May 2008 - Channel Crossing: Retail

Wired to Shop

By Randi Barshack

Retailing, in any form, is about matching a seeker of goods (from here on referred to as a “shopper”) to a product. That’s it. It is no more complex than that. Obviously, shoppers vary in terms of their motivations, desires and willingness to part with money, adding to the complexity of the shopper-merchant interaction. But in reality, shoppers have always been able to exercise discretion when it comes to the choices they make.

Turn the clock back-way back-and think about the earliest form of commerce: I’ve got something you want, and you’ve got something I want. Or maybe the other guy has a better one (or is more anxious to get what I’ve got). The currency may have changed, but the act of acquiring what one needs or wants through transactional means has not. The traditional open-air market, for example, has long provided a venue for shoppers to not only pick up essentials like fish, fruits and vegetables, but also has provided a community and formed the shopping culture.

For that individual proprietor selling goods at the market, success has always been dependent on three things: attracting shoppers; turning them into customers; and making them repeat customers. Clearly, there’s no one thing that made a vendor better at attracting, converting or retaining customers-but failing to achieve any one of these surely meant the demise of that business (that stall would open up to another vendor waiting in the wings). And the same holds true for retailers today.

So let’s assume that you’re doing everything possible to get traffic into your store. You’re doing something right: shoppers are finding you; they’re even seeking you out. Your job is done! This, believe it or not, seems to be what many online retailers think. Often, all energy and resources go into attracting new customers, with little to no attention being paid to what it takes to turn shoppers into buyers-and ultimately-repeat customers.

Turning shoppers into buyers-conversion-really is the metric by which retailers live and die. And retention really is just conversion as well-keeping customers, getting them to come back and buy more. Chances are, the efforts you put into your conversion strategy will result in better retention, too.

So, what does it take to convert, and convert profitably? This brings us back to our initial point: there needs to be a match or connection between a shopper and a product-that “magic moment” when the shopper finds it: the thing that satisfies an immediate need or desire and creates that adrenaline rush (okay, maybe not quite an adrenaline rush for everybody).

Whether we’re talking about brick-and-mortar or Internet retailing, successful retailers understand and follow this basic tenet: every interaction a shopper has with your business has the potential to move a shopper closer to-or further away from-a purchase. The experiences shoppers have with your website or sales associate are either obstacles or motivators. Successful merchants understand what makes shoppers tick. Brick-and-mortar retailers, catalogers, Internet businesses-and those merchants tackling all of the above channels-figure out how to consistently deliver shoppers what they want and expect will succeed, regardless of what they sell and in any market conditions.

So does the secret to unlocking sales potential, particularly in the online realm, lie with the shopper? If retailers, in fact, liberate the online shopper-putting the conversion burden in the hands of the latter-will the outcome be a more empowered customer who buys, buys more and buys more often? Retailers tell us that providing shoppers with the tools and the freedom to make choices and pursue the path toward purchase that makes the most sense for them is indeed a solid premise on which to base a successful online selling strategy.

We’re wired to shop. We love to get a great deal, believe that we got a better deal than the next person, and have a hard time living with ourselves if we think we’ve been had. We’re also pretty good at justifying our purchases-and we just can’t help it because our “inner shopper” is in control.

So what’s going on in a shopper’s brain? A Stanford University researcher has suggested that shoppers weigh the anticipated pleasure of a purchase against the inevitable pain of parting with their money. We also know that shoppers typically make a mental list of priorities and trade-offs between five core variables: price, quality, variety, convenience and quantity. As consumers progress through the shopping journey, these five variables drive decision at each step in the process.

So let’s say, for example, you are looking for a simple navy sweater. A local upscale clothing store is less than a mile from your house with ample parking. If convenience and quality are high priorities, this might be ideal, despite the fact that options are limited and prices high. Should price and variety factor in as important, then driving 20 minutes to the crowded mall may be worth trading levels of convenience found at the local shop.

Understanding shopper intent is the first step in optimizing your selling strategy. Now that you better understand decision drivers of your various customer segments, you have what it takes to apply that to the three stages of the shopping process.

Stage 1: Attraction
During the attraction phase, whether it is in offline advertising, direct mail or search engine ad text, let customers know which of the five decision variables differentiates your site. For price-driven segments, use words like “Unbeatable Prices” or “Lowest Prices Guaranteed.” For variety-driven segments, attract them with assurance that there are “Hundreds of Styles to Choose From.” Quality-driven shoppers may be attracted to well-known brand names and quality product descriptors (“cashmere,” “durable” or “satisfaction guaranteed”). Convenience-driven shoppers look for things like “overnight shipping” or “hassle-free returns.”

Stage 2: Conversion
The conversion phase of the shopper journey is easiest to control by merchants. Whether a customer physically passes over the threshold of a brick-and-mortar store or clicks a mouse to enter your virtual storefront, that instant when the “attraction” progresses to “conversion” is critical. This is the opportunity to evolve the dialog with the shopper that began earlier. If a shopper came to your site by having entered a specific search term (let’s say “green cowboy boots”), make sure the landing page corresponds to that individual’s request. Sending shoppers to a homepage displaying a variety of goods pushes them further away from their perfect product. Likewise, if a shopper clicked on an ad claiming “low prices,” make sure that the landing page reflects good bargains.

Dynamically generated navigation that leverages detailed product attributes is also a great opportunity to respond to customer priorities (and according to many online retailers, can be a 5x conversion-booster). The quality-driven shopper will want to browse by more descriptive attributes (like “cashmere,” “stainless steel” and “thread count”) or brand names that show your products meet the shopper’s standards. A price-sorting option helps that price-driven shopper. Displaying the number of items in each category will help the variety-driven shopper feel confident that many choices abound.

Stage 3: Retention
The best place to focus on retaining customers is not post-sale, but during. We’ve seen that shoppers carry with them a mix of five critical shopping drivers-ones that help define them as lifelong customers. Actions that signal to customers that you understand their shopping motivation will help to ensure loyalty and increase lifetime value.

Throughout each stage of the customer journey, shoppers provide invaluable insight into what makes them tick. The most powerful technologies on the market provide tools for fine tuning the shopping experience in alignment with customer priorities. Are we technologists or business people? We are business people, fortunate to live in an era in which technology has freed us from the traditional restraints of physical commerce while enabling us to take our trade to new levels of engagement.

Randi Barshack is vice president of worldwide marketing at Mercado Software.



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