In September 2013, Devashish Saxena told the executive committee of electrical supplies distributor Rexel that customers who engage with the company’s websites will buy more from its bricks-and-mortar outlets. The leaders of the Paris-based company responded: Prove it.
Devashish Saxena
Saxena’s team then studied the results in Sweden, one of the countries where the distributor had moved most aggressively into e-commerce. They found that the company’s 8% year-over-year growth in the country in 2014 was driven by a 28% increase in sales from customers who purchased both online and offline.
“For every one euro a multichannel customer spent on the web, they spent an additional 4.1 euros offline,” Saxena told a session this week at the B2B Next show in Chicago. His presentation was called “Causation Beats Correlation,” and the response of some Rexel executives explains why.
Skeptics told Saxena that the increase in purchasing by multichannel customers didn’t prove that the website drove additional store sales. They said this could be just correlation—the best customers were naturally the ones who would be most likely to use the website, and they also bought more offline than other customers. Where was the proof that the website caused the increase in offline buying?
“We needed to show causation: that when a customer starts to interact with us digitally there is value created,” Saxena said.
To do that, his team selected 3,133 accounts of German customers who had not engaged with the distributor’s e-commerce site. To avoid criticism that these were all good customers, they selected a mix of high-, medium- and low-value customers.
Saxena and his colleagues studied what happened once those customers started interacting with the company’s e-commerce site: Their total spend, online and offline, increased by a median of 12%. From the time they started using the website, their monthly spend increased 21%.
Similar tests in other countries also showed that consumers who began interacting with the company online as well as offline increased their total spend by between 7% and 29%, Saxena said.
That showed that customer behavior was shifting as a result of the e-commerce sites, Saxena said. But his team went further to quantify the extent of that shift in buyer behavior.
They now measure how deeply each customer interacts with the website. Some only visit the site or search for a product. But others interact more deeply, such as by purchasing, logging into an account or using the company’s mobile app.
Saxena says the customers who interact most deeply with the website spend more with the company, and are less likely to buy once and then not return. He said in one case the company’s churn rate was 27% overall, but under 3% for the customers most engaged with its website.
He says the company now scores customers by “degrees of connection” with its websites. And it seeks to increase their engagement with Rexel’s digital and mobile assets, having now proven, to everyone’s satisfaction, that customers that shop digitally also shop more in the company’s physical locations.
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