No discounting this caution

N. Nagaraj

Krishnan Thiagarajan

``LADIES and Gentlemen of the Jury, I rest my case.''

You would say this after reading out what you found in this article, if you were one of those die-hard ``it is the message and the convenience, man!'' school of thought when it comes to online retail and e-commerce.

The latest iCustomer Observer, a quarterly study by Valentine Radford, says that 92 per cent of online customers in the US expect more discounts from Internet retailers than from traditional retailers. If you ``bought'' your customers, now is the time to kick yourself. If, at any point in time, your customer acquisition costs included in them ``discounts'' as a large chunk, you'd now wish you'd rather not taken your cash-burn rate so high. Just that's what your customers are telling you -- you gave me a discount then, and I expect one now. And if you don't agree, I'd rather buy offline.

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Conversion rates (the number of people who visited the site and then bought something) even in the earlier quarter had been a measly 0.2 per cent (2 in thousand). The click-throughs were also a measly 0.2 per cent. And why? Three-fourths of the respondents think that banner ads are annoying. About 30 per cent think that banner ads provide essential information. A chunk of these are likely to be newcomers to the online shopping experience and another chunk is likely to be the ``comparison-shopping is king'' brigade. The rest could include analysts and compulsive shoppers.

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Anyway, there's no reason yet to pack up your Web site because you can't attract customers through banners. More than half of the respondents agree that e-mail advertising is enjoyable. And, more than 80 per cent say that they enjoy receiving e-mail newsletters. This is possibly because e-mail newsletters carry enough information to interest them, and the ads are placed in context and displayed to them when their interest is at the highest.

For instance, you are unlikely to read a tennis newsletter unless you are an avid tennis fan, and when you are reading about your passion is the right time to offer you the latest trainers, or racquets using the latest technology, or maybe even three tennis balls for the price of two.

The study also found that more than half of the respondents prefer to receive coupons (for discounts, freebies) through e-mail rather than newspapers or mail. This sounds like a good thing for both the customer and the seller. The seller can prompt a purchase online by just e-mailing the coupon -- all the customer has to do is just click the link and add stuff to the shopping cart and press ``Buy!''

Here's more good news for marketers: the bottom fell out of the ``opt-in Vs opt-out newsletters'' argument. Just stop listening to all the psychologists and sociologists about giving people choice about what promotional literature and other information they should receive, and the modalities of the choice. Almost three-fourths of the respondents said that it doesn't matter.

Just don't assume that this means that people like all the stuff that they receive. For all we know, they just like to see the ``You have 152 new messages!'' when they check their e-mail, or they just take the messages and trash them, or they just leave them lying around till a mysterious e-mail server crash destroys them. But whatever they do with them, they like receiving them. Now that we have exhausted the possibilities, what remains is most elementary - that they have found a way of ignoring them, and how! Simple: Seventy five per cent of the respondents organise through multiple mailboxes, and the marketing spiels that they do receive sit in the corner waiting for the axe to fall.

Almost the only piece of great news that online retailers have is that respondents ranked Internet retail service superior to traditional retail service, but that was marginal -- very marginal indeed -- 6.4 over 6.2. The message is very clear: Internet retailer, clean up your act, or pack up!