Can you encourage your online audience to stay with you long term? The four key pillars to customer retention
There was a moment in late March where the publishing industry was braced for almost all its UK bricks and mortar physical book sales - everything outside of supermarkets - to shift online. In real terms, supplying Amazon was seemingly the only robust and reliable route to the consumer in these turbulent times. The bull argument was that in fact there would be a huge demand spike across all books formats as people had time to read - there was a real need to entertain themselves and their families - and books could do well if the supply chain held up. Then came ‘the day the buy buttons came down’. Following the huge surge in demand, even Amazon’s best in class supply chain couldn’t provide the consumer with everything they wanted, and huge swathes of books were ‘de-prioritised’ as a result. A head in hands moment. What to do next?
Some publishers with robust online platforms have reacted by becoming retailers themselves; successfully servicing their customer direct. Many smaller and mid size retail operations have also boosted their online offering, and have found a loyal and willing audience choosing to come direct for their books. Supplier and consumer found a way to connect. There is no getting away from it, Amazon will undoubtedly hugely benefit from this scenario. Their market share for 2020 will have accelerated ahead of forecast in physical sales, and their dominant position in digital and audio where there was no supply chain to be effected will have been reinforced. The question is, has this chink in the armour provided a window of opportunity for alternative online set ups, or is this simply a necessity lead market that will boomerang back to the online behemoth as soon as convenience allows? Supply chains are now starting to ease, businesses both large and small are getting their heads around this world, and my feel is both retailer and consumer are settling into a new relationship. I believe there is an opportunity here but any retention plan will need to have a clear eyed strategy with these four fundamentals front of mind:
Price - at the moment we’re witnessing an interesting pricing dynamic across all markets. Wider market consumer insight contends that throughout April price was de-prioritised as the consumers’ primary concern. The thinking was not ‘how much am I paying?’ it was ‘can I actually get it’. Supermarkets, for example, dropped most of their multi-buy offers over the past month. Why? Because demand was through the roof and their focus was on supplying products rather than competing with anyone else. That position is starting to ease again as shelves are filling, and consumers are slowly returning to a world where choice improves, and where they spend their money becomes a competitive marketplace again. Amazon’s prices are lead by matching competitors, and for a long time you could guarantee that you’d get the best price across the market from them. This mentality has changed as competition has dropped away - and as their key competitors have necessarily focussed on margin rather than volume - and so the price to consumer on the platform has crept up significantly throughout 2019 into 2020. This approach is magnified once you get into the depth of titles outside of the bestseller charts where any significant discount off rrp is now next to negligible. It feels like the door is ajar here. Assuming it is, the first step when building any longer term pricing offer is to be clear and consistent in the first instance. If the consumer knows what price they will get from you, they will return. If it’s a mix and match, effectively a pricing lottery, it will create doubt. Where doubt exists, loyalty suffers. Think of the W H Smith in store experience, voted Which? worst retailer on the high street by consumers in both 2018 and 2019. Ask yourself do you know what offer applies to what, where, and for how long? It’s a pricing tsunami with many products sporting multiple overlaid price messages. This creates a bad consumer experience and erodes trust. Secondly be aware of your major competitors. Check them at least weekly to understand what type of offers they are running. Is that impacting your sales? How might you respond, or will you respond in future? But be mindful, this context should inform your forward planning without dictating it.
Service - The other big tick in the Amazon box is service, and by that I mean ease of use and delivery. The other major buying insight to emerge since late March suggests consumers are currently more comfortable with longer lead times for their products. To paraphrase above, it’s not ‘I need it tomorrow’ it’s “I need it and I understand it might take a bit longer to get here’. Again this position will regress to the mean as supply chain eases. Expectation of a higher standard of service level will resume. Amazon Prime offers next day delivery which is a market leading offer - and the genius of it is people forget its not free - but there are learnings to take away from how they operate. Could you offer your own ‘mini prime’- pay a little bit more for a more premium service? What’s your minimum basket for free delivery - could it be a bit lower? And finally how difficult is it to find and pay for the products? We can’t all be one-click, but how easy is the consumer journey onsite? Consumer patience is at an all time high right now, but today’s consumer is exacting, so don’t expect them to be so forgiving longer term.
How dedicated is your consumer and how specialist is the market - as always, the type of consumer you’re engaged with is key. What level of interaction have you had with them since going direct? Have they returned and ordered more than one product from you yet? Have they given you any direct feedback on what they want more of? Is the community you’re serving a close knit one that wants to engage with you on a level beyond a good price and a decent service? The better the insight you have, the better your offer will be. It’s no coincidence that major retailers spend millions every year trying to understand their consumer better, in order to sell to them better. If you’re in a dedicated part of the market, with a hardcore consumer, thats another tick in the box for maintaining a direct relationship longer term, and also neatly segways into….
Point of difference - longer term, what points of difference are meaningful to your consumer? Amazon doesn’t often deal with point of difference on books except on the very biggest titles and even then by exception. Why? Because it’s difficult to execute point of difference as an automated process, and it can create customer disappointment. At the height of the vlogger bubble Amazon offered signed copies which drew huge pre-order volumes, sometime in the tens of thousands as teens flocked to get as close as possible to their virtual ‘friends’. However the few customers who ordered signed copies and didn’t get them were vocal and left negative reviews. This was often more user error than Amazons fault, but they take consumer satisfaction very seriously, and took the decision to turn away from anything with this ‘level of complexity’. Waterstones have now picked up on signed pre-order in their stead, though typically on more literary offerings, and it’s a lucrative pillar of their ongoing offer and pre-order strategy. Ask yourself what matters to your dedicated consumer? Or even better ask them directly if you can. What can you offer them that Amazon can’t that has value - in a clear and consistent way that keeps them coming back time after time? Point of difference executed elegantly shows your consumer you really understand them and breeds loyalty.
So it’s clear that this path isn’t an easy one, and I would think carefully before going too gung ho after a consumer that is rapidly evolving on an almost weekly basis. If you can profitably tick all the boxes above, and can continue to keep these fundamentals at the heart of your thinking, then the next few months will allow you to see how transient your audience is with some clarity. Price and service are the unavoidable bedrock of any ongoing offer - it is to this day the foundation of what has made Amazon the leading retailer it is. But like most David and Goliath stories, it’s the smaller business ability to take a more tailored approach that will maintain your audience, and keep that elusive direct relationship fresh in the months and years to come.
Andrew Sauerwine is the founder of The Commercial Publishing Consultancy which helps individuals, teams and businesses across the books industry to sell smarter and grow faster. If you’d like to get in contact direct to discuss how I can help your business please contact me on andrew@workwithcpc.co.uk.