A better, more profitable online infrastructure, or ecosystem, has been at the center of commerce for decades now, but the fierce competition that drives online sales is evolving at bottleneck speed in the post-COVID-19 pandemic environment.
It’s not so much that businesses offering online services are not used to employing analytics to figure out what their customers need or desire. Rather, it’s the growth of partnerships with affiliated and even non-affiliated companies to add value to a sale and create loyalty from existing customers while expanding the customer base through digital third-party access that has become a gamechanger. Shoppers, who may have once enjoyed browsing in typical retail stores, fully embraced online shopping as they waited out the pandemic at home. The ease, perks and financial benefits of garnering services or purchasing products from the comfort of home was not just a necessity, but also became a form of entertainment. Consumers simply developed new shopping habits while hunkering down at home. The question is whether those habits have staying power and whether the hyper-competitive digital third-party element of online sales will continue to grow even though the economy has opened up throughout the U.S.
Not just an online presence
An online presence is not enough. Business sustainability requires engendering loyalty from customers who now expect a variety of perks and financial benefits to keep shoppers coming back—and back again—to an online store or company.
So, what are mammoth companies like Amazon, Apple, Walmart and others doing to keep consumers happy and begging for more? Both Amazon and Walmart offer low prices and free shipping, but how about the idea of directing your customers to other products that they might find interesting or invaluable? Amazon employs this marketing technique seamlessly. For instance, when a customer browses Amazon to buy bed sheets, the company follows that lead and displays blankets, colorful new pillows and other sundry items to buy.
Apple, however, has employed different tactics to grow and maintain its customer base. Apple broke a record in 2018 to be the first company in the world to record $1 trillion in market capitalization. Two years later that market cap doubled. Apple’s products are certainly not cheap. The company has proven that creating an image, maybe even a mystique, is alluring for a wide swath of customers. The ease and prestige of Apple products, like the iPhone, has spawned a devoted following of customers. Whether you’re at the brick-and-mortar Apple store in the mall or are browsing their website, once you’ve purchased a new phone, you will be offered the opportunity to buy the newest phone cover to fit the slightly larger or smaller phone you just purchase, and of course you’ll need a new phone charger. And wouldn’t you know it, Apple is offering a couple of freebies with your bundled purchase, at least for a limited time. The company is betting that you’ve always wanted to subscribe to the Hulu streaming service, but eh, why spend more money when you already have Netflix and Amazon Prime? Apple gives you that service for free, but they’re counting on the chances that after the trial period is over, you’re hooked on Hulu and will keep the subscription going at a cost that you might not have agreed to had it not been for the freebie. This affiliate marketing strategy is a win-win. Apple may send you to one of its affiliates for a sale, but they will get a piece of that profitable pie and customers are happy they have a new streaming service to enjoy,
Make it simple. Make it fun.
So, what is it exactly that Apple does so well? Do you know people who are first in line to buy the latest Apple iPhone, even though their year-old phone has never faltered? I do! Simplicity, or at least the illusion of simplicity, is key. Apple products are simple to use, although the prices are certainly not cheap. What is that special, intangible, magical thing about Apple that begets such devotion from their customer base? The experience of standing in line with other people in the know to get the newest, hottest technology, whether it be a new-fangled computer or a mobile phone that promises a better camera and a sleeker design, or maybe it’s just the idea that you, the customer, are the trendiest, most well-informed consumer. I always feel that Apple is giving stuff away for free. A lot of people would be surprised to find that their products are really not superior to androids and that the user experience may be simple, but is actually kind of clunky. My grandma can easily use an Apple phone while she would be hard-pressed to figure out a Samsung cellphone. When simplicity meets trendy, product cost isn’t as much of a barrier for a purchase.
And then there’s “What’s in your wallet?” from Capital One. It is just one of a plethora of credit cards that offer an array of incentives to encourage people to charge, charge, charge and reap the rewards of high interest rates for unpaid balances. Cash back, travel mileage points, and other perks are oftentimes irresistible to consumers. Some credit card companies offer unlimited double mileage on every purchase, while others offer discounts on streaming services, concert tickets and other goods required to experience the good life. Are these perks enough for you to be devoted to one credit card company, or are you the savvy, fickle shopper that may stray from a brand that doesn’t change its promos with your evolving tastes? Banks often offer complimentary insurance policies that once expired, the consumer may decide to renew. Every bank wants to sell mortgages or credit cards. They, the banks, earn profit from these affiliate companies.
All these variables are weighed differently by different people. The relevant point is when you build a better infrastructure through third party access you are keeping up with the competition, and hopefully in the process, developing a loyal customer base. When you want to sell something—anything—design the experience around product quality, price, perks and simplicity. Everything counts, not just one thing. Remember, the bottom line is that the customer is always in control.
Third party access provides limitless opportunities for resourceful entrepreneurs. The growing trend in business demands an all-encompassing ecosystem—a marketplace that may be akin to the old-fashioned general store that offered free candy to their customers’ kids, or the once popular “Five & Dime” stores that offered customers everything under the sun at reasonable, irresistible prices. The online sales arena may be a bit more complicated because the proprietor is not necessarily developing the kind of personal relationship with their customers, but the opportunities to customize your customers’ online experiences are endless. To make up for that lack of personal contact, an understanding of consumer behavior and the specific needs of your customers is paramount. This is where partnerships come in. For instance, if a bicyclist is browsing an online store for bike parts, bike helmets or attire can be showcased during their online shopping experience, which serves the dual purpose of pleasing your customers while boosting your sales revenue. In that same bike shop site, the proprietor could add even more value by flashing information about upcoming biking events in the online marketplace, tailored to regional locales. This tactic might not result in an additional, immediate sale, but once you’ve positioned your bike company as a cultural touchstone, sales will follow.
Think of your online store as a marketplace, but a marketplace that is specifically designed to tempt the very specific tastes of individual buyers. It’s really as if you are an in-person shop owner offering your customer additional items based on their unique interests and what they are already purchasing.
Identifying your customer base
To launch an effective consumer ecosystem, a company must identify the “persona” of its customers, even when customers have widely different needs. For example, a millennial customer will not have the same wants and needs that a Gen Z customer and a Gen Z customer will have. It’s just common sense. A student has vastly different needs from a customer ready to retire.
What about immigrant communities? I am a “Double Belonger” like so many immigrants who now call America their home. I, and others like me, have even more complicated needs that if addressed correctly by companies online or otherwise, will make me a loyal customer. For instance, I shop at typical grocery stores, but also shop at ethnic stores that offer specific goods used in Indian cooking. The need to understand my persona, as well as the personas of everyone in my household translate into big profits. Stitching information about double belongers isn’t hard in the digital world. Social media data combined with third party data is readily available to easily profile customers. If you don’t understand your customers persona you simply don’t understand their lives. Business owners don’t want to target customers with things they don’t need or use. For instance, if you try to sell a retiree baby diapers and a student a cane, chances are they will click off your site in disbelief.
John Griffiths, a research and planning consultant, warned in a piece he wrote for The Marketing Society1, that businesses can go too far assessing “customer journey thinking.” Sometimes, he said, “an entirely unrealistic expectation about what your customers want and how you meet their needs” becomes a pitfall. Creating an ecosystem is a corrective measure. He said ecosystems “puts the customer (not you) at the center and asks the simpler question, “How does the customer meet their needs.”
Customer journeys are not taken by customers lightly, Griffiths wrote. Rather than cull information from friends, experts that a person relies upon, stores that they already purchase products from or specific brands that they already trust, most people would prefer a simpler approach to consumerism. “They would rather not take the journey if they could avoid it, and once they have got the benefit your product gives them, their need is satisfied.”
Consumer ecosystems without an understanding of the consumer lifestyle and behavior can lead to some costly mistakes. A major pitfall is when customer privacy is ignored. If customers feel their privacy is violated in any way, you will not get a repeat customer. Similarly, if you anger too many customers by data sharing with third parties, you risk the information being misused. That impacts customer satisfaction and loyalty. A word to the wise, tread carefully.
Building a consumer ecosystem through digital third-party access, starts with defining core services that will be offered through your business. Expand to offer other services and products that have already been defined by the initial service. Build a core and expand outward—seems easy enough, right?
The takeaway from the vast online ecosystems developed by companies every day is that online store owners must determine what their customers truly value, what is relevant and what is not. You can always scam someone, but it’s just not right and will not serve you in the long run. Put your customers first and don’t overly focus on that balance sheet.
- Griffiths, John. “Think piece,” The Marketing Society.
John Griffiths, AKA the “barefoot insighter!,” runs a research and consultancy firm, “Planning Above and Beyond.
About the Author:
Harveer Singh is the chief architect and head of data engineering and architecture data architect with Western Union. His focus is on building and evolving online environments that foster customer loyalty.
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