Every marketing or pricing manager has at least once wondered about the future of online retail. The latest advances in digital experience have given a new focus on a customer rather than on bulk targeting approach. Anyone is capable of using a mobile app to scan barcodes, directly compare prices online, browse ratings and reviews on desired products or services. As a result, omni-channel access to information continuously affects an online store’s reputation, and thereby customers’ perception and behavior in real time.
Alexandr Galkin, Co-Founder and CEO of Competera
“Customers are no longer receptive to traditional lock-in procedures. It’s time to cover multiple sources with pertinent customer information to deliver a more personalized and memorable experience.”
Since customer behavior and preferences are in a state of constant flux, e-commerce retail must find novel approaches to providing a unique shopping experience, communications, and offerings to consumers. We’ve collected new consumers’ tricks and the solution tips for forward looking customer’s experience management. Let’s see how online retail can profit from their customers’ hunger for digital engagement.
E-consumers know very well the standard package of engagement. The traditional offering of the same products, coupons and discounts, is no longer a legitimate reason for long-term customer loyalty to an online store.
Instead of the “4 P’s of marketing” (Product, Price, Promotion and Place), customers expect to see Me2B principles in progress: to view themselves as the chief architects of their own decisions with the help of quick and beneficial interactions with the supplier of such desired goods which help improve their situation. In other words, consumers are very set against “being a target” and “choosing”, but much rather prefer to be an abettor of perfection and an integral part of the cooperation. In spite of this, consumers demand a right to dictate where, when and how, to engage with stores by researching products before making a purchase.
The latest PWC research of online retail and consumers transformations reveals, that by 2020 “digital natives – those people who grew up steeped in technology and following their favorite brands on social media - constitute more than half of all shoppers, and customers of the future are more than just customers - they will morph into content creators, marketers, and brand ambassadors”.
Econsultancy has investigated the issues surrounding the most important criteria of an actual “digital-native” culture. 58% of leading responses say that a key to success is through understanding customers’ demands and proposing relevant and comforting experiences through the customer centric strategy. Great customer service is mandatory, but the future of customer centricity is in an offer of a more valuable experience from the awareness stage through the post-purchase and repeat. Therefore, in order to drive repeat business, customer loyalty and profits, an online store needs to accompany a customer with personalized interactions at every stage of the shopping cycle.
- Emails featuring new products and preferred brands
- Mobile push notifications focused on preferred products
- Product recommendations based on browsing and purchase histories
- Web site, social ads or mobile app banners promoting sales for preferred brands or product categories
- Sales associates using data to drive cross-sells and up-sells at the point of sale
- Last-minute discounts for product bundles or add ons
- Email requests to complete product ratings and reviews
- Follow up blogs focused on how to use specific products
Foresight into customers’ behavioral transformation is a complicated task, but it is not difficult to ascertain with the emergence of new applications and technological devices expanding the horizons of customer experience. Each regular customer of your online store most certainly is a patron of at least one other online retailer. The loyalty dependent upon being a “favorite online store” is no longer reliable because of the customers’ modus operandi to compare and select an optimal price for every product. Today, consumers being in person at a store are able to take a photo of a selected product and instantly find it, or its analogs in several online stores. Looking at the screen of the smartphone, the consumer immediately views the prices and chooses the most appealing one.
PWC’s research reveals that 60% of online shoppers choose a favorite retailer because “the price is right”. This is a crucial point for online retail margin, because “optimal” doesn’t necessarily equate to cheapest.
What is the optimal price? It’s the number residing within customers’ psychological boundaries between inappropriately cheap and inappropriately expensive. Therefore a pricing manager needs to pinpoint precisely within the space between “the borders” while playing two games simultaneously: winning the high margin within the competitive market while gaining customers’ loyalty through the present price perception.
Online retail pricing is moving to the format which was originally provided by the Facebook Ads Platform based on achieving different marketing goals under the various demands of advertisers. The future of communication between e-retailers and e-consumers through the pricing channel is an interface, where customers are able to select all the configurations of the final purchase, while an online retailer sets the KPIs which should be performed. Naturally, the price is an integral part of such transaction processes.
Today e-commerce retail moves towards the future - aspiring to understand the critical price zone for each SKU or product groups, while varying the price within the limits of the zone. Buying a refrigerator for $1750, a customer is ready to overpay by 0.5 - 1.2%. Simply stated, this is around $80 - $100. Does it work with a cellphone for $115? Most definitely not. This is a simplified example, but what if you need to understand a product category with over 9000 units?
An appropriate pricing spectrum from a customer’s perspective, is built around the main competitors’ price, which affects your online store pricing reputation. To prepare a customers’ price comparison, a pricing manager needs to:
Price Intelligence, a tool of competitive price analysis, is uniquely suited for this kind of problem. Inspired by smart pricing effects, the price optimization software produces a data-solution based on competitors’ pricing, stock availability, and promotions for the purpose of e-tailers delivering a new digital customer experience.
This technological degree of freedom allows customers to gain a better shopping experience, but forward thinking customer experience managers can derive big benefits for online store margins, by being vigilantly adaptive in the Age of Customers and always staying a technical step ahead of customers.
Author: Alexander Galkin, Competera.
Published at brainsins.com