The Key to Free

There's a new buzzword on the block: Free. In fact, it seems the more Wall Street flounders, the more the word is used as a selling point. From 'Free with purchase' to 'Buy one, get one free' the concept of getting something for nothing is more potent than ever amid today's grim economy.

As online merchants seek creative ways to pinch every penny, more are taking a second glance at free or low-cost tools and services. And there are a lot—from data-rich web sites to software and applications designed to save retailers time and money.

Many tools do offer value and save on expenses, merchants say. But there are downsides. Free services don't always stay that way, particularly as usage ramps up. And if something goes awry, the merchant's typically on its own to find a fix. Plus, such services are often less reliable than their paid counterparts.

Still, the pros outweigh the cons in many cases, merchants say. And although there may be some sacrifices, it's all worth it when the monthly bill comes—or doesn't come—in the mail.

Answer the call

Troy Lawson, chief technology officer at Best Kiteboarding LLC, says free tools present a great opportunity for growing companies like his.

"We're a very tech-savvy company, and we're open to trying new things," Lawson says of the retailer and manufacturer of kiteboards, which launched its e-commerce site in 2004. "If it's a new tool, we know full well that it hasn't been proven over time. But for small businesses that don't need 100% up-time, free tools can offer real benefits."

Those potential benefits led Lawson and his team to try the free voice-over-Internet telephone service Skype just months after it hit the market in 2003, and to gradually add additional Skype services as they became available. Skype is now owned by eBay Inc.

Best Kiteboarding signed on, at first using the service for employee-to-employee calls instead of dialing extensions. Staff used headsets plugged into their computers rather than phones. Soon after, Best Kiteboarding wanted more—especially when it got wind of other low-cost Skype programs that seemed likely to save the company a significant amount of money.

And so the retailer started using SkypeOut for outgoing calls. The service allows Best Kiteboarding to place unlimited outgoing calls to 35 countries for about $10 a month, Lawson says. About a year ago, the merchant added a third Skype service to accept incoming calls, and essentially did away with its old phone system altogether.

"We basically just dropped all of our phone lines," Lawson says. "Today we have one line and that's a fax line."

For the newest incoming call portion of Skype, Best Kiteboarding uses a service from vendor PrettyMay that routes incoming calls to the retailer's Skype Internet phone system. It costs money, but Lawson says the savings and return on investment is substantial. The PrettyMay system cost $500 to implement and charges about $400 a month. By comparison, his old $4,000 Nortel phone system came with a $1,500 monthly fee. Moreover, Lawson says the new system is much more advanced.

"The Nortel system we were using basically only answered calls and collected voice mails. The system we have set up now would cost $7,000 or $8,000 if we went out and bought it from a standard provider," Lawson says. "It will e-mail voicemails to our employees, and we can export all calls going through our phone system into an Excel file." That lets the retailer analyze incoming calls so it can see the busiest times or what the missed call rate is during a specific time period so it can be more efficient in scheduling employee hours.

Design on a dime

While Skype helped Best Kiteboarding save money on direct communication with customers, other low-cost programs can help merchants convey an overall brand image.

Industry analyst Keven Wilder, president of retail consultancy Wilder Inc., says merchants can get free or inexpensive design services by tapping the creative minds of amateur artists through tools like CrowdSpring.com, part of crowdSPRING LLC.

The service allows businesses to post ads for creative work—from company logos to t-shirt designs—and name a price they are willing to pay. Artists submit their creations and the winner gets the cash prize. The service also includes a free contract establishing the company's ownership of the design.

The going rate for work typically is in the $250-$500 range—a small percentage of what a retailer might pay if it hired an ad agency. "You could get the perfect logo from a janitor by day for a fraction of the price you would pay normally," Wilder says. What's more, postings typically receive 68 entries, and, while a retailer can't use the ones it doesn't buy, submissions can be a great source of inspiration, she says.

Beyond providing a service or filling a need, some free or inexpensive tools offer solutions to problems that a retailer can't afford to pay—or pay very much—to fix.

Such was the case with online ski, snowboard and apparel retailer evo. The company needed a way to manage data its customer service reps were receiving from shoppers, such as price-match requests or international shipping applications.

"They were coming through e-mail and in lots of different formats that we would have to centralize and compile manually," says Nathan Decker, senior human of e-commerce at the retailer.

Evo found a tool called Wufoo from Infinity Box Inc. that helped it add HTML forms to its e-commerce site that customers can fill out and send to evo with a click. Now, instead of receiving hundreds of e-mail requests for things like price matching in varying styles collected by numerous customer service employees, the retailer can access all the data in one spot and one format. Wufoo also will export the information into charts and graphs.

"The service stores data so it doesn't fall off the radar and we can make updates to forms instantly," Decker says. Wufoo builds and hosts the database that stores the information and other back-end technology.

The free version of Wufoo allows retailers to post three forms to its site, generate three reports to analyze the information and accept up to 100 customer submissions per month. Evo started out using the free version, but now pays $24.95 a month for the service so it can post unlimited forms and tie five users to the account. That paid version also offers payment integration and more data storage.

Traffic and time machines

Retailers hesitant to tinker with adding new-to-market tools to their systems or web sites don't have to miss out on freebies. They can tap the wealth of free information available on the web and use it to find out more about their company—and its competitors.

Justin Palmer, web site administrator for Christian apparel store C28, operated by C2:8 Inc., took a trip on the Wayback Machine available at web site Archive.org for insight when he was working on launching a new online store for the retailer.

The new store, called Canvas, allows artists to submit t-shirt designs, which are voted on by registered users. The winning shirt is then sold on the Canvas web site. The business model, Palmer says, is a Christian version of the popular online t-shirt store Threadless. The Wayback Machine tool, which lets users access old versions of web sites, allowed Palmer to take a glimpse of older versions of Threadless.

"I could look at Threadless and see how big their voting community was five years ago, or what kind of designs people were submitting early on and basically see if we were on track," he says.

Jack Kiefer, CEO of online baby products retailer BabyAge.com Inc., also uses the Wayback Machine to size up the competition. For example, he might look at the changes an e-retailer made to its site in the year following a management shakeup. Or, if an e-retailer posts record web revenue, he might use the tool to spot web updates that contributed to the rise.

"It helps us evaluate competitors, and how their sites looked in the past, and see what new lines and initiatives they launched and when," Kiefer says.

Kiefer also regularly visits Alexa.com, a site that offers access to data on traffic, inbound links and reach of web sites. "It's a really good tool to quickly get a sense of how big a site is," he says.

A similar site, Quantcast.com, offers traffic data on web sites, videos and widgets, Wilder says. It also provides free demographic data about visitors, such as gender and age group. Users have to register to retrieve information.

Google gratis

While Alexa and the Wayback Machine address specific needs, Google Inc. has in recent years provided online retailers with a wide array of tools—for free.

The search engine giant offers tools to help retailers manage and track paid search terms within their Google AdWords campaigns. It also offers Google Analytics, which helps retailers see how consumers find their web sites and what they do when they get there. Many e-retailers are finding the tools valuable.

Since implementing two free AdWords management tools, home furnishings retailer Touch of Class has increased sales from some Google paid search campaigns significantly in one month, says Gary Bell, vice president of information services for the retailer.

Earlier this year, Touch of Class added the Conversion Tracking and Website Optimizer tools. The tracking tool collects data on which paid search terms convert, when they convert and how frequently, and the optimizer uses that information to determine which ads to serve, when to serve them and what to pay based on parameters a retailer sets. Bell says the conversion optimizer can be activated for a keyword campaign once data is collected on 30 orders in 30 days.

"The tracker sends data from a customer's checkout thank you page giving the order total value to our Google AdWords account," Bell says. "I can then view conversions and conversion value in the campaign management and reporting tabs."

Conversion optimizer then automatically bids based on how much the retailer says it wants to pay per conversion. "We set the maximum amount, and Google bidding algorithms test various bids at various times of day and geographic locations to maximize the conversions," Bell says.

Touch of Class had been doing its own analysis of campaigns by manually marrying Google AdWords data on click cost to the conversion sales data from its Omniture SiteCatalyst analytics package. But with 15 AdWords campaigns—programs set up for each product category—700 Ad Groups—subcategories under the product categories—and more than 110,000 keywords to manage, the process was becoming time-consuming.

"It was difficult with the large number of ad groups and keyword phrases that we have to manage," Bell says. "Plus, the challenge of manually deciding keyword bids for so many keywords was daunting. I had to find a better way to manage paid search."

Half of the retailer's campaigns were using the optimizer tool as of the end of February. Early data shows the tool is paying off, Bell says.

"Comparing the results of our paid search between the first week of February and the last shows sales up a significant 30%," Bell says. "Each week in February tracked better than the prior week, so there's a lot of potential to improve sales even further."

While most of Google's free tools are designed to support its AdWords paid search program, Palmer of C28 says they can be used apart from AdWords as well. For example, Palmer says Google tools show not only who clicks on a paid search term, but if they convert. So his staff uses them to conduct A/B testing.

"We tested two versions of our header, one that just said 'C28' and one that said 'C28 Christian Stores,'" Palmer explains. "We had a 2% increase in conversions when we defined what we were. Over a year, that's $80,000—for free."

Lawson of Best Kiteboarding combs data from the Google Analytics tool to learn more about the customers coming to his site. "It tells you where people are coming from, their bandwidth, the screen resolution they are using," he says. "So, for instance, if we see that most customers have high bandwidth, we know it's probably okay to start using more Flash."

To pay or not to pay

Tight budgets force retailers to innovate, and frugality is a watchword at evo, Decker says. But there are times when it just makes sense to pay for a service, he adds. Especially when it's critical to business functions.

"With free services, you are sort of on your own to customize it to your needs," he says. "There's not an 800 number to call with a friendly voice on the other end to walk you through X, Y and Z."

Reliability also can be an issue. As it is with the Skype phone service that Best Kiteboarding uses. "Skype is a huge, huge savings. But its stability is about 98%," he says. "We maybe have one dropped call every two weeks."

For retailers taking a massive amount of phone calls, 2% downtime could add up to a significant loss. Wilder says retailers need to analyze the risks and benefits of each system. "I still am a believer in you get what you pay for," Wilder says. "If your company doesn't have that geeky intern or team, it might be worth it to pay."

Evo, for example, tried a free open source telephone system to manage its incoming calls and had such a difficult time it upgraded to a paid version.

"Calls would drop, the system would turn off randomly, and the sound quality was poor," Decker says. "Plus the management and maintenance time it required of our staff was unreasonable."

Beyond evaluating quality of a free service, retailers also have to weigh the time it takes to teach—or coax—staff to use the new tools. Lawson says some of his employees were uncomfortable using headsets while speaking on the phone. "Teaching people how to adjust to using these new tools, especially people who have been in the industry awhile, can be tough," Lawson says. "Some didn't like that they couldn't just pick up a phone."

E-retailers must decide for themselves which free or low-cost tools make sense for their business based on their industry, staff and budget. Indeed, such services likely will require staff training or doing without on-call help or customization, but the cost savings just might be worth the sacrifice. While there may be no such thing as a free lunch, in today's economy, more merchants are gladly opting for the value meal.

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