Welcome to a new era of retail where the shopper is in charge. With competitors literally a click away, total transparency in the purchase experience and the ability to instantly price check from a mobile, today’s consumer is fully in command of the shopping experience. With this in mind, RichRelevance has launched a new campaign: Respect the Shopper.
48% of web shoppers plan to spend less this year than they did in 2008, but 61% of consumers who are reluctant to buy this year say web resources such as recommendations and promotional e-mails would help convince them to buy, according to a new study by JupiterResearch, a unit of Forrester Research Inc.
Those of you working the very front lines in the retail sector know the realities of operating in this new, new economy. And frankly, we are entering un–chartered waters as we now must market and merchandise to a new type of customer motivated by not just price but something much deeper—fear.
As Paco Underhill, the renowned retail consultant and author of “Why We Buy: The Science of Shopping” noted in his recent interview with Time, today’s consumer is “dazed and confused” and is making the decision to purchase or not to purchase based on fear of the unknown—will I have a job tomorrow? Will my credit card company shrink my credit line? Will my retiree benefits continue to be provided by my employer? It is the culmination of these true “life” issues that are ruling whether a consumer’s entire cart makes it to the check out, or if it’s abandoned mid-way through the shopping experience.
The fear driving the consumer mindset is one that we cannot directly control but one that online retailers may help ease by providing content tools to help consumers make informed purchase decisions. Brand new research we released this week with JupiterResearch and Bazaarvoice clearly proves that online shoppers value peer-influenced content almost as much as the web sites where they actually purchase products. And while peer-influenced content—including personalized product recommendations—is highly valued by all consumers, it is much more relevant to shoppers with tighter pocketbooks who are more reluctant to spend. It helps them feel confident that the purchases they are making are the right ones because their shopping peers are validating their decisions.
The Jupiter study found that nearly half of online shoppers (48%) plan to spend less this year but a majority (61%) of those reluctant to make certain purchases can be positively influenced by what Jupiter calls “Content Connectors”—shopping resources based on peer-input. The ultimate in peer-influenced content, personalized product recommendations, are considered useful by seven out of ten online shoppers who plan reduced spending in the coming year.
The message for online retailers is clear: we cannot hold out for an improved economy and a return to higher consumer spending. Even when growth returns, consumer behavior will most likely lag behind the growth curve. In response, merchants must align all their resources to capture and influence the consumers they do reach, using the tools and methods available to them to hold onto these shoppers. By neglecting to add tools that reassure the new, increasingly hesitant consumer, retailers risk customers visiting another site where they can obtain the content connectors to feel confident in their purchase decisions. Given the results of this study and the realities of this new, new economy, in the coming months, retailers should:
Bridge the Gap: Marketers must examine the customer shopping experience between the front door and the checkout to ensure shoppers are getting the information and “content connection” to increase confidence in purchase decisions.
Engage with Shoppers: Taking a page from Paco Underhil’s book, “Why We Shop: The Science of Online Shopping,” online retailers should pay close attention to the “Rate of Interception” – that is the level of interactivity a shopper has with the content, tools and resources on a web site which, according to Underhill, in the offline world generate higher sales and loyalty among customers. Introducing interactive elements to encourage consumers to engage with merchandise and product selection will encourage shoppers to stay and shop – rather than jump off to another competitive site.
Be Social: Assist consumers with their spending reluctance by personalizing their online shopping experiences with “peer” based shopping tools including the “Three R’s”: Recommendations, Ratings and Reviews.
Be Transparent: Help consumers overcome their spending reluctance with clearly stated customer service options, flexibility in multi-channel shopping and better returns and guarantee policies.
Online-retail industry analyst Patti Freeman Evans of Forrester Research will be joining executives from Bazaarvoice and richrelevance at two upcoming events to present and discuss the findings in further detail; the New York event takes place March 3rd, and the San Francisco event on March 26th. For more information please visit https://www.bmmreg.com/Engaged/
Lots of people are blogging about what to do in this sluggish economy to keep ecommerce sales up. Frequently, advice comes packaged in seemingly simple lists—17 search friendly tips, 4 quick fixes, 10 ways to boost sales. It’s not the abundance of these opinions that really strikes me, but that much of the advice feels like yesterday’s news. Offer free shipping? Buy up lots of keywords? Offer coupons and discounts?
The inclination for everyone in these difficult times is to hunker down and find security in tactics that are “tried and true.” Fair enough. Surely it can’t hurt to improve on search engine optimization or offer free shipping. But will these tactics alone keep ecommerce sales up for your site? And further, how do they differentiate you from other retailers?
Upwards of 85% of online retailers already offer free shipping promotions (Forrester Research, 2008). The next most popular promotional methods are all variations on price—discounts, added value, and cash rewards. According to Performics, in a study released mid-December, retail sales generated by search engine marketing were up 43% on Black Friday, year on year. That’s a lot of spending to get people to spend—particularly in light of the fact that the cost effectiveness of these tactics is slipping. The ROI associated with free shipping is decreasing as costs are going up (FedEx announced in November that it is increasing overnight shipping rates by 6.9%). And, as retailers push more advertising/marketing dollars to SEM programs, they can expect increased competition for key words.
What to do?
Sarah Lacy’s BusinessWeek article last week, aptly titled “Time for E-Commerce 2.0”, provides a glimpse at the answer. She believes that online consumers have grown bored with today’s marketing tactics and online shopping experience, which have remained relatively unchanged in the last ten years: “More than a decade after the Internet revolutionized how we shop, innovation in e-commerce has hit a wall.” Though she offers up 5 ways online retailers could make it better, I believe they can be summed up as one core idea: improving the shopping experience to increase conversion.
The hyper focus on driving traffic to a site and then applying promotional tactics during checkout is symptomatic of a chronic problem that has long stymied ecommerce—low conversion. The average conversion rate continues to hover around 3%, which means that 97% of visitors leave sites empty-handed. Instead of innovating to capture these lost sales, retailers have become satisfied with merely compensating for this low rate of conversion. To date, ecommerce has successfully solved for the beginning (driving more traffic to their sites) and the end of the shopping cycle (incentivizing the customer at the checkout line). It’s time for retailers to focus on evolving and enhancing what I’d like to term “the 97% middle” of the buying process: the shopping experience. To break into specifics:
Navigation. Unfortunately, for today’s online shopper, browsing through online “store aisles” is often analogous to bumbling around a store with blinders on, without the help of a store clerk. Site search and browse can be optimized, but discovery tools like personalized product recommendations can help shoppers find what they’re looking for, faster. Even simpler tools such as “breadcrumbs” and other general site layout improvements can materially improve navigation.
Overall experience. Online and off-line, it’s often intangible aspects that attract people to a store, and then back again for a second purchase: the ease of well organized aisles, a welcoming look & feel or “vibe,” great customer service, and so on. Improve these aspects of the shopping experience, and you’ll improve conversion.
Content. Everyone knows that Amazon.com is nearly as popular for their customer reviews as they are for the products they sell. Content, be it editorial or user generated, helps shoppers engage your site and decide what to buy.
Merchandising. Every site page—not just the homepage or the checkout pages—should be viewed opportunity to implement enhancements that illuminate your inventory, guide your customers, and then propel them to a purchase. This could range from displaying best sellers to complimentary items to simply recently viewed items.
Transparency. Is it easy to find your return policy? What about your shipping rates? How about deep product information, including multiple product views? Can customers easily contact you? The answer to all these questions should be yes. For online shoppers, transparency leads to trust –which leads to buying.
As Lacy contends, “E-commerce is at a crossroads. The industry can delude itself that growth will pick up once the economy rebounds, or innovate its way to higher sales.”
Ultimately, no matter how many top 10 lists you implement that drive expensive traffic or cut into your margins, the single best thing you can do to help you survive and thrive in this economy is focus on that 97%, and make shopping easy and enjoyable on your site. That will build your brand and deepen relationships with your customers—so next time they’ll skip the search engine and come straight to you. “Really?” you might ask? It worked for Zappos.