The customer relationship doesn’t end at checkout

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Where does ongoing retail success reside? It may surprise you to know it happens on the other side of the checkout, after the customer’s current purchase is complete. For centuries, merchants placed their focus on bringing shoppers to the storefront. When commerce moved online, the same objectives remained:

  • Attract customers to the site
  • Convert them
  • Increase Average Order Value (AOV)

Customer Connections

When the mobile economy started to gain traction, merchants slightly modified their priorities, looking for techniques to maximize SEO and then optimize conversion. It was essentially the same technique as before: get the buyer to the store and convince them to buy.

Businesses exerted great effort and spent large amounts of money on paid ads, A/B testing of checkout flows, and even the location, color, and size of the checkout button itself. They paired up-sell and cross-sell techniques with promotions and free shipping offers, all to get the online consumer to add more items to the shopping cart.

Such techniques continue to be a valid and critical part of Internet-based, in-the-moment commerce, but vendors must now look beyond that. The lion’s share of revenue happens following the initial purchase, after the customer has checked out. That’s where attention should be placed.

The reason lies in the renewed concept of connection.

First, and most obvious, is online connection, which allows a customer to shop from anywhere. They no longer need to venture to the bricks-and-mortar store to make a purchase, and innovative new delivery services allow physical goods to arrive within a short, satisfactory timeframe.

Second, and more important, is the personal connection, supported by data. Merchants have an unprecedented opportunity to collect information about their customers. Concepts such as what was purchased, the type of payment used, and online browsing history are just the beginning. Downloadable apps can now deliver additional knowledge to the equation, recording activities, preferences, and corollary data pulled – with permission – from their actions on social media, through their smartphone apps, and by way of intermediaries like stripe.com. Brands are building direct relations on Facebook and other social networks and are finding creative ways to make sales in that new environment.

Internet of Things and Big Data

Intelligent machines, part of the Internet of Things revolution, are also supplying vendors with data. Some people may scoff at the prospect of a refrigerator connected to the Internet, but when it can tell a food retailer which day the fridge gets re-stocked or how quickly the orange juice runs out, it can have significant impact on ordering from suppliers, in-store promotions, up-sells and cross-sells.

Grocers can sell information pulled from orange juice consumption to health related suppliers, vitamin manufacturers, or media companies looking for interesting on-demand show topics – all on an individualized, person-by-person basis.

Big data analytics is a hugely malleable resource with almost infinite use. It enables insight into customer intentions and habits and to create future sales opportunities and increased overall value.

Subscription Revenues, B2C and B2B

The third connection point is subscription. Vendors and manufacturers in every industry are starting to recognize the greater revenue potential offered by switching from a product to a service model. From daily essentials to beauty items to coffee, any product can be transformed in some way into a service model.

This applies equally to the B2B market. Tractors and turbines need replacement parts, upgrades, consulting, and well-trained operators. The range of items sold through subscriptions has grown dramatically in the last several years.

Service, Service, Service

Customers appreciate convenience, and they value advice. They also welcome referrals to affiliate programs in related areas – orange juice consumers may be interested in fitness, diet, or tourism programs, which provide additional sources of potential revenue for the owners of the data. In return, customers provide loyalty and recurring revenue over far longer timeframes.

The trend towards service is not being pushed only by proactive vendors. There is significant pull from customers themselves. The shift away from “owning” to “sharing” is happening in a number of industries, including automotive.

Major manufacturers are noticing decreases in new purchases from the younger, urban demographic. Rent-by-the-hour car sharing services like ZipCar are taking a bite out of their market, as well as that of traditional rental companies.

Key Recommendations

  • Place less focus on increasing the overall order value, and more on the post-checkout relationship.
  • Rather than offering an immediate up-sell, entice the customer to register with your site.
  • Offer reduced prices on certain items, a free trial period, or credits for future use.
  • The usage data extracted, combined with recurring sales and subscription revenues, far outweigh the margin made on a single extra shopping cart item.

 

Michael Vax
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November 2, 2015
Michael Vax

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