3 Ways Online Retailers Can Take Smart Risks

When it comes to online shopping, today’s most forward-thinking retailers are differentiating beyond just price and connecting with their customers in new ways — they’re introducing virtual reality apps, answering customer questions via chatbot, and experimenting with new forms of payment.

In this new retail landscape, experimentation is quickly becoming an imperative for retailers looking to stay ahead of the competition. Across channels, brands must find ways to quickly test new ideas for reaching and engaging with their customers — or risk losing ground to those who can.
For some companies, the risk of testing big new ideas can seem too great. They fear losing revenue — and customers — if they make changes. This way of thinking is outdated. In these modern times, the reality is that smart, measured experimentation is the lowest-risk way to stay relevant.

Experimentation is not about throwing wrenches into well-oiled machines. It’s about gathering information and trying fresh ideas on a smaller scale before rolling it out with all customers and locations. By experimenting, brands can pinpoint how to best engage with customers on the right channel with relevant, personalized content — and then deliver the right customer experience at the right time.

How can retailers get started with experimentation without hiring a bunch of PhDs? Here are a few ways brands can begin experimenting today with little cost and low risk:

Build and get to know your customer base

Whether a big box or local retailer, all brands should have a strategy to encourage customers to become loyal advocates and repeat shoppers. To do this, brand marketers first need to understand how to draw customers in organically so they can replicate it.

REVOLVE is one of many online retailers that has an ongoing experimentation program to predict customer spending trends and deliver the most relevant content possible to drive these purchases. In an effort to draw new users to their mobile app — where they could deliver highly-customized experiences — the team ran a test. They hypothesized that sending mobile web visitors to a splash page with promotion codes for REVOLVE’s mobile app would drive app installs. The experiment was a success: the variation with the discount increased app downloads from the mobile site by a whopping 350 percent. Retailers can apply the experiment mindset that REVOLVE has by creating hypotheses around customer sign ups and testing them with various new strategies.

Importantly, retailers need not stop experimentation on the product pages. The customer journey doesn’t end when they put an item in their cart, and neither should optimization. In fact, the checkout process is ripe for a refresh. With average cart abandonment topping 88%, retailers should find ways to make the process smoother and more appealing while ensuring that the experimentation tools they use on the checkout pages are payment card industry (PCI) standards compliant. Protecting their customers’ data is high on the list for retailers. PCI-compliant experimentation tools are a fairly new option, and with the ability to experiment on your checkout flow retailers can now start to get ahead of the competition.

It isn’t just about understanding and experimenting with subscription and pricing models, checkout flow, personalization on your checkout page and maximizing your funnel. Disruptors in the retail space will use experimentation and personalization insights for product development, go-to market and demand forecasting. Quite simply, no retailer wants an inflated supply chain of perishable materials sitting on a shelf. Producing highly accurate demand forecasts that power supply chains and fulfillment operations while still delighting customers is how retailers will beat the competition.

Personalize the shopping experience to increase sales

According to Swirl Networks, 88% of customers say they’re more likely to shop with retailers that deliver personalized and connected cross-channel experiences. Many call this the “Amazon effect”: Amazon has been so successful in understanding individual buyer preferences and serving product suggestions accordingly that now consumers hold other retailers to this high bar. Granted, few brands can compete with Amazon’s resources, but that doesn’t mean effective personalization is out of reach.
Take Walmart for example: In 2014 Walmart.com was looking to boost its online presence during a time when its US discount division was experiencing disappointing sales. Wal-Mart rebuilt its website to personalize a unique online shopping experience for each of its customers. To start, the site loaded a customized homepage for each shopper based on the customer’s location, local weather and search and purchase history — a small improvement, but it made a difference. From there, Walmart began to make product recommendations more prominent on the site. Using algorithms, the site showed shoppers additional products based on previous purchases. Wal-Mart’s e-commerce sales increased by 30 percent to over $10 billion in the same fiscal year.

Identify new opportunities to increase loyalty

Returns were once the black sheep of retail, but today brands are finding ways to use returns to drive long-term loyalty. While returns are typically a cumbersome process, 70 percent of customers say an easy return or exchange is likely to make them a repeat customer, according to Narvar’s State of Post-Purchase Experience Report.

Brooks Running is one example of a brand that turned returns into a positive experience and increased customer satisfaction. In an effort to reduce shoe returns in the future and keep customers coming back, the running company analyzed their data to better understand what common factors led to returns. They found that when someone buys two or more pairs of shoes within half a size difference, at least one of those pairs will be returned.

With this insight, they experimented with a pop-up message for customers when they had two or more pairs of shoes in their shopping cart a half size apart, offering a customer service expert to help them identify the best fit. By helping these customers prior to checkout, Brooks Running decreased their return rate for online orders by 80 percent, with 88 percent of targeted customers saying they appreciated the offer to help with sizing.
As any business knows, maintaining and deepening existing customer relationships is far more profitable than identifying new purchasers. By making an effort to get to know current customers and experimenting to find new ways to create loyalists, e-retail brands can not only be seen as tech-savvy innovators but also increase their bottom line.

 

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