As fears of a recession grow amid continuing supply chain issues and rising inflation, businesses in the retail and eCommerce space should be asking – and answering – one key question: “How can we best position ourselves now to grow market share when the economy recovers?”
The following is an excerpt from our new whitepaper Reinforcing Retail From Recession To Recovery: Areas To Invest In Right Now, which discusses eight areas companies should invest in today to position themselves for success when navigating periods of economic uncertainty and evolving customer preferences.
Use data insights you uncover to win new customers and build deeper connections with existing ones.
Once you have analyzed your data and are armed with ideas for how to better leverage the data, let your discoveries inform your marketing and communications. You might even want to consider investing more into marketing – even amid times of economic uncertainty. During the last recession, for example, clothing retailer TJ Maxx studied its customer data and increased marketing spend by 15%, targeting customers outside of its traditional core market. The next year, 75% of the company’s business came from first-time customers.
Data can also be used to deepen ties with existing customers – either by adding personalization to your communications or by showing empathy for your customers. Recently making the rounds on social media was an example from a McDonald’s restaurant. When processing a customer’s delivery order, a manager attached a note that read: “Hello! We’ve seen that you’ve placed your order from the hospital. Hope you’re keeping well! Your order is on us.”
Inc.’s Kelly Main explains the brilliance of this simple message – how it combines the use of customer data with a thoughtful, empathetic message. “McDonald’s did one thing very few do that made a world of difference regarding its use of data in marketing,” Main wrote. “With two words, ‘we’ve seen,’ the company led with transparency. What this does is wash away the negative connotations that often come as a side effect of data-driven marketing, which can often feel overly intrusive and suspiciously personal. Instead, McDonald’s actually used the data – and the fact that it has it – to connect with the customer. By making them feel seen, they also feel heard and understood – something that most humans psychologically desire even more than love.”
Another example: If, after some analysis, inflation appears to be influencing your customers’ buying habits, consider sending a message to customers who have not made a purchase recently, acknowledging the challenging economic times. Include a discount code or offer that might appeal to the customer based on their purchase history – for example, free delivery for any purchase, or a small-dollar discount on their next purchase.
Look for ways to infuse your marketing messages with transparency and context that show empathy and help to build trust. For example, Under Armour and DMI collaborated to develop a range of concepts that would help the company promote the right gear for the right shopper-athlete. Concepts included integrations with fitness apps to recommend gear based on a customer’s personal profile and activity as well as a personalized AI product coach in store fitting rooms. As brick-and-mortar stores struggle to stay relevant amid the current economic uncertainty, technology-leveraged personalization tools can help deliver unique experiences to customers.
Use your deeper understanding of customers to improve their user experience.
Part of knowing your customers involves evaluating what they are looking for when they visit your website or peruse your mobile app. You build loyalty by putting the things that people want into their hands in the most expedient, convenient way possible. Investing in CX helps to build customer retention, which in turn can drive profitability. One study famously found that a 5% increase in customer retention can generate a 25% increase in overall profitability. Why? One reason for this is because converting an existing customer is easier than converting a new one. Marketing Metrics found that the probability of converting an existing customer is between 60 to 70 percent vs. 5 to 20 percent for new customers.
An investment in CX could mean, for example, adopting a curated marketplace platform that allows a business to selectively include products from other businesses that might complement their own. Niche fashion retailers, for instance, can use an enterprise marketplace solution to experiment with adding shoes and accessories that their customers want. Such products might be well outside their traditional clothing offerings, but some businesses have found that their customers trust them to carry curated items that pair well with traditional offerings and offer the convenience of a one-stop shopping experience.
Another scenario involves an online retailer implementing a more open enterprise marketplace to offer a wider range of assortments from third-party sellers on your site. Sweetwater, one of the nation’s leading musical instrument eCommerce retailers, recently launched an open marketplace that allows third-party sellers to list used instruments for sale – everything from guitars to effects pedals to synthesizers. The move comes at a time when supply chain shortages are delaying the manufacture and delivery of many digital instruments, and so the secondhand market is thriving.
Digital marketplaces can unlock new opportunities and revenue streams, but make sure your analysis of customer data indicates that there is a strong business case for investing in such a platform. Otherwise, it might make more sense to focus on reducing friction and increasing ease on your existing platform or mobile app.
How should you position your company now in order to grow market share when the economy recovers? Learn more in the whitepaper Reinforcing Retail From Recession To Recovery: Areas To Invest In Right Now.