Our Own Worst Enemies

Consumers — yes, that means you and me — know what we want. More choices! May we have more sizes, colors, and flavors? And could you add soy milk, skip the cinnamon, then top it off with ice cubes… to go, please?

And that’s just to get a cup of coffee. Don’t even get me started on cars, laptops, and safety seats for children. My head is spinning just thinking about the options.

Perhaps we don’t need so many choices. But we still want them, right?

Maybe not.

The popularity of sites like epinions.com, CNET.com, and Amazon.com’s  user reviews indicates that what most of us want is just a good recommendation from a credible source. We simply don’t have time to completely research every purchase we want to make.

Meanwhile, the average marketer feels his website must offer choices galore to try to answer the needs of all the people all the time. And Mom and Pop’s little online store has to compete with big businesses that have pockets deep enough to do it.

What’s a small Internet business to do?

Very often, if you look close enough (or stand far enough back), the solution lies within the problem.

While choice is not a bad thing in itself, the attempt to offer every option to all the people all the time is counter-productive. Having too many options is confusing for the customer. Paradoxically, it makes it more difficult for him to make a choice. As a result, a website that takes this approach will have an overall response rate that, in terms of the size of its target audience, is low.

It’s easy to understand why this happens. When you market every one of your offers to the same large group of people, only a small percentage of those people can possibly be interested in each one of them.

You would never send out a print sales letter in such an unsystematic way. The postage cost alone would be prohibitive. But even if you had unlimited funds, sending a sales letter to an audience without having data that supports their probable interest in your offer would be fatuous.

The old way says you need a one-size-fits-all website serving 10 million visitors — and that the numbers have to be big to make it work. But a website can’t be successful if it’s nothing more than a glorified brochure that treats every visitor the same.

Websites that work well these days have to be smarter. They have to guide the prospect to what they are most likely looking for, and maybe even customize the content and pathway through the site as they use it. Sites like Google and Yahoo, for example, offer personalized home pages where the user decides what information should be presented to him.

How to Apply This Way of Thinking to a Small Business

My longtime friends Jonathan and Mary Hinde run a small aromatherapy business from their home in Cambridge, England. The greatest strength of their business is the wide range of products they offer — more than 1,300. Their greatest weakness is — you guessed it — too much choice.

Not long ago, I suggested that they try an experiment. I had them think of about five or six broad personality “types” their customers might fall into. (It had to be an educated guess, as they don’t meet their customers. Orders come in via phone, mail, fax, and the Web.) The next step was to decide which of their bestselling products were likely to appeal to each defined customer type.

They ended up with a grid of six typical customer profiles and about 100 bestselling products, with checkmarks indicating where a product was likely to match a customer type.

Over the last month, they’ve tried to guess which “type” each new customer would fall into, judging by what he or she ordered or sounded like on the telephone. They’ve then sent the customer a “Thank you and welcome” letter, along with a recommendation for three or four bestselling products that match his or her grid profile.

The initial results have been encouraging. Jonathan said the test has already resulted in 25 percent more repeat sales and 37 percent more income from new customers.

This was a quick and dirty way to do a test that marketers normally think requires major CRM (Customer Relationship Management) software.

An Army of One

Whenever I bring up the concept of targeting discrete groups within their overall customer list, many big marketers say it’s too “fiddly.” That it’s simpler to just point and shoot. And small business owners complain that they don’t have enough customers to make segmentation worthwhile. But the fact is, every customer is already a segment… of one. Target that one, and you win every time.

I admit that you could continue throwing spaghetti against the wall, and some of it will stick. But wouldn’t it be smarter to figure out what your customers really need?

[Ed. Note: David Cross is a veteran Internet marketing expert who has worked closely with Early to Rise and Agora for many years. He is also a featured expert in ETR’s Internet Money Club.]