Retailers that focus on how they connect over what they sell might just discover the best defensive strategy ahead of Amazon’s arrival.
The impending arrival of the big A on our shores has promoted a healthy swathe of doomsday thinkers rushing for the panic button as agencies, brands and retail marketing leaders ponder how to face a challenger who proudly boasts – ‘your margin is my opportunity’.
It’s a confronting prospect, especially for legacy retailers that employ a range and price proposition, because in the long run, Amazon will win. This concern has been well documented by industry leaders like Richard Goyder, the departing head of Wesfarmers, for some time.
The first opportunity analysts have leapt to is enhancing the experience around products and services, suggesting brands need to create a stronger emotional connection to customers. On the face of it this advice is clearly too simplistic and leaves too much room for interpretation.
I’d challenge the thinking that the battleground for the hearts and minds of Australians will be fought on what brands can deliver (add-ons, new products & services); and suggest it will be how brands connect customers to products & services that will matter most.
There are three questions I’d encourage CEOs and CMOs to have with their agencies in the next few months to challenge how they serve:
Experience: Does our best possible experience need a website?
Imagine that first interaction between a digital product and an audience is special. When the audience marvels at the interaction, the way it was designed to be used, it feels like magic to both the user and creator.
In the digital era we’ve generally imagined the connective tissue between brand and audience as a website. But frictionless services are challenging their existence.
In 2016, we saw a profound shift in how retailers began connecting with customers; from personalising communications across the ecosystem to connecting directly to customers via messaging services like Uber. I’ve never visited Uber’s website. I’ll never have to. It’s completely removed the friction of a web experience by making itself a better utility across distributed channels.
In December last year, Matt Johnson, VP of products & services at GoKart Labs, discussed how this type of mobile messaging commerce is creating a different modality for interaction between retailers and consumers.
“Messaging is no longer poised to be a place to simply discuss weekend plans and catch up on life events, but instead to be an avenue for brands to serve consumers and provide an even higher level of customer service. Simultaneously, it allows smaller brands to legitimately compete with retail giants like Amazon through more meaningful communication and personalisation.”
When you think about it, the ultimate form of personalisation isn’t a series of items you ‘might like’ based on explicit or implicit information. It’s simply connecting with someone (or something) in real-time to give you exactly what you’re looking for.
Johnson stops short of suggesting that interactions on messaging platforms where you can place orders through common language like ‘buy’ ‘sell’ & ‘hold’ could replace the e-commerce platforms we know today, but I’m not so sure.
Stripping the experience back to its core and challenging the combination of digital touch-points to determine the best customer experiences could transform the feeling a customer gets when engaging with you.
Services: Are we offering our customers too much choice?
Post the GFC, marketers found a new way to connect with cost-conscious consumers, frantically rushing to unbundle products reducing base costs of items to ‘let you decide’.
A great example of this was the airline industry: Here’s the base fare, then everything else you could have, but you can choose. Sound good?
Cost-conscious customers felt empowered at first, but this experience made us wary and frustrated when we didn’t read the T&Cs correctly and were penalised for not playing by the rules. Naturally, we became sceptical of these offers.
Today, less the ten years later the pendulum has swung almost entirely in the opposite direction. Overwhelming choice, our lack of time and general wariness toward the ‘*’, has made us crave a solution that doesn’t require us to make yet another decision.
For the greater majority of retailers, increasing range has been seen as a vital part of their business strategy. But today this approach is an expensive exercise. If you lead in three categories, why would you artificially create more competition by poorly competing in others? A strategy that will deliver cost efficiencies and increase revenue on your strongest product lines is to fight for you niche and innovate on your baseline.
From a customer perspective, simplifying the decision making process (reducing choice) in retail environments actually increases the likelihood of conversion.
The counter to this argument only exists at the check-out when brands provide delivery options. Investment here, puts your customer in control and honours their time.
Data: Who knows our customers better than we do?
By now, many retailers have invested extensively in mapping customer personas as customers experience their version of the ideal journey, but the journey today is fragmented and hard to predict.
The most innovative thinking isn’t coming from disruptive products in historic categories, but thinking about the lives of customers beyond the journeys we want them to take, and partnering with companies to share data and connect to audiences in new ways.
As a marketer, think about what your clients could learn from partnering with a company like Ticketek? For lifestyle, consumer & fashion brands where people spend their free time (their passions beyond their day to day purchases) tells us a remarkable amount about their motivations.
The effort and investment required to enrich your data will be better spent adding colour to the picture beyond the product lifecycle you’re hoping to engage.
Retailers are right to be apprehensive about Amazon’s entry to market later this year. But their arrival on our shores should not strike fear – it should inspire new thinking.
It’s a fool’s errand to think we can continue as previously and react to the changes in the market as they happen. Once momentum builds with customers experimenting with their services it will already be too late.
Instead, we should use this time to openly challenge the existing thinking that’s lead to the experiences we’ve designed for customers, and think laterally more about how we connect with people.
Alex Wood is strategy director at creative technology agency DT and has ten years experience leading strategic marketing programs with major retail, financial & consumer brands across Australasia.
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