Consumers may extensively research all possible information about a product online but ultimately make the purchase in a physical store. Does this mean that online advertising should be turned off as ineffective and financially disadvantageous?
Perhaps, but to be 100% certain, it's necessary to delve into and conduct a ROPO analysis. You might not even suspect it, but seemingly unprofitable online advertising channels can have a significant impact on the number of offline sales at first glance.
What is ROPO effect, and why should retailers pay attention to it? Together with Pavlo Fortelnyi, a web analyst at Promodo, we explored the ROPO meaning and its effect on business.
What is ROPO? The term ROPO (Research Online, Purchase Offline) emerged in 2009. Since then, conducting ROPO marketing has become a must-have for large businesses.
The ROPO effect involves consumers searching for a desired product online and thoroughly researching: its cost, specifications, reviews from other consumers, and more. Then, they proceed to purchase the product in a physical store.
Why does this happen? There are various reasons. For some, it's important to personally inspect or try on the product, while others might face difficulties with online payment or order processing.
When looking at purchase statistics in 2023, the majority of purchases are still attributed to physical stores.
But how can large retailers and internet stores with physical locations learn how online user behavior impacts retail sales? Always consider the ROPO effect and conduct ROPO analysis.
Companies that do not track the relationship between customer behavior online and offline risk reducing their sales, for example, by turning off advertising that may not seem profitable at first glance.
Let's imagine that you want to increase online sales and, most likely, without ROPO marketing, you would halt all advertising campaigns where sales levels are low. However, the unique aspect of the ROPO effect is that if a product doesn't sell well online, it might be a top seller offline.
For instance, sneakers and plasma televisions. Which of these products generates more offline sales? Which marketing channel should you allocate a larger budget to? Without considering ROPO, if you only look at online sales figures, the advertising budget would be directed towards plasma televisions.
With ROPO analysis, the situation is different. Sneakers might not sell well online, but they could drive more visits to physical stores, thus contributing to overall sales.
By taking the ROPO effect into account, businesses can make more informed decisions about their marketing strategies, allocate budgets effectively, and better understand the holistic impact of online activities on offline sales.
Conclusion? Having access to such data, you would know that it's worth continuing to advertise a product, even despite low online sales.
This is just an example; the situation in your business could be entirely different, as the proportion of ROPO purchases varies depending on the specifics of the business, region, consumer mentality, age, and more.
“Only 5-10% of customers understand what ROPO analysis is and deliberately request this service. On our part, we always emphasize that if a business has both offline and online presence, it's crucial to set up and track users who transition from online to offline”. Pavlo Fortelnyi, Team Lead of the Web Analytics Department
53% of consumers claim that they always conduct research before making a purchase to ensure the best choice. 99% research products online before visiting a physical store.
Among all consumers, representatives of Generation Z (born between 1997 and 2013) are the most common group to research products online before making a purchase.
Benefits of ROPO marketing for large retailers:
Important: Implementing a bonus or loyalty system in offline stores that allows collecting customer data (email, phone numbers, etc.). This enables the linking of data between online and offline interactions.
First and foremost, to conduct the analysis, you need to focus on identifying users and combining their online and offline actions—linking a user's website interactions to their in-store purchases. As mentioned earlier, it's preferable to have an established bonus or loyalty system in place that allows data collection.
Primary stages of user identification:
All measures aimed at increasing authorized users should gradually lead to an increase in the percentage of identified users.
It's important to understand that achieving 100% user identification is not feasible. The goal is to reach a percentage that allows for statistically sound decisions; for instance, having 10-15% could be sufficient for operations. Over time, the system will improve, and this percentage will increase, potentially reaching up to 40%.
After collecting all the data in Google BigQuery (or another repository), it needs to be linked. The user identifier can be used as the key. We recommend combining data from:
For visualization, you can use tools like Power BI or Looker Studio. To transfer user behavior data from Google Analytics to Google BigQuery, you can utilize the standard export feature.
Offline order data can be imported from your CRM into the repository either in one-time loads or through setting up automatic data uploads for regular determination of the ROPO sales share.
The table imported from your CRM should contain at least:
Imagine that in your CRM, you have customers who have provided their email and a unique user identifier. You send an email containing links with their identifiers. When customers click on these links, they land on your website and interact without needing to create an account. By using Google Tag Manager, you can transmit user identifiers to Google Analytics, either to User ID or Custom Dimension. This allows you to gather valuable information about their website actions and better understand their behavior, all while respecting confidentiality.
If a user submits a request on your website and later visits a store to make a purchase, you can link their actions using a transaction identifier.
In the diagram above, you can see data about user behavior on the website (on the left) and purchase data from the CRM (on the right).
To learn as much as possible about your users, you can incentivize registration on the website by offering bonuses such as discounts, downloadable resources, promotions, etc.
You can also use a special parameter in the links you send to your customers via email. This parameter can contain the user identifier value from your CRM system. This will help you identify the user, even if they haven't logged into the site.
Criteria that will allow you to generate reports in additional segments:
If you want to not only determine the share of ROPO purchases but also calculate their Return on Advertising Spend (ROAS), you'll need data on expenses from your advertising sources. It's best to import data on expenses and other metrics directly from your advertising platforms into your repository. While GA3 was available, you could import them from various services into analytics and then upload, for example, into BigQuery. However, after migrating to Google Analytics 4, this is no longer applicable.
All your data can be consolidated according to this scheme:
If you build only a ROPO report, you will receive the following data: the number of online orders, online revenue, and the number of orders and revenue from ROPO.
ROPO provides an understanding of the relationship between the number of orders, but how do you understand whether the promotional channels are effectively engaged and whether the expenses on them are justified? Set up cross-channel analytics. We explained how we do this in a recent case study on cross-channel analytics.
Cross-channel analytics helps track the effectiveness of each channel, expenses, and CRR (Cost Revenue Ratio). Cross-channel analytics + ROPO analysis also provides other metrics: ROI, ROMI, CRR, and so on for these channels.
Cross-channel analytics + ROPO analysis are like two separate products that live independently, but they provide the best reports together.
“During ROPO analysis, we utilize additional reports such as expenditure reports for the campaigns themselves (Google Ads), breakdowns by keywords, and reports for email campaigns, and so on”. Pavlo Fortelnyi, Team Lead of the Web Analytics Department
In the ROPO report, we observe the correlation between channels, expenses by channels, online revenue, and revenue considering ROPO. Additionally, during the construction of the ROPO analysis, we have further reports, including the campaigns' profitability, Google Ads breakdown by keywords, email campaign reports, and so on.
On the previous slide, the ratio of online orders to ROPO orders is displayed. If we assess purely the transactions on the website, there are only 3,059 of them. However, considering offline transactions as well, the total comes to 23,000. Do you feel the difference?
For example, in this report, we can see expenses for all channels (Facebook CPC, Google CPC, Google organic, Viber) – this is cross-channel analytics, which is then linked to ROPO to observe the interaction between offline and online users.
CRR (Cost Revenue Ratio) online for Google CPC is 34.49%. However, when considering the same channel in ROPO, the CRR indicator drops to 22%. This means that ROPO indicates that Google CPC is performing well, and the channel is profitable. It's just that users from this channel first visit the website and then make purchases offline.
“We rarely conduct ROPO analysis without cross-channel analytics, and there's a good reason for that. To accurately evaluate ROPO, it is essential to understand the expenses across different channels because without them, we can only see the number of online and offline orders. Therefore, to have a comprehensive view of ROI, CRR, profit margins, and other metrics, we must first establish cross-channel analytics and then link ROPO analysis to it”. Pavlo Fortelnyi, Team Lead of the Web Analytics Department
The greatest value of ROPO analysis lies in understanding the synergy between your online and offline investments. Without conducting a thorough ROPO analysis, you risk inaccurately evaluating the effectiveness of these investments and potentially losing prospective customers who first interacted with you online and then visited physical stores. By using ROPO analysis, you gain a comprehensive understanding of the entire customer journey.
“Due to ROPO analysis, you can ascertain that the investment of $2,500 transformed into 40 leads on the website, and an additional 60 leads who were offline but conducted research online before converting”. Pavlo Fortelnyi, Team Lead of the Web Analytics Department
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