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& Marketing
                                                                                                        Sales
Do Business Faster and Better:
E-Commerce for the Imaging
Supplies Industry


by Dr. Dimitris Constantinou • Easy Group LLC




I
    n the October 2009 Recharger, I presented the
    first of a three-part series of articles regarding
    e-commerce for imaging consumables. As the busi-
ness environment becomes more and more complex
and our industry continues to rapidly evolve, it is
becoming more important than ever that as a busi-
ness owner you don’t ignore the obvious opportuni-
ties that e-commerce has to offer.
   While the term “e-commerce” to most people sug-
gests the mere transaction of “buying or selling goods
through the Internet,” the concept of e-commerce for
me is more than that. Simply put, e-commerce is
about using the Internet to do just about everything
for your business faster and better. It is about giving
customers access to information and systems and let-
ting them serve themselves. It is about exchanging
information, buying and selling products, establish-
ing and maintaining an ongoing and dynamic rela-
tionship with your customer, and more. It is the
online equivalent of all forms of communication with



                                                          www.rechargermagazine.com • November 2009 • 45
Sales & Marketing

       It is about exchanging information, buying
             and selling products, establishing and
              maintaining an ongoing and dynamic
                  relationship with your customer.

     your customer, and the efficiency and competitive-          make a big difference. Consider the following (per-
     ness it can bring to your company is extremely pow-         haps oversimplified) example:
     erful … if done correctly.                                     •	 You	 have	 50	 percent	 profit	 margin	 (cost	 of	
        The following represent what I consider the main         goods/sales price)
     building blocks of a successful e-commerce driven              •	 You	have	20	percent	overhead
     company:                                                       •	 Your	conversion	rate	is	4	percent	and	your	aver-
        1. Market and Product.                                   age order is $50
        2. Pre-sale Marketing (Traffic Generation).                 Assuming the only other “cost” is your marketing
        3. Conversion.                                           cost, what can you afford to pay in marketing costs
        4. Post-Sale Marketing (Maintenance).                    (per visitor) to break even?
        5. Infrastructure.                                          If you have a 4 percent conversion rate, that means
        The focus of last month’s article was on the first       that four out of every 100 (or one in 25) visitors will
     two building blocks (Market and Product and Pre-            place an order. With an average order value of $50,
     sale Marketing).                                            you would have an effective RPA (revenue per one
        In this article, I will focus on the next two building   visitor) of 60 cents (see below for calculation).
     blocks (Conversion and Post-Sale Marketing).                   What that means is that you can afford to pay up
        A final discussion about “Infrastructure” will be        to $0.60 in marketing per unique visitor. If the mar-
     presented in December ’s Recharger.                         keting costs you less than $0.60 per visitor, you make
                                                                 a profit and if it costs you more than $0.60, you lose
     Building Block One: Conversion                              money.
        I am defining the “conversion” of a Web site as the         Here’s a closer look at the mathematics behind this
     number of customers that actually place an order as a       analysis:
     percentage of unique visitors to that site. Obviously,
     conversion rate plays a huge role in the overall suc-          Average order                            = $50
     cess or failure of any Web site, but so does the dollar        Cost of goods (50 percent of order)      = $25
     value of the average order. Both conversion rate and           Overhead (20 percent of order)           = $10
     the dollar value of the average order are factored in
     to different metric systems that are used to calculate         Profit (before marketing)                = $15
     overall Web site “conversion.”
        Third-party affiliate programs such as Commis-              Marketing cost (per visitor)
     sion Junction, calculate conversion through what is            in order to break even                   = $0.60
     termed the “EPC” (earnings per 100 clicks), while
     Google Analytics calculates conversion as the “RPA”            With 4 percent conversion rate, 1 in 25 visitors
     (revenue per acquisition, which is equivalent to the           place an order, if you pay $0.60 in marketing
     earnings per one click).                                       costs per visitor, that equals $15 in marketing
        It doesn’t matter what measurement system you               costs per sale (0.60 x 25 = $15)
     use, the bottom line is that you want to have a higher
     percentage of visitors placing an order, and a higher
     average order dollar value.                                   Now let’s change the scenario and assume you can
        Even small increments to your conversion rate can        achieve a 5 percent conversion rate and an average


46 • November 2009 • www.rechargermagazine.com
Sales & Marketing

           You want to captivate the customers’
          attention as fast as possible, and hone
           them in to what is most important for
                            them to know or see.

order of $60 (keeping profit margin and overhead the     Getting quality traffic to your Web site is a very large
same). The RPA now becomes $0.90.                        discussion topic, and was briefly presented in last
                                                         month’s article. However I want to impress on you
  Average order                           = $60          again the importance of delivering quality visitors to
  Cost of goods (50 percent of order)     = $30          your Web site that are in the “right frame of mind.”
  Overhead (20 percent of order)          = $12          Quite simply, that means that you need to attract
                                                         visitors that are not only interested in the products
  Profit (before marketing)               = $18          and solutions that you offer, but are also in a “buy-
                                                         ing” mode (not just a “research” mode).
  Marketing cost (per visitor)
  in order to break even                  = $0.90        2. Web Site Aesthetics/Design. The look and feel of
                                                         your Web site goes a long way in making a customer
  With 5 percent conversion rate, 1 in 20 visitors       “comfortable” in buying from your Web site. Simple
  place an order, if you pay $0.90 in marketing          is	always	best.		You	want	to	captivate	the	customers’	
  costs per visitor, that equals $18 in marketing        attention as fast as possible, and hone them in to
  costs per sale (0.90 x 20 = $18)                       what	is	most	important	for	them	to	know	or	see.		You	
                                                         also want to make them comfortable in ordering from
                                                         you, by providing them with a professional looking
   By increasing the conversion rate from 4 percent to   Web site and all the necessary security features such
5 percent and the average order value from $50 to        as SSL security certificates, privacy statements, con-
$60, we effectively created an opportunity to afford     tact information and more.
paying up to $0.90 in marketing per unique visitor,
whereas in the previous example you could only           3. Product/Solution Offering. As discussed in the
afford to pay up to $0.60.                               prior article, never underestimate the importance of
   So what can you do to increase the conversion rate    positioning products as comprehensive solutions. If
(and effectively, the RPA) of your Web site? Conver-     you position and market your products as solutions
sion rate is a much larger topic than this article       with all the associated benefits, you are already one
allows me to expand upon, but I will touch briefly on    step ahead of the competition and have differentiated
some factors that affect conversion rate:                your product from a sea of homogeneous products.
                                                         And, as much as possible, offer options to your cus-
  1.   Quality of Traffic                                tomers. Offer original brand cartridges, remanufac-
  2.   Web site Aesthetics/Design                        tured cartridges, refill services, and more depending
  3.   Product/Solution Offering                         on your business model. And make sure your cus-
  4.   Web site navigation (Can your customer find       tomer can find all their options in a quick and efficient
what   they need quickly and easily?)                    manner. That brings us to the next factor that affects
  5.   Cross-sell and Up-sell features                   your conversion, your Web site’s “navigation.”

1. Quality of Traffic. Conversion starts with targeted   4. Web Site Navigation. Different people will give a
traffic. If you don’t have targeted traffic going to     different term to what I am referring to as “naviga-
your Web site, you’re wasting your time (and money).     tion.” Some may call navigation your Web site’s

                                                                                 www.rechargermagazine.com • November 2009 • 47
Sales & Marketing


             Customers often like to have a human
            touch, guiding them and assuring them
          that they are buying what they need and
                     getting the best overall value.

     “cross reference guide,” or “printer cartridge compati-         human touch, guiding them and assuring them that
     bility guide” or some other term. Essentially, by “navi-        they are buying what they need and getting the best
     gation," I am referring to the tools that you offer your        overall value. Never underestimate the importance of
     customers in order to find the products they need               a human touch, no matter how automated or e-com-
     quickly and accurately. Basically, how your customer            merce centric your company becomes.
     will “navigate” to see your product offerings.
        In the imaging consumables industry, navigation is           Building Block Two: Post-Sale Marketing
     an even more critical component and can make a huge             (Customer Maintenance)
     impact	 to	 your	 conversion	 rate.	 	 You	 could	 have	 the	       Be sure to stay in front of your customer, even after
     exact product the customer wants, at exactly the right          they place an order. Don’t think of it as though you are
     price, but if that customer does not find that product          trying to sell more products to the same customer,
     quickly and accurately, they will not order it.                 think of it more like building and maintaining a rela-
        Navigation tools for our industry are very hard to           tionship with the customer, more sales will follow.
     assemble	 and/or	 manage.	 You	 need	 to	 know	 all	 the	       There are many things you can do to stay in front of the
     printer and cartridge models in existence, how they             customer in your post-sales marketing and relation-
     interrelate, and what specific products work for which          ship-building efforts, but a few obvious things you can
     specific printer or cartridge models. And that’s just           do are:
     part of it; you also need to stay abreast with new                 •	 Include	offers	with	your	orders.
     printer and cartridge model releases, and we all know              •	 Manage	 an	 effective	 and	 spam	 free	 e-mail	 mar-
     by now that this is happening at a faster pace than ever        keting campaign (offer coupons, information, product
     before. Consider also that many aftermarket manufac-            updates and more).
     turers and remanufacturers make products with differ-              •	 Call	your	customers.
     ent compatibilities (consider for example a universal              Customers appreciate the follow up. A simple call
     cartridge or chip versus a cartridge specific model),           to your customers to ensure that they received their
     your “navigation” tool could become extremely over-             order and that everything is working fine goes a long
     whelming.                                                       way in retaining trust and continued relationships.
                                                                     That effort also becomes an opportunity to get to know
     5. Cross-sell and Up-sell Features. Every second that           your customers a little better; perhaps they have more
     your customer is on your Web site, and every page they          printers, other locations, or other ways that you can
     visit, is an opportunity to sell them on what you have          help them (and thereby of course also increase your
     to offer. Take advantage of multiple cross-sell and up-         sales and customer retention).
     sell opportunities, such as “free shipping” prompts at             A more detailed analysis on e-commerce infrastruc-
     checkout (example: display an automated message that            ture will be presented in the third part of this series of
     reminds the customer that if they “spend another $20            articles in Recharger ’s December 2009 issue. R
     they qualify for free shipping," etc). Another way to
     cross-sell is to get the customer on the phone. In my
     experience, with a trained phone sales rep, you will get                   Contact Dr. Dimitris Constantinou at
     a higher order value per order over the phone than                              dimitris@easygroup.us.
     through the Web site. Customers often like to have a

48 • November 2009 • www.rechargermagazine.com

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E-commerce for the Imaging Supplies Industry: Part 2 of 3

  • 1. & Marketing Sales Do Business Faster and Better: E-Commerce for the Imaging Supplies Industry by Dr. Dimitris Constantinou • Easy Group LLC I n the October 2009 Recharger, I presented the first of a three-part series of articles regarding e-commerce for imaging consumables. As the busi- ness environment becomes more and more complex and our industry continues to rapidly evolve, it is becoming more important than ever that as a busi- ness owner you don’t ignore the obvious opportuni- ties that e-commerce has to offer. While the term “e-commerce” to most people sug- gests the mere transaction of “buying or selling goods through the Internet,” the concept of e-commerce for me is more than that. Simply put, e-commerce is about using the Internet to do just about everything for your business faster and better. It is about giving customers access to information and systems and let- ting them serve themselves. It is about exchanging information, buying and selling products, establish- ing and maintaining an ongoing and dynamic rela- tionship with your customer, and more. It is the online equivalent of all forms of communication with www.rechargermagazine.com • November 2009 • 45
  • 2. Sales & Marketing It is about exchanging information, buying and selling products, establishing and maintaining an ongoing and dynamic relationship with your customer. your customer, and the efficiency and competitive- make a big difference. Consider the following (per- ness it can bring to your company is extremely pow- haps oversimplified) example: erful … if done correctly. • You have 50 percent profit margin (cost of The following represent what I consider the main goods/sales price) building blocks of a successful e-commerce driven • You have 20 percent overhead company: • Your conversion rate is 4 percent and your aver- 1. Market and Product. age order is $50 2. Pre-sale Marketing (Traffic Generation). Assuming the only other “cost” is your marketing 3. Conversion. cost, what can you afford to pay in marketing costs 4. Post-Sale Marketing (Maintenance). (per visitor) to break even? 5. Infrastructure. If you have a 4 percent conversion rate, that means The focus of last month’s article was on the first that four out of every 100 (or one in 25) visitors will two building blocks (Market and Product and Pre- place an order. With an average order value of $50, sale Marketing). you would have an effective RPA (revenue per one In this article, I will focus on the next two building visitor) of 60 cents (see below for calculation). blocks (Conversion and Post-Sale Marketing). What that means is that you can afford to pay up A final discussion about “Infrastructure” will be to $0.60 in marketing per unique visitor. If the mar- presented in December ’s Recharger. keting costs you less than $0.60 per visitor, you make a profit and if it costs you more than $0.60, you lose Building Block One: Conversion money. I am defining the “conversion” of a Web site as the Here’s a closer look at the mathematics behind this number of customers that actually place an order as a analysis: percentage of unique visitors to that site. Obviously, conversion rate plays a huge role in the overall suc- Average order = $50 cess or failure of any Web site, but so does the dollar Cost of goods (50 percent of order) = $25 value of the average order. Both conversion rate and Overhead (20 percent of order) = $10 the dollar value of the average order are factored in to different metric systems that are used to calculate Profit (before marketing) = $15 overall Web site “conversion.” Third-party affiliate programs such as Commis- Marketing cost (per visitor) sion Junction, calculate conversion through what is in order to break even = $0.60 termed the “EPC” (earnings per 100 clicks), while Google Analytics calculates conversion as the “RPA” With 4 percent conversion rate, 1 in 25 visitors (revenue per acquisition, which is equivalent to the place an order, if you pay $0.60 in marketing earnings per one click). costs per visitor, that equals $15 in marketing It doesn’t matter what measurement system you costs per sale (0.60 x 25 = $15) use, the bottom line is that you want to have a higher percentage of visitors placing an order, and a higher average order dollar value. Now let’s change the scenario and assume you can Even small increments to your conversion rate can achieve a 5 percent conversion rate and an average 46 • November 2009 • www.rechargermagazine.com
  • 3. Sales & Marketing You want to captivate the customers’ attention as fast as possible, and hone them in to what is most important for them to know or see. order of $60 (keeping profit margin and overhead the Getting quality traffic to your Web site is a very large same). The RPA now becomes $0.90. discussion topic, and was briefly presented in last month’s article. However I want to impress on you Average order = $60 again the importance of delivering quality visitors to Cost of goods (50 percent of order) = $30 your Web site that are in the “right frame of mind.” Overhead (20 percent of order) = $12 Quite simply, that means that you need to attract visitors that are not only interested in the products Profit (before marketing) = $18 and solutions that you offer, but are also in a “buy- ing” mode (not just a “research” mode). Marketing cost (per visitor) in order to break even = $0.90 2. Web Site Aesthetics/Design. The look and feel of your Web site goes a long way in making a customer With 5 percent conversion rate, 1 in 20 visitors “comfortable” in buying from your Web site. Simple place an order, if you pay $0.90 in marketing is always best. You want to captivate the customers’ costs per visitor, that equals $18 in marketing attention as fast as possible, and hone them in to costs per sale (0.90 x 20 = $18) what is most important for them to know or see. You also want to make them comfortable in ordering from you, by providing them with a professional looking By increasing the conversion rate from 4 percent to Web site and all the necessary security features such 5 percent and the average order value from $50 to as SSL security certificates, privacy statements, con- $60, we effectively created an opportunity to afford tact information and more. paying up to $0.90 in marketing per unique visitor, whereas in the previous example you could only 3. Product/Solution Offering. As discussed in the afford to pay up to $0.60. prior article, never underestimate the importance of So what can you do to increase the conversion rate positioning products as comprehensive solutions. If (and effectively, the RPA) of your Web site? Conver- you position and market your products as solutions sion rate is a much larger topic than this article with all the associated benefits, you are already one allows me to expand upon, but I will touch briefly on step ahead of the competition and have differentiated some factors that affect conversion rate: your product from a sea of homogeneous products. And, as much as possible, offer options to your cus- 1. Quality of Traffic tomers. Offer original brand cartridges, remanufac- 2. Web site Aesthetics/Design tured cartridges, refill services, and more depending 3. Product/Solution Offering on your business model. And make sure your cus- 4. Web site navigation (Can your customer find tomer can find all their options in a quick and efficient what they need quickly and easily?) manner. That brings us to the next factor that affects 5. Cross-sell and Up-sell features your conversion, your Web site’s “navigation.” 1. Quality of Traffic. Conversion starts with targeted 4. Web Site Navigation. Different people will give a traffic. If you don’t have targeted traffic going to different term to what I am referring to as “naviga- your Web site, you’re wasting your time (and money). tion.” Some may call navigation your Web site’s www.rechargermagazine.com • November 2009 • 47
  • 4. Sales & Marketing Customers often like to have a human touch, guiding them and assuring them that they are buying what they need and getting the best overall value. “cross reference guide,” or “printer cartridge compati- human touch, guiding them and assuring them that bility guide” or some other term. Essentially, by “navi- they are buying what they need and getting the best gation," I am referring to the tools that you offer your overall value. Never underestimate the importance of customers in order to find the products they need a human touch, no matter how automated or e-com- quickly and accurately. Basically, how your customer merce centric your company becomes. will “navigate” to see your product offerings. In the imaging consumables industry, navigation is Building Block Two: Post-Sale Marketing an even more critical component and can make a huge (Customer Maintenance) impact to your conversion rate. You could have the Be sure to stay in front of your customer, even after exact product the customer wants, at exactly the right they place an order. Don’t think of it as though you are price, but if that customer does not find that product trying to sell more products to the same customer, quickly and accurately, they will not order it. think of it more like building and maintaining a rela- Navigation tools for our industry are very hard to tionship with the customer, more sales will follow. assemble and/or manage. You need to know all the There are many things you can do to stay in front of the printer and cartridge models in existence, how they customer in your post-sales marketing and relation- interrelate, and what specific products work for which ship-building efforts, but a few obvious things you can specific printer or cartridge models. And that’s just do are: part of it; you also need to stay abreast with new • Include offers with your orders. printer and cartridge model releases, and we all know • Manage an effective and spam free e-mail mar- by now that this is happening at a faster pace than ever keting campaign (offer coupons, information, product before. Consider also that many aftermarket manufac- updates and more). turers and remanufacturers make products with differ- • Call your customers. ent compatibilities (consider for example a universal Customers appreciate the follow up. A simple call cartridge or chip versus a cartridge specific model), to your customers to ensure that they received their your “navigation” tool could become extremely over- order and that everything is working fine goes a long whelming. way in retaining trust and continued relationships. That effort also becomes an opportunity to get to know 5. Cross-sell and Up-sell Features. Every second that your customers a little better; perhaps they have more your customer is on your Web site, and every page they printers, other locations, or other ways that you can visit, is an opportunity to sell them on what you have help them (and thereby of course also increase your to offer. Take advantage of multiple cross-sell and up- sales and customer retention). sell opportunities, such as “free shipping” prompts at A more detailed analysis on e-commerce infrastruc- checkout (example: display an automated message that ture will be presented in the third part of this series of reminds the customer that if they “spend another $20 articles in Recharger ’s December 2009 issue. R they qualify for free shipping," etc). Another way to cross-sell is to get the customer on the phone. In my experience, with a trained phone sales rep, you will get Contact Dr. Dimitris Constantinou at a higher order value per order over the phone than dimitris@easygroup.us. through the Web site. Customers often like to have a 48 • November 2009 • www.rechargermagazine.com