thinks

For the first time in 14 years, I’m not wearing my wedding ring. No, my wife hasn’t come to her senses and tossed me overboard (and I hope she never does). I cut my finger and my ring was digging into the spot. Painfully. But I don’t like not wearing my ring. Like the old “tie a string around your finger” trick, it’s a reminder of a deep, meaningful commitment. It’s a reminder of responsibility. It’s a reminder of more than 14 years of my life, its ups and downs, and, of course, of who helped me through it all.

Businesses don’t often recognize commitment. Some would argue they don’t make commitments, willing to toss aside employees at the first sign of financial hardship. But I don’t believe that - not for all, anyway - and especially not among small businesses. You demonstrate commitment every day, in the way you treat your employees, your customers, your neighbors. It may not be as culturally meaningful or as universally recognized as a ring, but the counsel you give, the service you provide, the support you offer symbolizes commitment, too. So celebrate your commitment. And watch you don’t hurt your finger.

We’re continuing our look at Small Business E-commerce Strategy today. Last time, we looked at “Why Splash Pages Suck”. Today we’ll take a look at channel management.

Not all e-commerce channels work as well as others. When most folks think of e-commerce, they think only of their own website. Having your own website for your business is critical. But it’s not the only place to sell as part of a well defined e-commerce strategy. Let’s take a look at the three types of e-commerce channels and how you can decide which ones work best for you.

Three key e-commerce channels

Sales of your product can occur in up to three key channels. These are:

1. Your website
2. Partner sites
3. Voice-assisted web

Your website is the most important of these, by far, followed by customers starting on the web and calling you. But partners matter, too. Partners include sites like Ebay, Amazon and Etsy for retailers and manufacturers; travel agency websites for hotels; directories for service providers; and affiliate sites for most business types.

Depending on your business type, you should measure how effectively these channels work for you and tailor your e-commerce strategies around their benefit. How do you do that? By measuring the cost of each channel, the volume of sales and the amount of revenue received from each. The will tell you your profitability per channel, which you should always look at in terms of dollars, not margin. As Alan Rimm-Kaufman said over at Mike Moran’s Biznology recently, “Too many retailers focus on profit margin (a percentage) instead margin dollars (real money)…At day’s end, you don’t deposit percentages, you deposit dollars.”

Cost of channel

Every channel has a cost. Typically these include things like commissions paid to affiliates or fees paid to retail sites (think Ebay/Amazon). Some of these costs will be fixed (monthly recurring fees, for instance), while some will vary according to the amount you sell. Make sure to include your time and the time of your staff as one of those costs. For a typical business owner, divide your annual salary by 2080 (40 hours/week times 52 weeks. I know you work more than 40 hours a week, but dividing by the actual hours you work would probably just depress you. Stick with 2080. Plus, you can use the same number for you and your team).

Volume of sales

Volume of sales is pretty basic. How many sales do you receive from each channel? Most third-party partners will provide you this information readily. Phone tends to be one of the harder channels to track this for, but you can use these tips to come up with some measures.

What about the volume of traffic? Don’t assume that just because a site gets lots of traffic that your listings automatically will. You might, but you’ll need to check to see if that’s true. By focusing on sales, you’re tracking the actual value of that site to your business.

Revenue per sale

The number of sales may not matter as much as how much revenue you make from each. Here’s one place where voice-assisted web sales often show their stuff as many companies do a better job upselling and cross-selling on the phone.

Profit per sale

Finally, you can use the numbers you’ve gathered above to determine the profit from each channel, which should represent its value to your business. However, even if your own website produces a lower profit than partners, don’t surrender all sales to a partner channel. In the long run, your business depends upon your own, thriving web presence. Your own website builds a stronger brand, represents your company most effectively and isn’t subject to the whims of a third party such as raising prices or limiting selection.

Most folks love to talk about early adopters. Seth Godin’s practically made a career of it, most notably in his classic book Unleashing the Idea Virus. Mike Blumenthal at Understanding Google Maps & Yahoo Local Search points to a survey detailing late adopters among mobile phone users. Do you pay more attention to early adopters or late adopters?

For instance, any number of factors reflect “late adopter” tendencies. These include:

• Shopping channel - and don’t assume they’re exclusive to a single channel
• Buying channel - ditto about multi-channel
• Device (PC, mobile, what-have-you)
• Screen resolution
• Connection speed
• And so on…

I’m sure there are others. Please add yours in the comments.

Michael Arrington, in a recent comment on a TechCrunch post, notes, “If all we did was listen to commenters we’d be paralyzed”. While I’m (somewhat) putting words in his mouth, it’s worth noting how “commenters” in this case can equate to early adopters, too. You’ve got to serve the needs of all your customers, early, late and in-between.

What items do you do to focus on early adopters? Late adopters?

Tim Ash subtitled his new book, “Landing Page Optimization”, “The Definitive Guide to Testing and Tuning for Conversions”. That’s a bold claim, but one he defends well. Ash, president of SiteTuners.com, knows his subject inside and out and does a solid job of walking web marketers through both the theory and practice of optimizing your web pages to drive increased sales, even when presenting more complex math behind analyzing results (yes, math. Don’t worry, fellow marketer, he keeps it brief). The information in chapters 7 and 8 alone should cover the costs of the book for your entire team. Ash does a great job of discussing important topics in data collection such as data aging. The only place Ash may fall short is in discussing data collection for offline conversions, though, to be fair, that’s likely a topic worthy of a book (or two) of its own. Don’t let that keep you from checking it out. If your job revolves around selling on the web, you need this book.

Increasingly, being a marketer means being a geek marketer, one as comfortable with data analysis as designing a campaign. Folks like Tim Ash and books like “Landing Page Optimization” will ease that transition. Grab a copy today..

I’m a big believer that brand awareness is not a goal. I’m also a big believer that OfficeMax may even have failed at that. Grok Dot Com gives an object lesson in how to miss the mark with a marketing campaign, no matter what that mark is.

Robert Gorell does a great job explaining what ought to be your rationale behind your site. Ultimately if your site - whether a main site, a microsite or an affiliate site - doesn’t lead to revenues, then you might want to rethink it, no matter how much fun it might be. Even sites like JibJab or the Onion need a business model. And I suspect Ze Frank got lots of business opportunities from his work on The Show.

If your goal is to launch a fun, funny, viral experience, that’s OK. But if it doesn’t tie directly back to a measurable, repeatable, realistic goal, take it back to the drawing board. You don’t want to Elf up your campaign, too.

Immediately? Nothing.

Longer-term? Still probably nothing. But possibly quite a bit more. Social search is supposedly the next frontier. Jeremiah Owyang notes today that social is tough to monetize, but I’m betting some folks will figure out how to do it.

For example, Google launched its profile product about a month ago, with little fanfare, but it’s clear the search leader aims to gain detailed demographic information both to aid search (”help me find this person”) and to help advertisers (”help me find this customer”). What few seem to mention is the vast customer database Microsoft and Yahoo will share as the largest single email provider on the web (Time Magazine reports [Feb 18, 2008] Micro-Hoo would have 426 million users worldwide compared with 90 million for Gmail). If Microsoft and Yahoo could power an Answers-like social recommendation search using what they’ve learned from their failed algorithmic search and more successful enterprises like Flickr and del.icio.us, they just might be onto something. Twitter does a great job of answering the types of search queries social search should excel at, in this case finding a song title from a partial - and incorrect - lyric. Doug Sherrets from VentureBeat and I compared notes a couple weeks back about this topic. I think that the most likely winner in social search is someone we’ve never heard of yet, especially if Micro-Hoo takes a year or two to integrate. But, if they can manage this feat, they’ve got a large community of users and great scale to ensure profits overall, even if individual clickthrough remains low.

So, what action do you need to take to grow your business? For now, none. If you’re doing paid search marketing - and if not, why not? - you still should allocate your spend according to where you’re getting results. Yahoo’s rejection of Microsoft’s overtures this morning, while probably a play for more cash, is all the more reason to ignore it for now. In the longer term, however, if social search catches on, don’t be surprised if the combined Microsoft-Yahoo behemoth gives access to the most - and best - customers.