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In the face of growing multi-channel competition, the future prosperity of e-retailers depends on customer relevance and not necessarily pricing, according to a survey of 14,000 members of the UK's Consumers' Association. This article is copyright 2012 The Best Customer Guide.

The survey found that that seven out of ten consumers (70%) shopped online because they felt it was cheaper than shopping in the high street. It was clear that, when it comes to looking for bargains, pure online retailers have had the advantage over traditional multi-channel retailers in a recessionary world - and the worldwide growth of pure online retailers has mainly been enabled by their ability to offer low prices without the overheads of a high street presence.

But while this might seem like an obvious strategy during a recession, is it the only way to succeed in the long term, and can a reliance on low prices sustain a competitive advantage for online-only retailers? The study concluded that long term success will ultimately be achieved by those online retailers that can tailor their offerings to each individual customer through an understanding of their specific needs, and which can optimise their products, pricing, promotions, service, communications and channels accordingly.

The key enabler for this approach is the effective use of transactional and behavioural data to drive a more relevant engagement, according to Meinert Mellows, global head of analysis for Emnos: "The way to win long term is to be relevant to the needs of customers. An insight led approach is an alternative conquering strategy to just being the cheapest. It's about building trust and loyalty through the right offer to the right customers."

Given the ability of online retail to offer a huge range of choice data insight can enable e-retailers to personalise the online experience and ensure the offers and products are optimised to individual customer preference. This enables the retailer to increase impulse purchase and cross selling opportunities through relevant product suggestions.

In addition, predictive analysis can ensure pricing and promotions strategies are targeted through intelligent communications to improve their effectiveness. Price sensitive customers can be identified and targeted with promotional pricing. On the other hand, those customers that value convenience, quality or access to particular services can be addressed differently, for example, through priority in delivery or support.

However, despite the success over the past decade of this approach, many online retailers are yet to make the switch in thinking. A recent review of the UK's top online retailers revealed that 80% are failing to gather even basic contextual information at sign-up. A survey undertaken by Emailvision suggested that a failure to harvest data such as gender, address or date of birth reduces the ability of these online retailers to have a more meaningful and ongoing engagement with customers.

"In the online world, retailers should be doing more to combine their data to gain a holistic view of the customer. Shopping transaction history, combined with visitor behaviour and other contextual information provides the insight to create a more relevant experience; suggesting relevant cross-sells, impulse purchases and informed promotions that make sense to that shopper," concluded Mellows.