Sheplers WhitepaperOVE R 1 0 0 Y EA R S O F SM A RT M A R K E T INGE X E C U TI VE S UM M A RY :As a retailer that has been around for over 100 years, Sheplers has a wealth ofmarketing and merchandising experience. The company, whose name has becomesynonymous with western wear and cowboy boots, is now using that experience tocraft cutting-edge online retailing practices built around testing, targeting, andpersonalization of website content and features. This whitepaper describes howSheplers has been using Monetate to put its ambitious online retailing plans intoaction to improve online revenue, customer acquisition, and other key metrics.
Sheplers WhitepaperA. BAC K GRO UN DFrom modest beginnings in 1899 as a saddlery in Wichita, Kansas, Sheplers has become a leading retailer of westernwear, which the company deﬁnes broadly as: "apparel and accessories for the country/western lifestyle, includingtraditional cowboy wear, fashionable western wear, country-inspired casual wear and authentic work gear."More than a dozen Sheplers stores can be found in seven states across America. The ﬂagship Sheplers store in Wichitais today a landmark on the citys Western Heritage Tour. The company also has an extensive direct mail catalog offering.Since 1998, Sheplers has enabled customers to shop whenever it is convenient for them, from just about any place inthe world, thanks to the Internet and the company website at www.Sheplers.com. Sheplers also makes extensive use ofemail for marketing and merchandising. The net effect is a commanding presence in the world of western wear retailing,across America and around the globe (about a quarter of the companys online revenue is from international sales).Although the companys roots in retailing can be traced back to the nineteenth century, Sheplers was one of the ﬁrstretailers to adopt a twenty-ﬁrst century approach to online marketing and merchandising. According to Sheplers ChiefOperating Ofﬁcer Mark Hampton, the transition to being an Internet business offers both advantages anddisadvantages:"Online you have competitors both vertically and horizontally. Just about everyone wears shoes, but the percentage whowear cowboy boots is relatively small. So I would characterize our market as a vertical, composed of narrow categorieslike cowboy boots and western shirts. That means an inherently smaller online audience than horizontal competitors likeAmazon.com and Zappos, companies that are selling things across broad categories, like books,music, and footwear in general."As search technology has evolved, the ease with which consumers can ﬁnd specialty items—forexample, snip toe alligator boots—has compensated for the existence of online superstores thatattempt to sell anything and everything (for the record, the ﬁrst three organic results in Google forsnip toe alligator boots right now belong to Sheplers). In other words, the company was quick tosee the beneﬁts of search engine optimization and pay-per click-advertising. According toHampton:"Early on we started building our website for good organic search results. We got into PPC earlyand in a big way. We paid a lot of attention to conversion and custom landing pages. In fact, we Snip Toe Alligator Bootsstill have over 300 customized landing pages speciﬁcally for top search engine keywords."
Sheplers WhitepaperB. T E S TI NG , T E S T IN G , 1 - 2 -3Sheplers aggressive approach to search engine optimization and pay-per-click advertising has paid off. Today, around60 percent of trafﬁc coming to sheplers.com is coming there for the ﬁrst time, in other words: new visitors. That is goodnews because it means the company is continuing to reach people who potentially can be converted into newcustomers. So the question then becomes: How do you make sure you convert as much of this new trafﬁc as possiblewhile continuing to provide a satisfying site experience to established customers? For Sheplers the answer was a simple3-step process: Test the key elements of conversion, including the landing page experience; 1 product location and selection, the add-to-cart process; and the checkout process. Implement test winners so that changes identiﬁed as beneﬁcial can begin 2 earning incremental revenue as soon as possible. Monitor the results to make sure that any changes you make continue to 3 pay off.Although Sheplers has an experienced team of in-house IT experts running the website at sheplers.com, managing thistype of testing project through traditional IT channels can take a long time. Sheplers wanted to test aggressively, withinstant feedback, so the company turned to Monetate.When Sheplers installed Monetates testing and targeting platform it decided the ﬁrst task should be to make thepurchase ﬂow as smooth as possible. Reducing friction in the item selection and checkout process can increase bothrevenue per session and average order value as well as reduce cart abandonment rates. Before targeting more visitors “with promotional messaging that encourages them to buy, you want to make sure it is easy for them to do just that, tofollow through on the course of action you are trying to nurture, namely adding items to the cart and checking out. “ Monetate really understands the challenges faced by multichannel retailers today. They have developed a unique marketing-oriented solution that smooths the path to coordinating content and messaging across all channels. Bob Myers, CEO, Sheplers
Sheplers WhitepaperC AS E S T U D Y # 1 : G E T T H E C A R T R IG HTThe primary goal of this ﬁrst series of tests was to improve purchase ﬂow and reduce the cart abandonment rate. Avariety of screen elements were tested and changed. The effect of removing certain steps in the checkout process wasalso tested. For example, what happens when you let customers check out directly from the cart page instead of havingto click "Checkout" after reviewing their cart?During a test period of 10 days, the various changes made by Sheplers SHOPPING CART CONVERSION RATEresulted in a much lower cart abandonment rate and a 3.33 percentincrease in conversion rate. While that might not seem like a largenumber, the annualized projection of incremental revenue generated by +3.33%these changes was a seven digit number (ample enough to eliminate anylingering skepticism about the value of testing).Sheplers is not inclined to say exactly what changes were tested duringthis friction reduction testing cycle, however, if you look at thesheplers.com checkout page today you can see that it is a model ofsimplicity which follows many of the best practices in user interface Original cart Optimized cartdesign while maintaining the companys unique style and visual branding.The approach taken by Sheplers, to test some ofthe basic elements that inﬂuence conversion andpurchase ﬂow, is itself a best practice inmarketing optimization. After all, you dont wantto expend a lot of effort persuading people to putthings in the shopping cart if clumsy processingthen causes the cart to be abandoned.
Sheplers WhitepaperC . DI GGI NG DE E P E R: B RA ND S & C A TEG OR IESIn developing its website, Sheplers has wisely leveraged the lessons learned from many decades of brick-and-mortarretailing. The design of a real-world retail store is based on how most shoppers travel through the store to ﬁnd what theywant. Merchandising in the store aims to prompt purchases by presenting tempting offers at appropriate points in thatjourney.The brick-and-mortar shoppingexperience actually offers someadvantages over online shoppingsays Hampton. For example,customers can feel fabrics andtry on boots. But an online storecan do something that no brick-and-mortar store can do:"rearrange the store to ﬁtcustomer needs and intent,customizing the shoppingexperience based on whichdoor-to-the-store they enterthrough."Consider someone who entersthe Sheplers online store byclicking through from a search for"boots on sale." Now compare that site visitor with someone who searched for "Tony Lama exotics." One can assume,since Tony Lama is a brand of boot, that both people have some interest in buying boots. However, one can infersigniﬁcant differences between the two visitors with respect to product category, brand, and price range. Boots are aproduct category. Tony Lama is a brand. And "sale" is a price, or at least an expression of preference for a lower price.Even before the Internet, smart multichannel retailers like Sheplers were analyzing statistical synergies between brands,price ranges, category purchases, and so on. According to Hampton the company has been working for some time to"leverage these synergies online in terms of what we show to different customers on the website."
Sheplers WhitepaperC AS E S T U D Y 2 : M IX IT UPSheplers decided to use Monetate to capture preference and intent inferred from trafﬁc sources such as pay-per-cickadvertising and organic search, then use that information to customize website content. For returning visitors Monetatealso feeds data about past product views and purchase behavior into the customization mix.Sheplers tested this strategy by making modiﬁcations to the home page for people expressing interest in leatherouterwear like leather jackets and coats. The impact of these customized content changes was a 48 percent lift inconversion rate. In other words, visitors who were presented with the customized content chose to make a purchasealmost 1.5 times more often than the control group (a subset of people who were not shown the custom content eventhough they met the criteria). 48% Higher conversion rate lift Home page without targeting Home page targeting user preferenceEven though this test was targeted at a relatively small segment of shoppers—those expressing interest in leatherouterwear through PPC clicks and keywords in search—the annualized incremental revenue lift from this strategy wasprojected to be worth six ﬁgures. Needless to say Sheplers continues to test and implement different ways ofcustomizing content based on customer brand and category preferences. “ “ When you are trying to deliver the best possible website experience to each and every customer, with a minimum of pain, Monetate is a huge asset to have on your side. Bob Myers, CEO, Sheplers
Sheplers WhitepaperD . HE AD W E S T W IT H G E O- T A R G ETIN GThrough its operation of brick-and-mortar stores over many decades, in numerous states, Sheplers has learned thattastes vary by region, even in a relatively narrow vertical market like western wear. Cowboy boots with pointed toes mightsell better in some states while other states prefer snip toes. Justin boots are big in the Northwest. Wrangler jeans aremore popular than Levis in some states. Hampton calls this "brand pocketing." Justin Boots in the Northeast Snip toes inthe Northwest Pointed toes in the SouthNot surprisingly this phenomenon of brand pocketing is also found in online retailing where some brands, products, andcategories are more popular and convert better, according to geography. The geo-targeting technology built intoMonetate has enabled Sheplers to leverage these geographical preferences.Geo-targeting means changing the content of your website based on the location of the person looking at it. This ispossible because, whenever you visit a website from your desktop, notebook, net book, or other device, the web serverdetects the IP address of the device. That can be used to determine your general location. The usefulness of thisinformation can be illustrated with a simple yet proﬁtable example that leverages the fairly universal shopper preferencefor saving money.
Sheplers WhitepaperC AS E S T U D Y 3 : T A X E S IN TEXA S?Geo-targeting can be used to increase conversion by saving customers money, namely the sales tax they might avoidpaying on their purchase from your website based on their location. These days, shopping by price is almostsynonymous with shopping online and Sheplers customers are no exception. Sheplers knows that many shopperscarefully weigh all the factors that affect the ﬁnal cost of their purchase, including sales tax. Since the sales tax payableon web purchases can be up to 10 percent and varies by shopper location, Sheplers has adopted what can only bedescribed as an online retailing best practice: Let visitors know up front if their purchases are likely to be "tax free."This is not only helpful in closingthe deal, but if you point out thepotential savings as soon asshoppers land on your site, ratherthan waiting until they get to thecheckout page, it can reducebounce rates. Above you can seea simple creative that Sheplersdisplays on the home pagewhenever Monetates geo-targeting capabilities indicate asite visitor is located in a statewhere the company does notcollect sales tax.Actually, the creative above is notas simple as it looks. The name ofthe state is automatically insertedinto the graphic by Monetate atthe time it is rendered, thus avoidingthe need to make separate creatives for all the states to which the messaging applies (dynamic rendering of text basedon targeting variables is just another way in which Monetate improves productivity and helps you save on internalresources). 6.48% Revenue Per Session IncreaseAs for the value of this strategy, tests showed that revenue per session rose 6.48 percent when these tax free creativeswere rolled out (as measured against a control group). For Sheplers that translates into a projected annual revenueincrease well into six ﬁgures, achieved without discounts, or free shipping, or anything else that would erode margins.
Sheplers WhitepaperC AS E S T U D Y 4 : L E T S G E T LOC A LSheplers is now experimenting with changes to the home page content based on visitor location and what the companyknows about buying preferences in that location. For example, if you are shopping at Sheplers from a state with amarked preference for Wrangler you might see Wrangler products above the fold when you land on the home page.While the company is not prepared to detail the results of these tests, partly because they are ongoing, it is clear that thestrategy pays off when you get it right.For example, changing the sheplers.com home page for visitors from Japan produced a conversion rate improvement of116 percent. If you are inclined to think that a doubling of conversion rate is an exaggeration we should point out thatmany other Monetate clients have seen comparable results from country-speciﬁc targeting. The World Wide Web truly isworldwide and it turns out that a lot of people outside America like to buy from America (remember that 25 percent ofSheplers revenue is international).Would it be worth customizing content for visitors from different countries or regions or states if you had to implement thenecessary site changes piecemeal through your IT department? Possibly not, but rolling out this kind of targeting withMonetate is literally a few minutes of effort, and that is Marketing department effort, on Marketings schedule, not an ITproject that has to be placed in the IT queue.
Sheplers WhitepaperC AS E S T U D Y 5 : G E O- T A RGETIN G C ON VEN IEN C E A N DC OMP LI ANC EA third beneﬁt that Sheplers has found in geo-targeting is improving the site experience by hiding items that a shoppercannot buy. For example, various laws are in effect that limit the distribution of certain "exotic boots" to some locations,like California. It is also illegal to ship some exotic boots from America to other countries. Hiding items that cannot beshipped to a customers location reduces shopper frustration and calls to customer service.Sheplers has even used Monetate to help out the IT department.There are times when a website has to be taken down formaintenance purposes. Those times are different in differentlocations. For example, if you are taking the site down at 1:00 amCentral time that is 11:00 pm Paciﬁc time. Sheplers has usedMonetate to display a banner that warns shoppers about downtime intheir time zone, dynamically generated from the "local time" targetingvariable.
Sheplers WhitepaperE . CO NVE R SION T H RO UG H C U R A TIONAll of these targeting capabilities and merchandisingstrategies come together when you look at howSheplers is using two complimentary technologiesthat are on the cutting edge of digital marketing:badging and curation. In this context curation meansidentifying items that are deemed worthy of greaterattention and badging means visually highlightingthose items.Why are curation and badging important to onlineretailing? Consider the fact that Sheplers stocks 10categories of Work Boots. In the "Pull-on" sub-category alone there are 60 different styles. When ashopper gets to a web page with 60 choices, it helpsto know which items are new, which are best sellers,top-rated, and so on. Fortunately, Monetatetechnology makes that easy, whether youre sellingboots or jeans or western shirts.Of course, if you had to create new product shotsevery time the curation changed then badging wouldbe prohibitively expensive. Thats why Monetate developed technology that canautomatically display small images, the badges, on top of your original product images.The Monetate marketing platform will do this on your website according to whateverbusiness rules you lay down. For example, if a product SKU is in a list called "new" or"on-sale" then Monetate will ﬂoat the appropriate badge over the image of any productwhose SKU is on the list. You can tell Monetate to do thiswhenever such a product is displayed, or only on certainpages, such as a search results page.
Sheplers WhitepaperC AS E S T U D Y 6 : RE S P E CT T HE B A D G EBadges are a digital reincarnation of the age-old merchandising strategy of calling attention to speciﬁc products within arange of goods, such as items that you are particularly keen to sell. And badges are effective: adding bestseller badgeson category pages at Sheplers produced a conversion rate lift of more than 3 percent. The deployment of "Savings"badges on category pages increased average order value by 2 percent. Using a "New" badge on product detail pagesproduced a 1.63 percent increase in the "add to cart" rate. Individually, these might not seem like big percentageincreases, but taken together the annualized revenue increase from these badging campaigns is a seven ﬁgure successstory. 1.63% Increase in add to cart rateIt should be noted that the bestseller badge is a little smarter than the others. While the "New" badging is triggered by alist of SKUs that Sheplers uploads through its Monetate dashboard, Monetate curates the best selling productsautomatically because Monetate knows what is being sold and when.A simple business rule triggers display of the bestseller badge when an item crosses the predeﬁned threshold forbestseller (for example, the 10 most frequently purchased items in the last 30 days). In other words, Sheplers can justset this merchandising campaign and forget it. As customer buying habits change, so does the bestseller badging,without consuming any additional resources.Sheplers knows that badging pays so it is using Monetate to get even smarter, combining geo-targeting with itsaccumulated understanding of brand synergies to present different bestsellers to visitors from different states, based onwhat is selling best in the visitor’s state.
Sheplers WhitepaperF. TH E S H I PP IN G N E W SWhen we asked Sheplers COO, Mark Hampton, where he sawMonetate making the most difference to the company, he pointed toshipping. Obviously, shipping is a key factor in the online retailingequation, an equation that is different for each retailer.Take the case of Zappos, an online retailer that is more horizontal thanvertical, selling every type of footwear. Free shipping and free returnshipping are a big part of the companys business model andmarketing strategy. Clearly there are costs associated with that strategy,beyond the shipping costs themselves. Return rates at Zappos arereported to be high, partly because some people intentionally ordermultiple styles in multiple sizes and return most of them.Any online retailer who is considering offering free shipping needs toproceed carefully, paying close attention to the effect on both the topline and the bottom line, overall revenue and net proﬁt. One strategy isto offer free shipping selectively. According to Hampton:"We have determined, with Monetate tests, the importance of free shipping offers to leverage the top line and theincremental contribution." Free shipping can increase the top line but will also raise costs. That’s okay if the bottom line keeps growing.A key variable in the shipping equation for Sheplers turned out to be location. Detailed analysis of sales ﬁgures revealeda group of states converting at lower than average rates. The company suspected the presence of primary retailcompetitors in those states was the culprit, with Texas being one example. It made sense for Sheplers to target thosestates with free shipping offers and see if that produced a signiﬁcant lift in conversion and top line revenue while trackingnet contribution to the bottom line.
Sheplers WhitepaperC AS E S T U D Y 7 : F RE E S HIP P IN G SOMEW HER EWith its geo-targeting capabilities, Monetate enables online retailers to test and execute a wide range of shippingpromotions. These include reducing or dropping the shipping charges based on distance from warehouse, distancefrom competitors stores, or location within a particular region, metro area, county, ZIP code, or state. Shipping can bereduced or waived for all purchases for a limited time, all orders over a certain amount, all orders of a particular brand orcategory, and so on.Getting Monetate to tellshoppers from Texas that theyget free shipping whileshowing different messages toshoppers from other states isvery easy. The big questionfor Sheplers was the net effecton revenue. Would theincrease in sales pay for thecost of the free shipping?In a situation like this youneed your testing platform tobe nimble. You also want it toreport results in real time. Inother words, you want to beable to see the effects of thetargeting immediately andquickly turn it off should thoseresults prove negative.Monetate lets you do that, butfortunately Sheplers did nothave to turn the test off early.After four days the Monetatedashboard showed a 57 percent increase to the top line.Sheplers was also seeing a 20 percent increase in net contribution even though it was paying for shipping. The testproved the value of offering free shipping to shoppers in states where the company faced strong competition. As abonus, in addition to the very positive ﬁnancial numbers, this test showed that the strategy produced a 48 percentincrease in new customer acquisition. Annualized contribution to the bottom line? Sheplers prefers not to say, but it isreasonable to assume that this strategy was a Texas-sized success. 20%Increase net 48% Increase new customer acquisition contribution
Sheplers WhitepaperG. T H E R O U N DUPFrom the case studies described here you can see the breadth of Sheplers’ implementation of Monetate and get someidea of its impact on Sheplers’ business processes and performance. In addition to the various strategies describedabove, Sheplers uses Monetate on a regular basis for traditional A/B split testing to decide on the best creatives andother variables. For example, the company recently decided to try a different design for its "Percentage Off" badges. Thewinner produced a 4 percent revenue improvement over the loser and an annualized revenue improvement projected tobe well into seven digits.When we asked Mark Hampton to summarize the beneﬁts of deploying Monetate he summed it up in two words:information and partnership. Then he elaborated. Information: "The accuracy and detail of the information that Monetate 1 provides to the business is not only more informational than that available from standard analytics packages, it is directional. In other words, it is helping the company decide the direction to take in order to take its marketing to the next level."Hampton points to the availability of real-time data on multiple parameters when testing and targeting in Monetate,parameters like bounce rate, new customer generation, average order value, revenue per session, and cartabandonment."Monetate is not only telling me if what I am doing is proﬁtable but it is also indicating why its proﬁtable. You can tell if atest is reducing the abandon rate or speaking more effectively to a new customer than it is to a returning customer. Datalike that points you in the direction of how you can do even better."
Sheplers Whitepaper Partnership: Although Monetates software is very easy to install and use, 2 Hampton says Sheplers is deriving a lot of beneﬁt from the working relationship the company has developed with the Monetate Strategic Service Team."These guys help us stay focused on moving forward, not just making changes and measuring them, but derivinglearnings and implementing them."Hampton cites the early testing on the shopping cart as an example. Those tests indicated a need to make changes,and Sheplers implemented them. But in some other areas, like badging bestsellers, Hampton says the Monetate teamacted as "the forward scout" and encouraged experimentation to prove the value of changes that can go on to become apermanent part of the site design.In summary says Hampton, "Before Monetate, we were forced to do our own tests or just guess. Faster testing and moretests has freed up development time to do other things. Monetate lets you prioritize. For us, further personalization is thenext big thing, based on what people have viewed or are looking at. And with Monetate we are ready to take it on."After more than 100 years of retailing, Sheplers is a great example of an established enterprise that is looking to thefuture, pushing the envelope of digital marketing and merchandising, and reaping rich rewards where others have yet totread. “ “ Monetate gives us the ability to test everything in real time, against a control group, under the exact same conditions as the target group; and that gives us a lot more speed and confidence when making marketing decisions. Bob Myers, CEO, Sheplers “ “ The longer we work with Monetate, the more we learn about our customers and how to apply that knowledge to further improving our return on marketing spend. Nick Bomersbach, VP, Digital Commerce, Sheplers