by Kent Anderson, former President and Founder of Macy’s.com
Kent Anderson is a guest contributor to the Metrical blog. Kent has spent 35 years in retail and was the founder and president of Macys.com.
During my tenure as President of macys.com, one of my abiding principles was to focus on growing the topline revenue and not be as consumed with the costs to grow. Over time I learned that with the appropriate checks and balances in place on the operational side of the business, combined with a clear target of what success looked like, the increased revenue would more often than not meet or exceed the profit hurdle.
One way we were able to make that happen was to constantly look for revenue growth within existing processes and channels versus always looking to the next big thing to deliver revenue growth. I’m not saying that innovation and new ideas aren’t important in the mix, they are in fact critical to developing a solid long term strategy. However, in the hyper competitive retail world we live in today and with the capital markets highly focused on revenue growth year over year, it’s prudent to have a strategy to maintain growth in the here and now.
To achieve this result we focused on three things.
1) Increasing the rate of repeat customers,
2) Increasing the size of the shopping cart and
3) Improving conversion of existing sessions on our desktop and mobile app.
Today, I want to talk about a new potential tactic to improve conversion, that being an artificial intelligent (AI) driven cart abandonment platform. Using some simple math, here is where the opportunity in mind sits: assume the business you’re running generates 100m sessions a year and converts at 10%. Obviously that means 90% of your sessions didn’t create a measurable activity within that session. Assuming 40% of those sessions were for research with no intention to buy, the remaining 60%, or approximately 50m sessions, becomes the audience to try and convince while on your website/app to buy now. Even if the incremental improvement is small, say 5%, the potential for increased revenue is substantial–a 50% increase in revenue! Also, you’re not having to pay to attract converted customers again as you have already incurred that cost and thus further enhanced the ROI of this approach.
I realize that this is not a new idea. Previous attempts at this approach were pretty crude and often got lost in the clutter of other messages and promotions. But by wisely using the power of AI, like Metrical is proposing, there is plenty of opportunity to take website visitor activity and mine it for increased revenue at lower costs.
Kent Anderson is a guest contributor to the Metrical blog. Kent has spent 35 years in retail and was the founder and president of Macys.com. During his tenure, Kent increased the revenue of macys.com to over four billion dollars in annual sales. Kent currently heads Gearup Consulting, a services firm that provides strategic digital and omni-channel consulting.