Tuesday, November 9, 2021

The Forces That Are Redefining Loyalty

Strategy

E-commerce brands are accustomed to thinking of loyalty in terms of programs that offer perks to customers in order to prompt them to place repeat orders or sign up for a subscription. But the whole notion of “loyalty” is about to change radically. Simply getting a product into a customer’s hands in a reasonable timeframe and at a reasonable cost will be the biggest driver of loyalty for the next 18 months or more. My advice to e-commerce brands seeking to build loyalty is three-fold:

  1. Expand your catalog into adjacent categories (manufactured on the same shore as your customers) so that you have products on your shelves to sell to customers;
  2. Rethink your shipping partners or limit who you’ll sell to, concentrating on regions you can ship to quickly;
  3. Invest in a smart helpdesk platform like Gorgias, because your customer care team is about to be inundated with complaints from unhappy customers, and they’ll need to succinctly explain the global issues your company faces.

Challenging Conditions for E-Commerce Brands

Last holiday season much was made about “shipageddon,” or the inability of the USPS, UPS and FedEx to keep up with the surge of packages that required delivery. The carriers began charging a holiday surcharge, which many brands passed on to the customer. But that surcharge couldn’t address the underlying cause: not enough drivers to deliver the uptick in online holiday shopping.

Shipageddon may subside a bit this year, but that doesn’t mean e-commerce brands are out of the woods. This year the market has suffered a “receivageddon,” or a huge challenge in receiving the products that retailers have ordered from overseas manufacturers. Unloading cargo from ships has slowed down drastically largely due to a shortage of longshoremen who know how to operate that machinery. (The longshoremen union, in turn, blames the supply chain failures on foreign operators). 

Whatever the source of delays may be, one thing is certain: It’s September, and your holiday orders were placed with your suppliers months ago. You’ve anticipated what your holiday demand is going to look like, planned your promotions and updated your paid search campaigns. One thing you may not have expected: the products you thought would make your holiday season are sitting on a container ship, waiting for a longshoreman with the skills to load the container onto a semi so they can be driven to your warehouse.

And that’s assuming you can find a trucker to drive your products where you need them to go. As of June, the nation is still grappling with a shortage of long-haul truckers. Since 2017, the trucking industry has needed tens of thousands of additional drivers to keep up with demand. Those drivers never materialized, and covid prompted many to retire or move on to other careers.

What does this mean for the upcoming holiday season and beyond? It’s entirely possible that you won’t have enough products in stock to fulfill the demand you’ll receive from online shoppers. Pivots will be necessary.

The New Loyalty

If you don't have a product to sell to a customer, you obviously can't convert him or her. Or if you can't deliver packages to customers in time for the holidays, they won’t be likely to purchase from you again. Your business plan may call for increasing sales over last holiday season, but those plans may be encumbered by forces beyond your control.

Today, customer loyalty hinges more on supply chains and logistics than it does on marketing tactics. Where once you put a great deal of thought and effort into creating a great unboxing experience, beginning in October all focus will be on whether or not you can receive and fulfill an order within five or six days.

In this environment, it’s probably not necessary to offer deep discounts to win loyalty; simply having an item in stock and shipping it in a somewhat timely manner will be enough for you to become a favorite brand among shoppers. I wouldn’t worry too much about losing shoppers to competitors offering deep discounts, because they’re in the same boat as you. They’ve ordered from the same suppliers, and they definitely use the same carriers. 

Still, you’re in the business of selling stuff to consumers and you want their loyalty…how is that possible if your shelves are chronically half empty?

Expand Your Product Line

You might not have a lot of options this holiday season (except to beef up customer service to handle complaints). For the long term, the way to ensure customer loyalty is to have a greater range of products to sell so that customers can always find something to buy from you. If you’re an apparel brand, expand into adjacent categories, such as footwear or eyewear, or even some wellness products that may make sense for your customers (e.g. if you sell clothing made from organic cotton, your customers may be willing to purchase organic supplements from you).

The other option is to offer secondary and tertiary product lines so that you’re not dependent on a core product or two for the bulk of your business. Just make sure that the new products you sell are manufactured onshore, not off, so you won’t face the same constraints. The goal is to diversify your risks, not multiple them.

Rethink Your Carrier Model

Granted this is a costly fix, but it may be time to rethink your carrier model. Rather than have carriers that fulfill out of a few warehouses, consider working with additional, localized ones like ShipBob. This will allow you to warehouse your products closer to where all of your customers are and get them into their hands in just a few days.

This will mean taking on additional costs and taking a larger position on inventory, so you have products in the additional warehouses. These are all big bets, but they will reduce the amount of time and transit, and these bets will pay off in terms of the new customer loyalty. 

The other option is to take a more regional approach rather than a national approach to your business. I wouldn’t be surprised to see more brands or marketplaces like FastAF emerge that only launch in L.A. and New York. A regional approach means you can rely more on last-mile carriers rather than UPS or FedEx.

Costs will definitely have an impact on loyalty, and the transit costs of manufacturing far away and warehousing products in a few locations are quickly becoming prohibitive. The cost of filling a container and shipping it across the used to be around $800; today it’s over $13,000. In a very short timeframe, the cost of a wood pallet lept 300%, from $8.00 to $18.00. You can’t pass all of these costs onto the customer because they’ll simply stop buying (you’ve heard the adage: the cure for high prices is high prices). 

Ramp-up Customer Service

It’s entirely likely you’ll have some worried or upset customers this holiday season, and you should anticipate a lot of incoming calls, emails and posts to your social media page from gift givers who want to know where their packages are.

If your products were delayed due to circumstances beyond your control, don’t make the situation worse by taking a long time to respond to incoming queries. A helpdesk platform like the one offered by Rightpoint’s partner, Gorgias, will be instrumental for your customer care team.

For instance, macros (aka pre-written texts) make quick work out of answering the kinds of questions you’ll get from customers, such as has my product shipped, and how can I track where it is? You can also explain the supply chain constraints you face, so they’ll understand it’s not your brand alone.

Moreover, you can automate the responses customer care team members send, but still deliver a highly personalized experience to the recipient by using a combination of pre-written answers and integrations with other data sources, such as your order system. These messages can be sent via any channel the customer uses to contact you, including email, social media, SMS, or live chat on your website.

If you’re getting more queries than your team can reasonably keep up with, activate the intent signals of Gorgias. This feature can detect the intent of a customer correspondence and automate your response. Machine learning goes a long way in assessing the intent of customer inquiries, and can cover a lot of ground, including:

  • Product questions or experience feedback
  • Shipping and status questions
  • Requests for refunds, or product exchanges
  • Reports that an order was received damaged
  • Request to cancel an order

I think we all wish that the pandemic never interrupted supply chains, and that we could offer fast and free shipping as a competitive advantage. But the world has changed, and those changes mean the consumer will look at brands differently. All emphasis will be on the basics: Do you have what I want, and can you ship it to me in a timely manner and at a reasonable cost? At present, those can be difficult questions to answer. The sooner you answer them, however, the more you can bet on customer loyalty.