New dawn for retailers as Bronto fades into the sunset
Keeping pace with the modern consumer has been a challenge for some years and since 2020 and Covid-19 this got a whole lot harder. They were always demanding, fickle, sophisticated, and connected, but now they are so demanding that they are almost taking control of their shopping journey and experience. They have the devices and they have the channels, and the retailer will need to adjust quickly to this shift in the balance of power.
These behavioral dynamics are both a threat and an opportunity. The threat is that retailers continue to rely on single channel, unintegrated communications with consumers and rely on shallow segmentation to create sales and promotional messages.
The opportunity is in the rapidly growing size of the market. Consumers spent $861.12 billion online with U.S. merchants in 2020, a rise of 44.0% yoy, according to Digital Commerce 360. U.S. ecommerce hasn’t grown this much in 20 years and is three times the 15.1% rise in 2019.
However, it is essential to look at how consumers are behaving behind these positive numbers so that retailers can catch their attention. McKinsey has observed various changes in consumer behavior; a preference for trusted brands; a decline in discretionary spending; trading down; larger baskets; reduced shopping frequency, a shift to stores closer to home; and, polarization of sustainability.
This pivot also saw a huge rise in the number of people who had either rarely or never shopped on line. The result? They tried it and they liked it. In short, even though online will recede for some sectors, many people will never go back fully and, in the case of grocery, may simply mix and match store visits with home delivery or click and collect.
In this new market, many solutions are simply not fit for purpose for how shoppers browse, buy and act on promotions and communications. This then is the clue to making an intelligent assessment of needs, the extent to which your options recognize how customers shop and how you need to enable that as well as measure and report on it.
The solution must be able to build campaigns around customer personas based on recency, frequency and monetary (RFM) and it must be flexible enough to identify and report on how these personas change over time.
Understanding customers must then prompt an increasingly personalized response. 83% of consumers expect products to be personalized within moments or hours, according to a survey by Dassault Systems. And they will pay on average 25.3% more for personalization, but they expect a saving in return.
Once communications are personalized, retailers can start to make predictions using artificial intelligence so that they can take advantage of cross- and up-selling, and also start to personalize the actual products. A recent consumer review by Deloitte reported that 1 in 5 consumers are willing to pay 20% more for a personalized or exclusive product.
This level of personalization now also extends to consumers’ preferred channels to commerce. They expect more immediacy and during 2020 and at the height of the pandemic, retailers used live chat, text and even Whatsapp to send customers shipping updates, curb side pick-up information, and order processing details. Using these one to one channels with text alongside email, retailers were able to lower barriers to purchase and so increase conversion rate and reduce onsite churn.
In considering what platform to choose, this is the perfect opportunity to move up rather than across to a competing product that is more or less the same as what you have in place. By challenging your shortlist using your core customer focus strategy, you will find the right marketing solution and one that will adapt at the same speed as your customers are changing.