Sarah Escott, UK Director of Retail Partnerships at Savoo.co.uk., talks about how the economy has influenced online consumer behaviour
Edited by Jennifer Denby
How has the state of the economy influenced online consumer behavior and how can we tap into this to gain a better understanding of how we can effectively reach and engage consumers in the online retail space?
The financial hardship of 2009 was a reality for many households as unemployment increased with further redundancies and graduates attempting to join the workforce. Despite this, the retail sector experienced strong and surprising sales over Christmas.
This unexpected uplift came as many consumers rebelled against recession fatigue and decided to treat their families over Christmas. The 2010 economy continues to look bleak for household economics with additional factors contributing to this. Factors include VAT returning to 17.5% in January and cuts in public spending. This will surely impact on households as local authorities carry out cost cutting measures in local transport services, decreasing opening hours for community services and providing less support for the elderly and less able as well as cuts affecting education and decreases in university places. In order to remain successful during the bleak economy of 2010, there are three key behavioural trends retailers should be aware of regarding the consumer.
1) Online shoppers are fast becoming more savvy and expecting more from their online experience
Online shoppers will spend even more time looking for deals and offers online to ensure they’ve identified the lowest price possible without compromising on value or service. To achieve this they will continue to use the range of tools the web offers such as price comparison sites, onsite ratings, reviews and social media platforms such as facebook, blogs and forums. In addition to this, voucher, loyalty and cash back sites will also become increasingly popular with search engines, reviews and word of mouth being used to identify the best offers.
2) Personal factors as well as common criteria which influence selection of the cost savings option should be taken into account
Personal factors:
•Other users’ experience, rating and views of the product or service;
•The individuals’ immediate need for their purchase, i.e. consumers need vs. cost;
•Current personal loyalty program membership such as credit card loyalty schemes where points or miles are accumulated for a later stage.
Common criteria which influence selection of the cash saving option:
•Value of the savings;
•Value and timing of the cashback offer, for example is the reward immediate or does it require completion and submission of a form with a waiting period to receive the reward or money;
•Extent to which the loyalty scheme provides additional value, for example if the points gained multiply in value through the particular purchase.
3)Consumers are looking for engagement – an opportunity area for online retailers in the current fragile economy
Engagement can be carried out on different levels:
•Having site functionality which enables access to read and post independent, peer based reviews and ratings of products and services;
•Having direct contact with customers so they can ask questions or make product suggestions with the relevant person or group within the company followed by receiving a timely response;
•Having an exciting presence in the social media space where fresh or exclusive content and promotions are offered
•Utilising x-channel opportunities to capture data about customers and rewarding them with incentives to repeat purchase. For example rewarding with small cash incentives for completion of online surveys or offering a low value voucher in exchange for an email address or newsletter registration;
•General site engagement, the ability to capture the interest of the consumer on the site and guide them through their purchase decision. This may include features such as shopping carts that retain products, virtual assistance, live chat or the availability of a customer help line. Suggesting similar products as well as providing rewards at checkout, all add to the engagement experience.
4) An understanding of how to reach and engage the online shopper in the 2010 economic climate will be paramount to driving sales
Retailers will need to be continuously alert to any opportunities that the tight economy brings, in addition to having an understanding of how the economy and other key factors have changed the behavior of their audience. From there it is a matter of understanding which new avenues should be developed and implemented in order to continue to reach their audience and in doing so ensuring that the messaging is personal, credible, accountable, consistent and exciting.