The Changing Nature of Customers: An Online Industry Perspective

In an environment driven by technological disruption, the biggest winners are those brands who have taken advantage of the online space. Online opportunities for reducing costs, expanding services, and making the retail experience more convenient for customers abound. Engaging applications, user-friendly and mobile-friendly websites, accessible information, and one-click ordering make online shopping easier and more fun than going to a store, searching around for hours, and finding nothing of value.
 
Customers have also become more accustomed to hands-free merchandise. Music is transmitted almost 100 percent digitally now, barring the stacks and stacks of vinyl records through which hardcore collectors still search. Digital art, ebooks, and audiobooks are on the rise well. Games for all sorts of platforms and consoles can be purchased as digital copies through web-enabled systems. It would make no sense to sell these hands-free products in brick-and-mortar stores since going outside the home to purchase them would defeat their entire purpose: convenience.
 
Customers appear to prefer buying physical items online as well. This is evidenced by the success of Amazon, the biggest e-commerce platform in history. It recently became worth $1 trillion, which has only been achieved by one other brand, Apple. Free, rapid shipping options have made buying physical items, with a little planning, more accessible online than in-store, especially given that more sizes, styles, features, and items are available through Internet retailers than brick-and-mortar outlets.
 
Because of these developments, customer expectations have changed. They demand more convenience and more services for the same amount of money. While these changing expectations have created an array of challenges, many opportunities present themselves as well.
 
To help organizations across a range of industries take advantage of these opportunities, Loyalty360 speaks with senior-level marketing representatives to identify their strategies for success. In one of our recent discussions with such representatives, we noticed several opportunities of which online brands need to be aware. Successful online brands take advantage of the opportunities to educate and support their customers, innovate their products and services, outperform their competitors, and provide consistent experiences. Here we present an overview of these opportunities and the quotes on which this overview is based.    
 
One: Educate and Support    
 
When customers go into brick-and-mortar stores, they’re often looking for specific products, just like they are online. However, when they need to understand a given product, or compare the specifications of two similar offerings, they usually need to ask an associate for advice. Worst case scenario, the associate doesn’t have any idea how to help. Even in the best case, though, when the associate has all the answers, the process is still time-consuming. Online brands can sidestep this issue by providing all necessary information on its products in a user-friendly, accessible format. Online shoppers merely need to pull up two windows or tabs on their devices and set them side by side to compare products. In addition, rather than seeking someone out, online customers can consult FAQs for necessary information. Online customers can even speak with associates directly through chat applications, which enable brands to provide the same useful, interactive information that well-trained brick-and-mortar associates provide, except that customers don’t need to leave the comfort of their homes or make an out-of-the-way trip. 
 
Frank Lamberti, Executive Vice President, Distributor and Customer Experience | Herbalife: As far as disruption, what we know that in traditional retail the experience that shoppers have and consumers have especially in this field can be somewhat confusing to the consumer. We view ourselves as a disruptive element in that field. When you go to the store, for example, you might go to a nutrition specialty store and pull a product off the shelf and ask “what’s this?” The employee says generically what it is, but doesn’t know how to help you use it to get the results you want. We provide, through our distributors and our customer experience, an ecosystem that’s filled with education, great products, and the support that’s needed for customers to achieve the results they desire.
 
To read the full article with Frank, click here.
 
Two: Innovate Products and Services
 
Innovation can come in many forms. Netflix, for example, completely upended the video viewing experience by creating a subscription service that allowed customers to borrow DVDs for as long as they wanted without fees. When streaming technology came along, Netflix incorporated this into their business model and established the current viewing platform: customers pay for specific channels that they want, and nothing else. The opportunity to innovate requires constant attention to technological developments and advances. It also requires an R&D team that stays on top of the market and constantly generates new ideas. Customers have come to expect innovation, that the brands they frequent will create new, engaging services and experiences on a yearly if not monthly basis. One way that brands can meet this innovation expectation is by moving into spaces that currently have no online presence. Another is to commit to brand stories that have never been thought of before. Regardless of how innovation unfolds, though, brands must remain vigilant and make sure that they aren’t disrupted by underdogs or startups.
 
Helen Pan, Director of Loyalty Marketing and Customer Experience, Boxed: Boxed started with our cofounders realizing that of the $200 billion that’s in the wholesale industry, maybe one percent was online, and none of it was on mobile. The same was true with the CPG phase, which is also a $200-billion-plus category. So, realizing there’s that opportunity that our competitors haven’t explored was one of the reasons they started Boxed. I think we continue to disrupt because we continue to operate with the mindset of always innovating and being very forward-thinking with what we do.
 
To read the full article with Helen, click here.
 
Jon Mandell, VP of Marketing and Customer Experience | 1-800-Flowers.com, Inc.: It’s either challenge or be challenged. I think there are a lot of companies that have been disrupted because they sat back and rested on their laurels. We haven’t done that, not since day one, whether it was the first company to embrace telephonic commerce to the Internet to mobile, etc. It was hard for big companies to get out of their own way and make certain investments or even see how possible it was and that allowed for a lot of great and creative startup people to come in to challenge these big businesses and be disruptive. We certainly saw a lot of startups come into our space. All in all, I don’t think they were doing anything different than us. They may have been talking about it differently, but there has certainly been people that have come into the space and most of them haven’t lasted. The technology has gotten to a point, right now, that as a big brand we’re on equal footing, if not at a better place than a lot of these startups. I can have my own team building my own stuff with the way technology is today to keep disrupting myself, but do it at scale. It’s so much faster than these startups. We’re starting to see a place where we can outpace them. But you have to be looking for it, and you can’t wait around for it to happen and then jump on the idea. For us being innovative isn’t copying someone else’s good idea but figuring out how you can have the next big idea and apply it to your business to keep the competition guessing.
 
To read the full article with Jon, click here.
 
Three: Outperform Competitors
 
Online retailing provides an opportunity for brands to outperform competitors. Online brands can change business models a little more easily than brick-and-mortar retailers, and they can pursue more unconventional methods, with smaller ill effect if those methods go wrong. Because of lower overhead costs, they also have a chance to challenge big brand names in a way that small, on-site retailers can’t. They can more easily scale the technologies they adopt and the products they offer. All in all, online retailing presents a less challenging, because less expensive, environment to tackle, at least in terms of how brands set up shop. Certainly online brands have competition, and must strategize ways to deal with this competition, but because they only have to focus their efforts on a digital presence, rather than a physical one, they have more freedom to adapt. 
 
Lev Peker, CMO | Adorama: To me, being a challenger brand means that your business model defies convention in a way that gives your product a competitive advantage and forces competitors to either react or lose share. I think you see this most in industries where there are operating inefficiencies that allow for a lower margin, lower cost, and higher volume player to emerge. This presents opportunities for the gaming industry because it has not changed much in the United States in the past few decades. With the rise of social gaming, and legalization of online gaming and skillbased games in certain jurisdictions, we may be on the tipping point of significant innovation in the space. Similarly, this poses challenges to our industry because many of the operators have significant operating expenses and debt loads that are ripe to give way to lower cost, lower margin, and higher volume digital businesses.
 
To read the full article with Lev, click here.
 
David Daneshgar, Head of Business Development & Sales | BloomNation: I’m glad you mention disruption, because we can definitely feel the industry changing around us. Flower delivery is a huge business, but it’s also very targeted, so it’s easy to see when the incumbents are changing their practices because of our disruption. We hope and truly believe that we’re becoming a pest for these incumbents, and we think it will benefit the industry as a whole.
 
To read the full article with David, click here.
 
Four: Provide Consistent Experiences
 
Customers have come to expect that brands deliver them the same experience every time. Because online brands need to deal with fewer variables, they can take advantage of this expectation and achieve greater customer loyalty than brick-and-mortar competitors. Physical retailers have to deal with late shipments, associates who call off last minute, and in-store upkeep, and while online brands face these problems as well, they can maintain an eye-catching online presence with less disturbance from such events. In addition, because they need to devote fewer resources to face-to-face customer interaction, they have more resources to deal with such issues when they arise. Online brands can more easily deliver the consistent experiences that customers expect, which means that, provided they take advantage of this opportunity, they have an edge over physical retailers who have to provide consistency while also dealing with all the specific problems that arise for brick-and-mortar stores.  
 
Steve Aldrich, Chief Product Officer | GoDaddy: I think brands are the sum total of all experiences that are delivered to customers. It’s less about the marketing and more about every touch point with every customer. You need to deliver a consistent experience that really delights the customer, gets them to talk about how amazing the product was, or the customer care interaction was, or how on-point the messaging they received was. GoDaddy is very well known. We have super high brand recognition, somewhere in the 80-plus percent range, so people know the name GoDaddy. What we want people to say is, “When you start your business, you have to use GoDaddy to get your online presence.” That’s what we think about quite a bit.
 
To read the full article with Steve, click here.
 
Conclusion
 
New technologies have changed customer expectations forever. They want unique experiences and personalized offers, and they want these things to occur through the channels they find most convenient. They want to have access to products and services at all times, and they’ll avail themselves of other options if those products and services don’t meet their expectations. They can see brand reviews and compare competitors’ prices whenever they want using their mobile devices, which means that brand face fierce competition for share of market.
 
As we’ve seen, online brands have several advantages that brick-and-mortar companies lack. They can more easily educate and support their customers and have a better chance to innovate products and services. In addition, they can outperform competitors with lower costs and fewer variables and can more easily deliver consistent experiences. To see the fullest potential from these advantages, online brands need to commit to working toward them and improving them whenever possible. If they do, they’ll grow their chances of increasing revenue.
 

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