29th May 2019
Navigating the Biggest Challenges for Online Retailers – Part One
This is the first installment of our three-part blog series where we identify some of the biggest challenges for today’s online retailers and discuss how you can overcome them.
Part One: Attaining Customer Loyalty in a Competitive Environment
“Customer loyalty is the result of consistently positive emotional experience, physical attribute-based satisfaction and perceived value of an experience, which includes the product or services.”
I love this definition of loyalty from Beyond Philosophy, as it brings together the logical reasoning and more intangible feelings that a customer must experience on an ongoing basis in order to become loyal to a business. With this in mind, it’s understandable that for 37% of customers, it takes more than five purchases for them to consider themselves loyal to a brand. And as 65% of a company’s business comes from existing customers and 43% spend more money with brands they are loyal to, It’s not hard to see why loyalty is highly coveted by online retailers.
Loyalty is a big ask – when questioned about who they are loyal to, most people will name their family and close friends. So how can your business offer enough value for your customers to afford you the same generosity? In the first part of our new three-part blog series, we’ll take a look at how trust, differentiation, personalisation and keeping up with the latest online marketing trends (and overtaking your competitors) can help you to earn your customers’ loyalty.
Why is Loyalty a Challenge for Online Retailers?
The value of loyalty is high for every retailer, but If you operate online, you don’t need us to tell you how competitive your market is and how hard it is to gain that loyalty. Before the internet was so prevalent, consumers could only choose from the handful of shops on their high street, and perhaps stores who sent out catalogue direct marketing or had television adverts or shopping channels. Fast forward to 2019 and it takes Google 0.79 seconds to return 1.2 billion search results for the query “women’s red shoes”.
With so many retailers now available – not only in the consumer’s town or even country, but all over the world – naturally retailers are having to shout to be heard online. To decide between these retailers, customers tend to be driven by factors such as product quality, price, familiarity, recommendations, and their own experiences. Therefore if you are selling a product of equal quality and price as a product from another retailer, it stands to reason that loyalty will follow as an important factor. In fact, a study found that by the year 2020, customer experience will overtake price and product as the key brand differentiator. And unfortunately for the rest of the internet, there is one website where many people place their loyalty for a myriad of different products – and its name is Amazon.
The Challenge Named Amazon
With 370 million products listed for sale on the UK site alone, and with around 25 different departments, Amazon truly has many bases covered. It takes a pretty astonishing company to be a competitor in markets including books, clothing, music, car parts, furniture, smart phone apps, movies, electronics and groceries – and for more product searches to start here than on Google. With so many products available and such a huge reputation, it’s no wonder Amazon is many people’s go-to retailer for a wide range of purchases. Not only does Amazon offer so many products, but it also offers free delivery or fast delivery options depending on what you need, and it’s an expert in showing users personalised recommendations and related products that can increase their basket values while keeping customers satisfied. And statistics suggest this personalisation is particularly important to fostering loyalty – 48% of consumers have left a brand’s website and purchased from another because of a poorly personalised experience.
Familiarity breeds loyalty
So how can other retailers compete with Amazon? If it’s true that 37% of customers consider themselves loyal to a company only after they have made five purchases, the first thing to do is consider how to keep bringing customers back. For example, display remarketing, email marketing and social media marketing can all be used to reach existing customers. Does your marketing strategy include these ways in which you can build relationships with your customers, or are you solely focused on gaining new ones? With social media and display remarketing, familiarity can breed loyalty. Encourage customers to follow you on social media so they can get to know you, see how you interact with others, and understand your company culture. Both social media and advertising can get you in front of existing customers more often so you can show them that you’re an established brand within your field.
Use personalised email content to drive repeat purchases
For targeting existing customers while providing them with a personalised experience, take email marketing – it’s so much more than sending your monthly newsletter. Consider personalised recommendation emails based on a customer's previous purchases. Or abandoned cart emails for those who have left something in their basket without completing the transaction, or replenishment emails to let customers know when a product they want is back in stock. Re-engagement emails can also help to bring back customers who haven't browsed with you in a while - especially if you send them a discount or another special offer. You can find out more about adding dynamic content to your email marketing in our blog post How important is dynamic content for email marketing campaigns?
Now we’ve established that retailers must bring customers back in order to create that loyalty, it’s important to think about the kinds of experiences that will make them keep returning. Every instance of a customer returning must be a positive experience in order for them to come back again. Part of that is in competing with other companies they may also be loyal to, such as Amazon. So how do you compete with Amazon?
Differentiating Your Business Within the Market
We know what Amazon excels at – providing a wide range of products at different price points with varying delivery options and a personalised experience. But what do you excel at? What differentiates you from your competitors? More specifically, what can you offer that Amazon can’t? Why is that important for your target market? How can you show customers that these USPs are why they should buy from you and not Amazon or anyone else?
Let’s say you’re an online retailer selling evening dresses. You sell dresses made by five different designers, and the prices range from £50-200. You’re different to Amazon because:
- You don’t stock as wide a range of dresses
- You don’t cater to as wide a range of budgets
- You don’t offer free delivery
But all of that is completely fine. Let’s break it down:
- You don’t stock as wide a range of dresses – because you know what your customers want, and you’ve put your faith in these five fantastic designers, whose products you know inside out.
- You don’t cater to a wide range of budgets – but you cater to the lower end of the market while still offering great quality, and that’s what your target market wants. They know you’re not going to try to sell them a dress that’s hundreds of pounds over their budget.
- You don’t offer free delivery – but bearing in mind the nature of buying clothes for a special occasion, you have a great returns policy. And you make sure that your website provides customers with as much information as possible so that they can make an informed purchase they’re ultimately happy with. Maybe you ask people who review the dresses to comment on how well they fit, or perhaps you show photos of models in various sizes so that customers get to see more than simply the 5’8, size 8 model used in the designer’s photos.
Just because you’re doing things differently to Amazon doesn’t mean that any of it is negative. You can find ways to spin any perceived negatives into positives as I have done above. Whatever you’re selling, you’re sure to be a smaller retailer than Amazon, who sell so many products that they can’t be experts in what you’re doing. But you are. And through product descriptions, blog posts, articles (on your website and ones you write for other outlets), email marketing, social media and more, you can show customers the extent of your expertise and the quality of your products and the way in which you deliver them. Once you’ve shown people this and they’ve seen what you have to offer, you stand a better chance of them becoming loyal customers.
“But what about ASOS?” you may ask, as ASOS is a big competitor in the fashion industry, who also sells evening dresses – but the same thing applies. Think quality over quantity – in terms of the clothes themselves and your service and website content you are offering. You are not ASOS, and you are not Amazon. And that is not bad – it’s good. Show your potential customers why it is good.
Google’s Latest Offerings: A Help or a Hindrance for Retailers?
Now that we’ve tackled Amazon, it’s time to turn our attention towards Google. Because Google is coming up with some new offerings of its own, and it isn’t all good news for retailers.
One piece of big news that came from the Google Marketing Live 2019 event in May is that soon customers will be able to purchase goods from retailers directly from within the Google Shopping interface. Not only will customers be able to do this within the Shopping tab, but they will also be able to make purchases from search pages, the Google Assistant, YouTube and Google Images. The Google Shopping platform will show relevant content such as reviews, unboxing videos and other product information. While this sounds useful for consumers and the convenience could also lead to more sales for retailers, it also comes with some pitfalls. The very nature of this new feature means that customers will have all the information they need already on Google and will be able to pay with their Google account, meaning they never even need to access your site. Not only does that mean your hard work on your product descriptions and accompanying content such as blog posts may in some situations go to waste, but it also means that the loyalty aspect of the transaction is lost. Without your branding and expertise being shown to the customer before and during their purchase, how will you gain a returning customer through this transaction? It also creates a more competitive environment, in which it’s likely that products will be compared more than the companies providing them. This makes it more important than ever for retailers to gain loyalty from existing customers, to whom you are able to show your worth through remarketing, emails, social media and more.
Trust: How to Gain it, and How Not to Lose it
It would be remiss of me to talk about loyalty without mentioning trust. It goes without saying that people aren’t going to be loyal to a company they can’t rely on. But how do you gain and keep hold of your customers’ trust?
We’ve already discussed how rich content such as blog posts can help you to differentiate yourself and stand out as an expert in your field. But your website content can do even more for you, including helping you to build trust with your customers. Being open about the products and services you provide, offering realistic buying guides and advice, and writing honestly about your products and your company can all help people get to know you better and trust you. Social media is also a great outlet for this. Customers need to know that your company is professional and reliable, that you will deliver what you say you are going to, and that you will act in an ethical manner.
In terms of purchasing: real customer reviews, safe checkout processes, and continuous and reliable communication throughout the purchase can all help you to build trust. When it comes to data protection, complying with GDPR, keeping customer data secure and taking cybersecurity seriously are all things that will generally go unnoticed when they are going right – because they are expected. But get it wrong and you’ll suddenly have a lot of relationships to repair.
Keeping up with the Latest Online Marketing Trends
As the Google Marketing Live event proves, online marketing is an ever-changing landscape. In order to foster loyalty from your customers it’s important to make sure your offering is as good, if not better, than your competitors’, and that you continue to meet and exceed customer expectations. Part of doing this is keeping up with the latest digital marketing trends, such as artificial intelligence, which we’ll be covering in part two of this series.
Read part two of this three-part blog series, in which we’ll take a look at the latest artificial intelligence trends and give you the direction you need for getting ahead of your competitors: Leveraging New Trends in Artificial Intelligence.