Over the course of 2010, Leapfrogg is conducting a series of surveys investigating premium retailers’ use of, and attitudes, towards digital marketing. We are looking at a number of very specific niche markets beginning with home and garden. Further surveys will look at premium fashion, health and beauty, and food and wine.

This first survey was sent to 80 premium home and garden retailers with just over a quarter taking part. Respondents included well recognised high street brands and smaller retailers.

The full report is available to download here. Below we have included some of the key findings:

Use of marketing channels

The top five online marketing channels being ‘heavily’ or ‘partially’ used by premium home and garden retailers are articles and press releases (75%), email marketing (67%), search engine optimisation (67%), paid search (66%) and voucher codes (48%).

Respondents are ‘just getting started’ with social networking (38%), micro-blogging i.e. Twitter (33%), blogging (30%) and involvement in forums and communities (25%).

Interestingly, respondents have ‘no intention of becoming involved’ in the creation of audio (55%) or video content (35%), mobile marketing (33%) and shopping/comparison engines (33%). And although a number of retailers are adopting the use of voucher codes, a further 33% have no intention of using them.

It is suggested that premium home and garden retailers take the time to investigate the opportunities presented by video and mobile in particular. Video and the use of mobile technology to access the Internet, read product reviews and download coupons/vouchers are experiencing significant growth with consumers.

Importance of marketing channels

The top five online channels that are considered most important to the success of the business are search engine optimisation (76%), email marketing (50%), articles and press releases (33%), paid search (30%) and reputation management (25%).

The areas that are felt to be unimportant are voucher codes (33%), social networking (30%), audio (27%), mobile marketing (24%) and shopping and comparison sites (24%).

Understandably, premium brands may feel the use of voucher codes ‘cheapens’ their offering. However, Leapfrogg would consider it a concern that so few companies rate the importance of social networking and mobile marketing, in particular.

Channel rating according to return on investment (ROI)

The key channels that are claimed to deliver return on investment are search engine optimisation (SEO), email marketing, and articles and press releases.

In respect of the other 13 online channels the majority view is that the return on investment is indifferent.  Social networking is perceived to have a very poor return on investment by one quarter of the respondents, suggesting that premium home and garden retailers have not yet implemented appropriate systems to measure their social media marketing efforts with accuracy and in line with business goals.

Channel resource plans

The online activities where resource is being increased in 2010, compared to 2009, are social networking (65%), email marketing (60%), micro-blogging (58%), SEO (57%), activity in forums and communities (43%) and blogging (44%).

Plans to increase resource in social networking is interesting when it is considered that a quarter of respondents perceived social networking to have a very poor return on investment, whilst a lack of internal resource (see later section) was also deemed a significant barrier to the success of social media efforts. It is therefore suggested that premium home and garden retailers need to carefully consider objectives from social media activity, set up appropriate systems to measure performance and ensure adequate levels of in-house resource are dedicated to managing social media effectively.

Multi-channel marketing

Results indicate that respondents combine more traditional online activities, such as SEO, PPC and email when running multi-channel campaigns. Social media and blogging also represent popular channels, yet integrating mobile is very low, despite consumers growing use of smart phone technology to access the Internet.

It is recommended that premium home and garden retailers consider all the ‘touch points’ between brand and consumer and implement multi-channel marketing campaigns that ensure a consistent offering and message is present across all of them.

Management of marketing channels

Marketing is the department responsible for managing all online activities except PR, of which there is either a dedicated department or it is outsourced.  IT is responsible for search engine optimisation (SEO) in just over one third of the retailers who responded, which might suggest it is viewed as a technical discipline as opposed to a marketing activity.

Knowledge of customers

Generally, premium home and garden retailers feel that they need to know more about the behaviour of their customers online. 82% do not know how their customers behave on social networks and 66% do not know what their customers are saying about their brand online.

The latter is a particular point of interest as consumers are increasingly willing, and easily able, to share their thoughts with hundreds, possibly thousands of others through blogs, forums, reviews sites and social networks. In turn, purchasing decisions are heavily influenced by the positive and negative reviews a retailer may receive online. It is therefore suggested respondents investigate the use of buzz monitoring tools to quickly identify the conversations happening around their brand and products.

55% feel informed about their customer’s behaviour on their website suggesting respondents have implemented, and are using analytical tools to good effect. However, 45% appear not to be using tools, such as Google Analytics, to great effect therefore limiting the opportunity to make informed decisions on optimising site performance.

Knowledge of search engine ranking factors

Premium home and garden retailers rate keyword placement (67%), website architecture (57%), Meta tags (55%), the user experience (48%) and external links (43%) as crucial to achieving high search engine rankings. Rich media content and blogging were considered by the majority as important but not crucial to improving search engine rankings.

A quarter of respondents were unsure of the impact on search engine rankings of choice of technology and social media activity. Concerning the latter, it is recommended respondents investigate the relationship between search and social media as these channels cannot, and should not, operate in isolation of one another.

Goal setting

Half of premium home and garden retailers used past performance as a benchmark for setting goals for digital marketing activity along with basing predictions on financial goals.

One third of respondents do not currently set goals for digital marketing activity. It is highly recommended that premium home and garden retailers work to establish objectives using SMART methodology to ensure there is direction and focus for digital marketing activity. In addition, appropriate tools and processes should be put in place to measure goals accurately.

Ability to track goals accurately

Respondents rated their ability to track search engine rankings (57%), online conversions (48%), email marketing performance (47%), behaviour of site visitors (35%) and affiliate marketing (33%) as good.

Areas not being tracked accurately include conversions from social media activity (74%), mobile marketing (73%) and customer lifetime value (71%).

59% do not currently track overall return on investment from digital marketing activity.

This would indicate there is still a great deal of progress to be made in the area of measurement. Retailers should be implementing the appropriate tools and processes to measure the impact of each online channel. Better tracking will not only enable return on investment to be calculated from each channel but also provide invaluable data for forecasting and developing future strategies.

Agency relationships

The split between managing work in-house and the use of external agencies is 50:50 with a slight preference for conducting more of the work in-house but using specialist agencies where needed. Those that use external resources use specialist SEO agencies, full service digital agencies, web designers, affiliate marketing and PR companies.

Premium home and garden retailers rated the ability to deliver results (95%) as the most important factor when working with an agency. Specific knowledge of the customers’ market (76%), and having open lines of communication (67%) also rated particularly highly.

Premium home and garden retailers believe it is ‘crucial’ that an online agency has knowledge of the clients’ target audience (80%), their key performance indicators (73%) and knowledge of the business plan (53%). Yet only 40% believe an agency should have knowledge of the clients’ offline marketing strategy (40%).  This indicates that premium home and garden retailers need to better communicate offline activity with their agencies therefore ensuring a consistent, and properly integrated online/offline marketing strategy.

Barriers to success

The barriers that prevent premium home and garden retailers from maximising their online marketing efforts are lack of internal resource, lack of budget and a lack of understanding.  Board approval and not having an appropriate measurement tool are also cited as significant barriers.

The ‘lack of internal resource’ is of particular interest as a high number of companies choose to manage digital marketing in-house yet do not appear to possess the necessary capacity to do so to maximum effect.

Download the full report here. If you would like to discuss any aspect of the report findings, please get in touch. And remember to keep a look out for future reports covering premium fashion, health and beauty, and food and wine.