Once upon a time, an ecommerce company could get away with just a simple website that sold products. Then one day the industry progressed to the point that we all needed to incorporate an email service provider. And now, we have Amazon, Walmart.com, and the other retail powerhouses creating new standards for ecommerce fulfillment, price, and service. According to TechCrunch, Amazon accounts for 49% of all ecommerce sales. The closest competitor is eBay with 5% of total ecommerce transactions. This chaotic battle for market share has forced other retailers to get creative with how they use customer loyalty to incentivize their customers.
The Amazon Effect:
In 2017, Amazon saw $177 billion in sales revenue. This year, they’re projected to clear $258 billion. Features like Q&A, item comparison, and peer reviews have forced smaller retailers to get creative with their own user experience.
They also built one of the most unique customer loyalty programs in retail history. With its innovative paid loyalty model, Amazon Prime has changed the way millions of us shop each year. It’s also very diverse in scope, as Prime subscription benefits can range from free two-day shipping to streaming thousands of movies. And now that Amazon has acquired Whole Foods, it’s become that much more convenient for the customer. And to think it all started with books…
With the dominance of the third party aggregators like Amazon, Google Shop, and Walmart.com, it’s becoming harder and harder to keep a consumer’s attention. So many factors come into play on why this is such a problem.
When your products are being advertised on third party sites, they’re being compared apples-to-apples against hundreds of similar products. Google Shop’s comparison tool places the most relevant goods with the best price right next to your products. Not only that, but customers are channel-hopping across various ecommerce sites, social media, and other sources to get as much information as possible about your product. According to a study done by CommerceHub, 86% of purchasers change channels when buying online. So if your reviews, Q&A, and product descriptions don’t check out, your potential customer has a lot of other options to choose from.
The cost of acquisition is currently higher than the cost of inflation, a detrimental stat for marketers and ecommerce professionals. This is attributed to lack of trust in retailers and institutions in general. “The trust that consumers have in brands is going down tremendously,” stated Al Lalani, Chief Strategist of Annex Cloud. “Customers are researching more and looking for peer reviews across many channels, thus increasing the acquisition cost of that customer.”
Though there is no one simple solution to this problem, there are a few strategies that can help your brand better position itself against the competition.
It’s so vital for a brand to have a strong presence across all industry-related platforms. That includes a great ecommerce store, third party aggregators, mobile devices, and social media. Once a customer is acquired through a good omni-channel campaign, it’s important to incentivize them to return for future purchases. This is done with omni-channel loyalty. Say you’re a shoe manufacturer and a customer just purchased your shoes on Amazon. Because advertising on Amazon means more cost to you and more distraction to your customer, it’s in your best interest to convince the customer to purchase from you directly in the future. This can be done by incentivizing the consumer with offers like $10 off their next shoe purchase or offering free socks with each purchase.
Retention Through Customer Loyalty:
No matter how you acquire a customer, it’s important to make them want to buy from you again. The cost of acquiring a customer is greater than the cost of retaining a customer, so incentivizing right after the initial point of purchase is your best chance of nurturing that relationship. According to Ciceron, a satisfied customer will contribute on average 14x more revenue to a business compared to a dissatisfied customer. It’s about not only rewarding after a purchase, but incentivizing them when they take actions like posting photos with your products. It’s about breaking out of the points-for-purchase model and building a real community around your brand. When you cater to your customers, they gain a sense of inclusion and are more likely to purchase in the future.
Annex Cloud helps bridge the gap between retailer and consumer. By working with the retailer and creating a custom loyalty solution, we generally see an increased average order value and decreased cost of retention. The old days of getting by on an ecommerce site alone are behind us. It’s an absolute necessity for retailers to incentivize their customers with customer loyalty. If you either don’t have a loyalty program or you just want to get more out of your program, contact us and we’ll be sure to help you out!