The terms of service state somewhere that you agree to a subscription price to receive the free tones. When users try to uncheck the box, they can’t.

Some ringtone affiliates have said that when they use Yahoo Search Marketing, the titles and descriptions in the ad are sometimes changed to what Yahoo Search Marketing perceives is still an accurate description. The affiliate may bid on the term “free realtone” but submit copy that leaves the “free” out. Then Yahoo Search Marketing will reinsert the “free” since that was in the keywords they bid on. The affiliate doesn’t see the change until it gets served up. In some of these cases, the affiliate will immediately cancel the campaign when they see the mistake. Sometimes, not.

Other questionable techniques include using a ringtone company’s images and logos to build a unique landing page that goes to a completely different destination when consumers go to sign up. Some advertise MP3 ringtones that are, in fact, lesser monotone files.

Ron Czerny, CEO of PlayPhone, has had experiences with bad ringtone affiliates on his network. “We are very active,” he says. “We are constantly monitoring our affiliates. We take action in 24 hours if we find bad apples and we will report them to the carriers.” The cell phone carrier may pull their short code, he says, which means that the connection between the affiliate’s ringtone servers and the customer will be cut off. “This kind of thing happens in all entertainment areas,” says Czerny.

Government Intervention

It happens with piracy in movies and music, he says, adding that the slowdown in ringtone sales in Europe in 2005 and 2006 was because of “bad customer experiences” with fraudulent ringtone sellers. What was done in a lot of European countries was the carriers imposed regulations that sellers were required to meet before they could sell ringtones. Czerny says the market over there has bounced back.

“[Regulation] is not going to happen in the U.S.,” he says, “because companies like ours are taking that right action,” adding that the bigger companies have a stake in making it work. He says that consolidation is playing a role in weeding out the troublemakers. “We will see consolidation in the top 10 businesses,” he says. “A lot of small ringtone companies are using the backbone of larger ringtone companies and are just simply giving up.” He says the larger market will be in China. Brazil and Mexico have proven they have many willing to pay for tones. Innovations, he says, will come in the way people share the ringtones and not in the tones themselves.

As with the online lead generation industry, the perception and the practice need to mirror each other. The top online lead generation firms formed an association last year to help monitor their industry and set guidelines. Currently, ringtone sellers want to keep the market unregulated. “You must have communication with the network,” says MIVA’s Haverly. “We schedule weekly calls with some of the affiliates,” so that the lines of communication are always open. He adds that if a drugstore runs a two-for-one ad for aspirin but you have to pay full price if you want Excedrin, is it a misleading ad? Does the fact that it might be perceived as fraud warrant the government or the cell phone carriers to step in? Who is going to make the judgment call?

PlayPhone’s Czerny says the government will not step in. “It will not come to that.” Richard Jesty, an analyst at ARC Group, states that ringtone sales will also see a slowdown in the U.S., but not because of fraud. “Over time, the novelty will wear off, but not yet.”

Asking Permission

One of the biggest problems of mass-market advertising is that it vies for the attention of prospects by interrupting them. That’s why TV commercials have long been called "dream interrupters," because that’s exactly what they are. The TV show is your dream. The TV commercial interrupts that dream. Not good.

Of course, if nobody else is interrupting the audience, the interruption will be effective for you. But everyone and their second cousins are interrupting the audience to the point that there’s an interruption overflow. And that’s why guerrillas one and all are rapidly warming up to permission marketing.

The name of this game is to get your prospects to point to themselves as hot prospects. They literally agree to learn more about your company and its benefits. Permission marketing can transform strangers into friends and friends into loyal customers. The first and main rule in permission marketing is that it truly is based on selfishness: Prospects will grant you permission to market to them only if they know exactly how they’ll benefit.

Seth Godin, with whom I’ve coauthored The Guerrilla Marketing Handbook, Guerrilla Marketing for the Home-Based Business and Get What You Deserve! How to Guerrilla Market Yourself, admits that mass media advertising will remain a potent weapon.

"Winston tastes good… ." Can you complete that sentence? Of course you can. It’s "… like a cigarette should." And yet nearly three decades have passed since that slogan was advertised. It would cost far beyond your budget to implant such a slogan in the minds of consumers today. Maybe Nike can afford it. And Budweiser. But the list is very tiny, indeed. It does not include many affiliate marketers.

I agree with Godin when he says that marketing is a contest for people’s attention. There is so much interrupting these days that people have learned to ignore interruptions. TV is cluttered with commercial messages beyond belief, and the Web is even worse.

That means that the challenge of the day is to persuade consumers to volunteer their attention.

Tell them a bit about your company and how your offerings benefit them. Then let them tell you a bit about themselves. Then tell them some more about your company. They’ll tell you some more about themselves. Over time you create a beneficial learning relationship. They want to know what you have to say. That’s why permission marketing is marketing without any interruptions.

Of course, you’ve still got to flag the attention of your prospects, but once you have it, you can turn it into permission, then turn that into learning, then turn that into trust. Once they trust you, they can buy what you sell.

Godin says there are four rules of permission:

  1. Permission must be granted. If it isn’t, you can’t assume you have permission to market. Buying names and addresses, then sending direct mail, is not permission. It’s spamming. And guerrillas do not spam. They know spamming litters the marketing scene and is usually ignored.
  2. Permission is selfish. Your prospects will grant permission to you only if they see clearly that there’s something in it for them. You’ve got about two or three seconds to communicate what that something is.
  3. Permission can be revoked. As easily as permission is granted, it can be withdrawn. On the other hand, it can intensify over time. The intensity depends upon the quality of interaction between you and your customers.
  4. Permission can’t be transferred. Think of marketing as dating. You just can’t give a friend the authority to go out on a date in your place.

Once people give you permission to market to them – then what? Then they want to get to know you better. They want you to solve their problems. They want you to improve their lives.

Why does permission marketing make sense? These days, people have the money to spend on products or services, but they don’t have the time to evaluate your offerings and learn why you are trustworthy. That’s why online marketing is so powerful. You can use email to communicate with people frequently, quickly and unobtrusively – if they have given you permission. Get it at your website. If you list yours, be prepared for a barrage of permissions.

To get these permissions, you’ve got to remember that the Internet is not television. It is direct mail with free stamps. It allows you to create rich relationships. Web banners will wither on the online vine while email marketing becomes the real killer application of online marketing.

Interruption marketing is coming to a dead end in the road, and the future will belong only to those companies that have embarked upon a permission marketing campaign. Will yours be one of them? I hope so.

 

JAY CONRAD LEVINSON is the acknowledged father of guerrilla marketing with more than 14 million books sold in his Guerrilla Marketing series, now in 41 languages. His website is GuerrillaMarketingAssociation.com

Insurance for Conversion Rates

Designing for conversions isn’t rocket science. It’s just the ability to design a website with particular ideas in mind. For this column we’re going to focus on some of the most powerful ways to make a site convert – emotion, unique value proposition and credibility. Master these three basic concepts and you’ll be rewarded with soaring conversion rates.

The life insurance lead generation site EFinancial.com came to us a few months ago with an all-too-common problem. Its site looked much like others in the same industry. While the generic domain name gave people some sense of name recognition, there was nothing else that differentiated the site from its competition. In the online world, that’s not a very good thing.

Combine that lackluster look with the fact that the company needs to collect good information from users to do business and you have a site in need of some conversion design magic. For EFinancial.com, our definition of a conversion is getting a user to fill out the form. And the goal, as always, is to get more people to convert.

Get Emotional

So how can we make this site stand out from the crowd? Or at least, how can we get people to submit their information before leaving to scope out the competition? How do we stop users in their tracks? By creating emotion.

As your stereotypical guy, I’m not real emotional. I don’t do chick flicks and my monotone demeanor isn’t prone to outbursts. But as a marketer, I’ve learned to elicit, titillate and embrace my customers’ emotions. You see, if you can appeal to someone on an emotional level, the chances that they will engage with your product skyrocket. Remember, you don’t have much time to make your impression.

Here is something to keep in mind. Almost every new Web browser on the market offers some sort of tabbed browsing functionality. Now users can stay on one site while they open all their links in new tabs. What this means for marketers and website owners is that it’s now even easier for people to shop around online. I regularly watch users go to Google, perform a search and then open the top four or five results in new tabs. Then they quickly scan the results pages before picking which one they are going to use. This is a scary thought for many pay-per-click marketers because it means more clicks and potentially lower conversions. The call to differentiate or die has never been more compelling.

Show Me the Value

So let’s review the existing site. It’s easy to see that the form is the focal point of the EFinancial site, followed by the family photo and logo. While it’s good the form is front and center, the company is not taking the opportunity to talk about what makes it different from the competition. When designing on the Web, never forget to tell people what makes your organization better.

The EFinancial home page contains no real “about us” text and the main headline appears to be “Start Your Free Life Insurance Quote Here.” That’s hardly an argument for its service. In fact, besides the simplicity of the page, the site doesn’t do anything to sell itself.

I turned to Marty Weishaar, marketing director for EFinancial to find out what makes the company different. He explains that EFinancial definitely does offer some benefits such as being experts at closing tough cases. This is a great point because some people, because of their health, age, lifestyle, etc., have a hard time getting life insurance. This is an audience that should definitely consider working with EFinancial.

Highlight the Credibility

Next, it doesn’t operate on a bait-andswitch mentality, which is something that Marty tells me other companies are notorious for doing. According to Marty, EFinancial will really get you the rate they advertise. Again, this is a solid, unique value proposition and should be highlighted. And its technology automates many of the steps, which makes for a faster process from start to finish, thus satisfying the “let’s get this over with” life insurance shoppers.

Another thing I notice, and one of the points I consider to be low-hanging fruit in the conversion design process, is that the company has buried some strong credibility builders (VeriSign Secured, BBBOnLine, money-back guarantee and privacy notice) under the form and below the “fold” of the page. Study after study shows that having security seals in a prominent place really does boost conversions. While many of us in the online industry understand that these seals may not offer very much in terms of actually making a website more secure, their presence does make some percentage of users more comfortable with submitting their personal information.

Finally, if the goal is to get more users to fill out the form, lose the navigation. Assuming your traffic is fairly targeted, why distract them with links for home loans and auto insurance in the navigation? Getting rid of those will help keep users focused on the task at hand.

For the redesign, we’ve taken several steps to correct the issues identified above. First, we made the family photo larger, and selected a photo and headline that draws more attention to the child. Everyone knows that sex sells, but don’t forget the emotional impact of children as a sales tool. This new image is designed to grab the reader, as opposed to merely decorating the page. That covers the emotional aspect of the redesign.

Next we added bullet points that highlight the EFinancial value propositions and some basic “about us” text that was previously unavailable on the home page. Having and communicating a strong unique value proposition should be a priority for every Internet business owner. Next we moved all those credibility- building seals to the top of the page, where the space was being underutilized anyway, and we moved the carrier logos (AIG, Transamerica, etc.,) to a more prominent position. The security seals, privacy notice and familiar carrier logos should limit users questioning the site’s legitimacy.

Want your home page to be the topic of a future edition of By Design Makeover? Send your name, company, contact information (phone, email, etc.), a brief description of your business and its goals, and, of course, your URL to bydesign@sostreassoc. com. Please put “Revenue’s By Design Makeover” in the subject line.

PEDRO SOSTRE is pioneering conversion design and its ability to turn online shoppers into online buyers. He serves as president of Sostre & Associates, an Internet consulting, design and development firm, which also promotes affiliate programs on its network of websites. Visit www.sostreassoc.com to learn more.

The Guerrilla Attitude

The attitude of a guerrilla affiliate toward marketing is dramatically different from that of a non-guerrilla affiliate. More than 90 percent of life is about attitude and an even higher percentage of marketing is all about attitude. It’s one of the first things that your prospects and customers will notice about you. The way they’ll know it is through your marketing efforts. If you don’t do much marketing, people will be unaware of your attitude regardless of how winning it may be. Private attitudes do not equate with profits. You’ve got to go public with your attitude.

Let people sense it through your aggressiveness in the marketing arena. It will be clearly communicated through the visibility granted you by marketing. When it’s time to decide on a purchase, they’ll be drawn to companies with an attitude far more than invisible companies that don’t actively and proudly express theirs.

Your attitude will also be indicated by the professionalism of your marketing materials. If they look shabby, that shabbiness will become part of your attitude. If they inspire confidence, that will express your attitude.

The reach of your marketing also reflects your attitude and so does the frequency. Naturally, your commitment to your program conveys an attitude. Your consistency expresses it as well. Keep switching your media and message, your niche and format, and people will be unclear about your attitude, assuming you’re not even sure of yourself.

Of course, you can’t succeed on attitude alone. Marlboro may not be the best-tasting cigarette in the world, but it certainly has the right attitude. Same for Budweiser compared with other beers. Many product category leaders succeed with attitude more than excellence; attitude more than low price; and attitude more than lavish spending. Every car made can get you from point A to point B, but some do it with a more stylish attitude.

As an affiliate, your attitude must come shining through in all of your marketing. It will come across by what you say, how you say it, where you say it and how frequently you say it. Even the world’s most winning attitude is for naught if it’s not being transmitted. That’s why guerrillas communicate with a big attitude to compensate what they lack in a big budget.

The website of a guerrilla affiliate reflects that affiliate’s attitude in its design, its straightforwardness, its focus on the visitor, its copy and its overall professionalism. There are endless possibilities to convey your attitude with your website and certainly with your blog. That means that there are endless possibilities to get egg on your face. Whatever you do to communicate your precious attitude, do it right or don’t do it at all.

There’s a huge, yawning gap of which you must be aware. It’s the gap between what you think your attitude is and what your prospects and customers think it is. Your job – and it’s not even a tough job – is to close that gap, to manifest your attitude so clearly that prospects and customers think of you the same way you think of yourself.

An attitude that is mandatory if you’re to be a true guerrilla affiliate is outwardness. Inward focus works against you when it comes to marketing. Save that for your analyst’s couch, and shine your light outward- bound when you’re marketing.

The perception that you require is the knowledge that your marketing is not about you. It is not about your business. It is not about your product or your service. I hope you’re clear on that, because if you’re not, you’ll blur the other insights necessary for you to master guerrilla marketing.

There is always a very good chance that what you have to offer will mean a lot to your target audience. And there’s a small but real chance that it will mean a great deal to them right now. Those simple facts ought to mean a lot to you before you plunge headlong into a marketing attack. If you can adapt your mindset to just what your offering can mean to your prospects, you’re thinking properly.

If you’ve got the right attitude about marketing, you’re nearly fixated on providing your customers with precisely what they need. One of the things they do need, as do all members of humanity, is a sense of identity. If you operate from the inside of their minds, you’ll be able to make yourself part of their identity. The fact that they do business with you and have a lasting relationship with you will become part of their identity and it will be very clear to their colleagues and friends.

Since your attitude as a guerrilla affiliate is centered around your customers, other facets of your business will follow suit. Your service will pick up and customers will notice. The people you hire will share your attitude, and again, customers will notice. The way you run your business will never seem stale to them because you’ll be innovativing in ways that deliver customer bliss.

Doing it means you can see the future before it unfolds, giving you an immense competitive advantage. It shows you beyond doubt that the best way to engage in customer-oriented marketing is to continuously innovate and to be the very essence of flexibility. In the past, staying with the tried-andtrue was the way to go. In the future, in which today’s present resides, that’s not the way to go.

A guerrilla affiliate knows that focusing on your customer is the way to go, and that "business as usual" now means "business as unusual" if you’re to be a guerrilla with the right attitude, seeing things from your customers’ point of view, meeting and then exceeding their expectations.

That calls for knowing where you’re headed, what your competitors are doing and what your prospects’ customers are thinking. Then it calls for you to demonstrate the attitude that proves you can see things from their standpoint.

 

JAY CONRAD LEVINSON is the acknowledged father of guerrilla marketing with more than 14 million books sold in his Guerrilla Marketing series, now in 41 languages. His website is gmarketing.com.

The Posh Payoff

Diamonds, private jets, multi-million-dollar mansions, haute couture, luxury vehicles and high-end handbags – customers looking for upscale goods and services could probably find all these items in posh places like Beverly Hills or they could just head to the Web.

The online shopping environment for upscale merchandise has been robust in recent years.

Websites such as NeimanMarcus.com, with annual sales that jumped 30 percent in fiscal 2005, and Diamonds.com, are flourishing.

This climate of vigorous sales is driving merchants, including fashion icons DKNY and Prada, to unveil e-commerce sites in the coming months and incentivizing affiliate sites like American-Luxury.com and Splendora.com to promote high-end merchandise to their niche audiences.

Initially luxury merchants had trepidation about the effect the Internet would have on their brand equity. eMarketer’s senior analyst, Jeff Grau, says, “Because the Internet is often thought of as the place to go for bargains, luxury merchants were concerned that it would cheapen their brand. Luxury brands’ emphasis is on quality and fashion rather than price ” they did not want to be associated with a channel that was for bargain hunters.”

But lucrative benefits have outweighed these concerns – the Internet not only offers a new source of sales and higher profit margins, it is a way for merchants to avoid high overhead costs of paying employees and expensive rents in tony areas. And many luxury merchants that have moved online say they did so to meet increased demand.

LUXE FOR LIFE

That demand is evident in several categories. In 2005, Forrester Research found that jewelry/luxury goods, apparel and health/beauty were making the most inroads into total sales – and the market researcher forecast apparel and home products as the two categories to grow the fastest between 2005 and 2010.

Traditionally the categories that have sold the best online have been computer hardware/software, books, and toys/video games. ComScore Media Metrix found that for the 2005 holiday season, the jewelry and luxury goods and accessories categories showed a 22 percent gain in visitors in December over November.

Apparel: The conventional wisdom about e-commerce was that apparel never would sell well online because people want to try things on before they buy. But more familiarity with a brand’s size and quality expectations as well as easier return policies are causing consumers to buy more apparel online every year, which accounts for a large segment of high-end merchandise.

“People are becoming more and more comfortable buying apparel online. For example, denim is one of our top categories – we keep adding more brands due to the demand of what clients are asking from us,” Carel Hearon, eLuxury.com’s marketing and affiliate manager, says.

Accessories/Handbags: According to comScore Media Metrix, the percentage of Internet visitors to Coach.com increased 117 percent in 2005, and a 2005 Women’s Wear Daily poll found that a large percentage of women (48 percent) buy accessories online. Accessories such as handbags and scarves sell well over the Internet because they are not restricted by size or fit requirements.

“Handbags and accessories are our strongest categories. You don’t have to try on a handbag, so there is a lower return rate,” Hearon says. Others agree.

“We get lots of winning bids for eBay on terms like Balenciaga Le Dix and Chloe Paddington for handbags,” says Michelle Madhok, who runs SheFinds.com, which focuses on shopping and fashion. Madhok notes that such handbags retail in the $1,000 range.

Shoes: Madhok adds, “We sell tons of shoes – especially from Zappos Couture” – with an average price point of $250. She says the reason is, “No matter your size, shoes always fit – that makes them especially attractive for Internet shoppers.”

Trisha Okubo, founder of Omiru.com, a style and fashion affiliate, says, “Our best categories are shoes and other accessories, likely because the fit issue is minimized in these categories. Our experience with high-end shoes is that brand name matters. Bluefly has worked for us because it provides discounts on well-known designer names.”

Lingerie: The 2005 Women’s Wear Daily poll found that women like to purchase intimate apparel online such as lingerie because they enjoy the privacy of shopping from home. Underwear is SheFinds.com’s No. 1 category. SheFinds.com partners with BareNecessities, which offers brands such as La Perla and Cosabella that sell bras that typically cost more than $100.

Jewelry: According to comScore Media Metrix, the increase in the percentage of Internet visitors heading to Diamonds.com was 223 percent, and the increase to Zales.com was 163 percent from November 2004 to November 2005.

Eddie Bakhash, president of AmericanPearl.com, which has been in business since 1997, says it has experienced a steady growth of approximately 20 percent annually for the past five years. The top-selling items are rings, earrings and necklaces, and the average price point for a product is $1,000. Brad Matson, chief marketing officer for Bluefly, says it added jewelry “based on demand,” adding, “It is an important and growing segment for Bluefly.”

Home Decor: Forrester predicts that home products will grow 8 percent between 2005 and 2010. Marilyn Olsen, who runs four sites, including American- Luxury.com and French-Luxury.com, sells a wide range of high-end merchandise including furniture, kitchenware, interior design and gardening essentials and is an affiliate for upscale furniture merchants such as Design Within Reach, Frontgate and Horchow.

She explains the success of these categories:

“As people furnish their kitchen, they want to be able to cook and entertain casually in as much style as they do in other parts of the house,” Olsen says. When people visit American-Luxury.com to buy leather armchair barstools that retail at $729 each from Horchow, they can see a Jura Capresso Impressa espresso machine that retails for $2,399 from Sur La Table.

Other Items: The definition of a luxury item is something that adds to pleasure or comfort but is not absolutely necessary – an indulgence. Merchandise in all sorts of categories could match this description – such as spa treatments, luxury travel, upscale baby clothes, gourmet foods and high-end gifts.

For the 2005 holiday season, the leaders in the luxury segment were RedEnvelope with its December traffic (2.4 million visitors) seeing a 62 percent increase over the previous month; and Tiffany & Co., up 47 percent over November with 2 million visitors, according to comScore Media Metrix.

Luxury shoppers, who make up a mere 2 percent of all online buyers, account for nearly 7 percent of online retail sales. According to Forrester, the online shopping revenue reached $170 billion in 2005 – $12 billion (7 percent), was sales luxury sales.

Indeed, some online luxury shoppers are affluent people. In March 2006, Time magazine found that of adult Internet users with household incomes of at least $150,000, 12 percent of respondents said that the Internet was their primary place to shop for apparel and 18 percent said it was their secondary place. And upper-income shoppers have been driving sales for the past two years, noting that luxury goods retailers were the strongest performers during the 2005 holiday season, according to Ernst & Young Consumer Trends Center.

Forrester finds that luxury buyers are comfortable with Internet and Web technologies and have shifted a great part of their spending to the online channel as usability has improved. Luxury buyers, in fact, are 36 percent more likely to be comfortable with online transactions involving their credit cards and are 25 percent more likely to be technology optimists than average online shoppers.

CONVENIENCE IS KEY

And the Internet is an excellent way to reach lucrative clientèle – high earners who work long hours and have little time to shop. American-Luxury’s Olsen attributes part of the growth of her site to this. “I think a lot of it is time constraint,” she says. “The sophisticated customer is increasingly very, very busy and they don’t have time to go to the mall.”

Forrester found that convenience-driven consumers make up approximately 31 percent of all online shoppers and represent nearly 35 percent of all online spending. And many of these convenience shoppers are buying upscale merchandise.

“It turns out it is a convenience thing – most of our customers live in major metropolitan cities – they could have gone to the stores,” says eLuxury’s Hearon. “We thought our top buyers were going to be in places like Des Moines, Iowa, where there were not stores to buy the latest Rock & Republic jeans.”

And for people who live in more rural areas, it is certainly more convenient to shop online than to take long trips to metro areas. eMarketer’s Grau says, “The Internet makes it easier – it brings into reach the items that people in small towns cannot get.”

Jeremy Palmer, QuitYourDayJob.com’s CEO, says he has worked with Zappos.com, and was surprised that there was a market for expensive shoes but reasons that “people in fly-over states like Utah [where he lives] want luxury shoes but are limited in what they can buy – the audience is smaller but there is demand.”

Olsen agrees. “In some areas of the country, it is harder to find upscale merchandise. I think they tend to appreciate Internet shopping more than someone who has access to brick and mortar,” she says.

In addition to convenience, Grau says the growth in luxury online sales is due to the maturation of e-commerce where consumers feel more comfortable buying very expensive things online, so there are more items offered to meet demand.

“Merchants started out with books and CDs and gained confidence to where consumers buy a watch or a ring, whereas a year earlier they never would have. There are three main reasons: trust, education and presentation,” he says.

TRUST BUILDING

The biggest tool for building trust is improved customer service with excellent phone representatives, consistent delivery of quality products and better shipping policies for easier returns.

Madhok says, “Shoe companies are great with free shipping and free returns, so there’s no risk in ordering.”

Hearon adds that, “For apparel, such as denim, people will buy two sizes and keep one and return the other so they can avoid the hassle. We have great shipping policies to do that.”

Grau explains that merchants make it possible to enter into a live chat so there is more hand holding when it comes to buying a high-end product.

“You see on jewelry sites lots of educational information that explain what to look for when buying a diamond ring – how to evaluate quality and what carats mean. They [service representatives] help a customer shop and they gain more trust in the brand that takes the time to educate the customer about how to buy a diamond ring.”

Another important component to luxury shopping online is the presentation of merchandise that websites offer.

Consumers visit websites after they have been in a store since they can often find a great range of color and sizes. Online shopping is not only about pre-shopping, but securing exactly what you want, according to Grau.

Olsen says, “I work like a personal shopper and make it easier for people to find things. I am able to show them all of the options in one place and make their decision making more simple.”

Luxury shoppers do not think of the Internet as limited or the lesser alternative to off-line shopping but as a unique way to shop, according to Bluefly’s Matson.

“At Bluefly, you can see 100 dresses in one color very quickly – you would have to go to 10 stores to see that,” he says. “Bluefly has an engine that lets you look at all of the dresses that are black, size four and between $200 and $400, from more than 365 designers.”

There are some e-tailers that allow customers to enter their physical dimensions and the site will in turn offer up styles that are suited to your figure, Grau says.

Online shopping also serves consumers who want to stay on top of the trends, making it easier to achieve a certain look. Hearon says many of eLuxury’s customers “have high household incomes but some are willing to live in a shoebox to have the latest Louis Vuitton bag and shoes. They are very fashion-conscious and are aware of the trends and want to wear them and will do whatever it takes.”

Celebrity gossip and style watcher websites have brought the demand for “it” labels to cyberspace.

“Now women want the bag they see Jennifer Aniston carrying. Before, to get their hands on the designer item, they’d have to shop in a big city. Now designer labels – even discounted designer labels – can be found on eLuxury, Neiman Marcus, Yoox and Bluefly’s websites,” Madhok says.

Omiru.com’s Okubo says that, “the growing status-consciousness of our culture encourages the gravitation towards luxury brands. What you buy and what you wear is seen as an extension of your personality, really; an extension of you. What does this mean for retailers? People want Prada or Polo, not a private-label brand. Luxury brands have an automatic stamp of approval on them.”

NICHE IS NICE

This phenomenon provides an opportunity for publishers to focus on an area of their expertise, become an evangelist for a brand and reach potential customers – whether it is for premium watches, fine crystal or evening handbags. Moreover, luxury purchasers tend to be passionate and loyal and showy about their brands and this lends itself well to merchants looking for loyalists to endorse their products.

Liane Dietrich, vice president of Merchant Services for LinkShare, attributes the increase in luxury-brand sales online to affiliates.

“There are lots of niche and content sites that are playing the role of ‘recommender’ – they recommend products and merchants to consumers and that is paving the way for luxury brands to take their place.”

Clearly affiliates are attracted to upscale merchandise for the high commissions – many luxury sites do not offer discounts and have limited “sales” or “clearance” sections. Luxury merchants report that paying full price does not deter consumers from buying.

Another reason affiliates promote luxury products is the cache that luxury items offer them.

“I think it’s very important to note that affiliates are attracted to luxury merchants for the perception of high-average- order value and high conversion, as well as the visual value that the luxury connection adds to the affiliate’s site,” Dietrich says.

But affiliates need to be sure they offer the brand that leads a potential customer to their site. Shawn Collins, president of Shawn Collins Consulting, warns, “If unchecked, affiliates will exploit the brand – they will leverage the brand names like Gucci or Dior even if they don’t sell those products. Affiliate managers should kick them out after one or two ‘outs’ if affiliates mess around with the branding. For example, in paid search arbitrage, affiliates can bid on trademarked names such as Dior but these keywords frequently get abused and affiliates drive traffic to their sites when there is no product there.”

SELECTIVE, EXCLUSIVE, DISCRIMINATING

Affiliates should be aware that in exchange for potentially high commissions, the programs are not easy to get into and will require that affiliates not only have a highly trafficked site, but a well-designed site that features other upscale sellers. And they will be closely monitored with their keyword buys and how they present brands on their site.

“Luxury affiliate managers are pretty brand-protective. They are looking for a reduced level of discounting; a clean, visually appealing site; and possibly some other merchants on the site that would help raise the legitimacy of the website,” Grau says.

“Obviously, Rolex doesn’t want to see an advertisement for Rolex watches on a Wal-Mart affiliate site,” Palmer says. “The terms and conditions of luxury programs spell out how they want their brands advertised.”

Hearon says, “We are very selective – we have 300 people apply per week and I let in three. I evaluate the ‘look and feel’ of the site and I have an intern look at every affiliate. I make sure we are not on coupon sites.”

“You have to be cautious with affiliate marketing – if you are selling a fine-quality product, you want it to be showcased in the best possible light,” AmericanPearl.com’s Bakhash says. “Consumers evaluate the company and product based on where it is – which is why we really like Yahoo Shopping and Amazon.com.” AmericanPearl is on dozens of other sites through Yahoo Shopping, and Yahoo Shopping is their best affiliate.

Sak’s Fifth Avenue and Neiman Marcus are private programs and currently Neiman’s must approve all photos used on a site, according to Madhok. “I’m hoping as they begin to trust us, this requirement will go away since it impedes the speed of Internet publishing.”

But not all luxury brands are strict.

“Every luxury merchant is going to have a different tack on it. Some luxury merchants are very open to driving revenue that is valuable additional traffic for them – whether it comes from a very high-end affiliate or a small niche affiliate might not be as strong of a concern,” Dietrich says.

Matson says Bluefly has “hundreds of affiliates, which is helping Bluefly to grow. We get 60 [applicants] per week and take 20 or so. We look at quality and fit and examine each affiliate on a case-by-case basis.”

Hearon attributes the success of eLuxury’s affiliate program to “partnering with the right companies and making sure we send out newsletters once a week and communicate as often as possible with our top affiliates [such as] ShopAmex and American Airlines.”

These types of membership and loyalty sites work well for luxury brands by playing up the benefits of being a member in addition to getting the points or rewards. In addition, it plays into the idea of a luxury brand – because of membership, because people are often getting the first crack at a newly released item.

Each of the affiliate networks has a share of luxury merchants. Commission Junction has Bluefly; Performics has RedEnvelope and Frontgate; and LinkShare has eLuxury and Blue Nile. Merchants are looking for networks that are sensitive to where their brands might be, and how their brands are portrayed in any sort of marketing. For this reason, the networks offer a variety of tools that provide merchants with the reassurance that their brand is being marketed correctly.

The days of thinking that companies such as Overstock and eBay, which sell mass-market products like books and iPods, epitomize online shopping are over. The Internet is no longer incompatible with the exclusivity of luxury goods. Retailers of upscale merchandise are and will continue to look to online shopping as an essential sales and marketing channel.