Amazon’s success story of obsessing with its customers revolutionized the online retail industry. Many companies followed suit to reinvent their businesses. In the internet age, it is not just recommended to obsess with your customers but is considered a dire necessity. Companies have evolved to come up with smarter strategies to attract customers. Target markets can be thoroughly segmented and focused marketing campaigns can be designed, thanks to big data and analytics.
In spite of such advancements in technology, smart customers still hold the upper hand. Why? And who are these “smart” customers? These are the ones that have access to loads of information on the internet and know how to make use of the available data. Enabled by their smartphones and tablets, not only do they have knowledge about various products themselves but also have access to a goldmine of information from fellow internet users. The number of such street smart customers is on the rise, thanks to inexpensive technology. They are changing the way online markets look like today. Here’s why.
Spoilt for choice
Consider the example of online fashion brands; customers are bombarded with ads of variety of products from a number of brands. It’s impossible for them to consider all the products that come their way. Internet-aware customers carefully design their “consideration” set. They’re spoilt for choice and have access to products from all over the world. Their quest for “best” deals will eventually get them to the best deal.
Substitution with no second thought
The concept of customer loyalty has to be re-looked today. Equipped with knowledge of various products and their prices, smart customers recognize value when they see it. Consider tech products like mobile phones or other household gadgets; even when someone has had a clear favourite for a long time, if there is a new product in the market that offers more value for money, you can expect him/her to switch to that product without a second thought. It’s relatively easy to switch sides today.
Large customer network
Almost every online retailer hosts a public forum where people can rate and review items that they bought from them. Customers won’t mince words when they are unhappy and good reviews are not hard to come by either.
When I bought my second phone, I put up a question on a popular forum, “Guys, these are the 2 options I am considering, what should I do?” Half an hour later, I get a reply from a customer saying, “If I were you, I wouldn’t consider either of them.” He gave me specific reasons as to why I shouldn’t buy either of those products. He also suggested an alternative that he had been using for 6 months himself. The product he had suggested did have over 200 positive reviews and I went ahead and bought it. One happy customer can possibly buy 10 new customers. The converse is true too!
Customers are connected by the internet, they exchange views and buying ideas. The consideration set of the buyer is molded with popular opinion. When the customer is bombarded with so many choices, the only source that he/she can trust is fellow customers. This large customer network is driven by honest opinions of people that have tried and tested different products.
How should retailers handle such smart customers?
Given that the proportion of smart customers is growing by the day, good old corporate marketing strategies cannot be as effective as they were a decade ago. Modern technologies have enabled retailers to identify target markets at micro-levels but selling has become much harder than it was 5 years ago. Not only is it crucial to evolve with the customers but also at the same pace. In this age, when most of the technology used in a supply chain is commoditized, any company can equip itself with modern technology at a price. The key to maintaining competitive advantage lies in understanding and connecting with the customers, in a way that they appreciate.
Some major strategies that can help online retailers to thrive under these circumstances are,
The continuously changing nature of markets requires companies to respond quickly to the customer’s needs. Strategies should change with customers and as fast as they are. For example, more and more customers are ready to pay extra for faster delivery options. Amazon’s one day delivery option has proved to be a boon for last-minute shoppers. Marketing campaigns should be designed around this need to attract more customers. Customer priorities change over time and companies should be quick to notice them and take action.
Entice tech-savvy customers with connected products
Tech-savvy customers enjoy the flexibility and ease that new technologies offer to them. Consider the example of the award winning ASDA app that has been downloaded millions of times. The mobile price checking feature reassures the customer of the best price guarantee. It also lists out live fuel prices around local stores. Orders can be made on the go and it also allows customers to reorder their favourites easily. Apps can be personalised for greater user experience. New customers can be notified of one category of offers and loyal customers can be notified of other premium services.
Retailers should focus on building products that enhances the value of a previous product that customers have already bought from them. Customers must be notified of such connected products on their mobile apps. This enables retailers to build long-time relationships with their customers.
Keep it simple and very close to the truth
Today, simple and limited marketing is the key to drive efficient response. Excessive marketing can drive away customers much quicker than the time that was spent on acquiring them. As discussed in the previous section, most online retailers allow customers to publicly review and comment on the products that they bought from them. As a result, a good product is great publicity in itself. Similarly, elaborate marketing campaigns cannot be used as a substitute for a bad product. Showcasing a product as close to the truth as possible increases a company’s credibility in the market. A lie can buy one customer but it could end up being the reason for the loss of 100 potential customers.
Consider the example of mobile phones again. Although technical features look great on paper, true customer experience can be entirely different. Most of the features might be suitable for only a set of customers and this information can be beneficial for future buyers.
Information has not only given retailers an edge but also to customers. Intelligent consumers know when they see value and also when something is too good to be true. Retailers should acknowledge this fact and focus on simple and truthful marketing strategies. Buyer preferences are largely driven by honest opinions of fellow customers all over the world. As important it is to respond to customer’s needs, it is also important to cater to them in a way that helps them make informed choices. The truth and nothing but the truth is the way to go.