Tuesday, December 9, 2014

I Love Your Product; I'll Never Buy it Again

Retailers Forget Upside of Retention Amid Customer Acquisition Strategies

Our family is the proud owner of a brand-new washing machine. We took a bit of time to choose it and it's a good one, assembled here in the USA, and loaded with a lot of features. Like many of our durable goods purchases, I intend to take care of it and hope to own it for a long time. I suspect our family—a puppy and our 1.5 year old boy, in particular—will give it a run for its money in the next few years.

When the new washing machine arrived at our home, it was packed with new hoses, documentation, and a product called "Affresh," which I hadn't heard of before. The manufacturer recommended the use of Affresh specifically to clean out any grease and oil residue from the manufacturing process. That seemed like a good idea, of course, and as I read the instructions for the product I also noticed that it could help ward off the occasional musty/mildew-ish odor that we'd experienced with our old washing machine. Maybe the rest of the world was already clued into Affresh, but, for me, it seemed novel and smart and it solved a problem. Good start.

I hopped online and ordered a pack of it from Bed Bath & Beyond; it was a relatively typical online ordering experience. I'm certain I got a fair price. It arrived just a few days later.

What's odd about the overall experience, though, is that while Affresh is a product designed to be used repeatedly, I'll probably never order it again after this package runs out, even if I find it effective and useful. Why? Because, like Brita water filters and countless other "recurrable" products that are impossible to remember to re-order, my life is too busy to "manage inventory" for the consumables in our home. And—very weirdly—though it's generally accepted among marketing professionals that it costs six to seven times more to acquire a new customer [1], retailers of these types of products haven't taken the time to develop a simple, friendly re-order process conducive to the mobile-activated world of their current customers.

Indeed, it would appear that many of these retailers have conceded the 48% of consumers who start at search engines as shopping engines [2], rather than provide simple and clear direction back into the purchase path at their own site. Google's ad revenue arc proves the point, of course, with retailers spending 25% more on paid search in Q1 of 2014 than during the same period in 2013 [3]. Retailers increasingly rely on Google to drive traffic and they lean on new customer acquisition to drive growth.

These same retailers, of course, will take your money for another pack of Affresh if you sit down at your laptop and repeat the same exact order process as six months ago, but they haven't improved the process based on your previous purchase: In many cases, it's the same three-minute website checkout process, designed for a full-size computer, they've offered for the last decade. In fact, according to a 2013 study of 1800 respondents in the US and UK, only 6% of small businesses have mobile sites [4], at all, let alone a smoother mobile checkout process or ability to access previously purchased products with ease. A whopping 44% of Fortune 100 companies have neither a dedicated mobile app or mobile-optimized site [5].

So, good luck if you intend to repeat your order for Affresh on a small-screen mobile device because, though 72% of consumers want mobile-friendly sites [6], the underlying structure of the accepted checkout workflow itself remains so clunky and flawed that upwards of 90% abandon mobile carts [7]. Moreover, having learned from Zappos' incredibly successful return policy, many retailers will pack the box with a pre-addressed return tag so the customer has a clear-cut way to return your product.

Here's the bottom line if you're a manufacturer of "recurrable" products like Affresh: Your retailer, Bed Bath & Beyond (in this case) has given your customer a super-simple way to RETURN your product, but no real good way to get more of it. They certainly haven't reminded me of my need for more Affresh on occasion (or at all) and they haven't provided a convenient way for me to quickly access that product again. I simply can't believe this approach makes sense as a way to build a loyal customer base for the product or to drive sales for the retailer.

All this despite a growing group of statistics that point directly at the importance of re-engaging loyal customers rather than simply expecting them to re-locate your brand at the homepage of a search engine: First, reducing customer churn by 5% can result in increased profits of 25% to 95% [8]. That's huge. Second, 55% of customers are willing to pay more for a better customer experience [9]. This means your conversation with consumers can move beyond a pure price-point dynamic. And, last, giving consumers the option to have a delightful, "totally satisfied" experience means they will bring 2.6 times more revenue to your company than the "somewhat satisfied" customer [10]. In short, customer retention—and responding to your customers' buying expectations as a means to that end—counts.

Because of these things, our company, GimmeAnother, started with a simple goal that we haven't let out of our sight: Allow consumers—who increasingly value their time over hunting for another deal—to save the products they love and trust to one single spot on their mobile phone, then complete a re-order for any product in less than 10 seconds. Bed Bath & Beyond, for example, could pop our "Save to Mobile" button onto their website and offer the convenience of a 10-second re-order of Affresh. It'd earn them an additional order from me at the very least.

If you're an internet retailer, you should consider the same: Evaluate your data—see where the possibility for re-engagement with current customers lies—then commit to building or buying into a technology that recognizes and rewards the contribution of those repeat buyers. Take a chance with this group of loyal consumers and you might find a crowd who was eager to buy all along.

-- Jon Roketenetz

Jon is the CEO of Chicago-based tech innovator GimmeAnother and founder of 3VERB.

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