Cheetah Digital have pulled together a unique guide for digital marketers in retail dealing with the immediate and longer-term fallout of the coronavirus.
This is a time of uncertainty. We’re typing and reading this from our own makeshift desks. People everywhere are trying to figure out how to support businesses while working from home. Shopping behaviours have changed overnight. Coronavirus will prove to be a firm inflection point within the retail industry. This unprecedented disruption to what was business-as-usual will accelerate core shifts in retail customer behaviours and trends that were already starting to move in new directions.
In what follows, we look to offer our thoughts and knowledge on the current situation from the perspective of the digital marketer in retail. We’ll share what we have learned to date from the data available to us, drawing information and trends from across our strategic partners. Key points for ongoing consideration:
- Your audience is online and captive.
- Effectively 100 per cent of purchasing activity will be done online, versus the 15 to 18 per cent done today.
- Once the initial shock wears off, customer spending notwithstanding coronavirus will start buying non-staples again.
- Your most valuable customers will be with you and supportive throughout.
- Now is the time to triple-down on acquisition strategies and activities. Make the effort to interest and acquire those who are looking to spend. This will pay off in the long-term.
- Accept and acknowledge that the world after coronavirus won’t simply go back to normal, but this can provide opportunities.
- Customers will grow to expect more interactive and personalised digital relationships with their retailers.
- Finally, coronavirus will accelerate an ongoing step change in share of sales, eCommerce, and direct-to-consumer revenue versus in-store. This is the new normal forever, 18 per cent is over when the dust settles.
With these points in mind, we can now look to suggest plans to help retail businesses survive today, navigate tomorrow, and thrive again in the near-future. To help break things down, we have looked to divide the coronavirus pandemic into three phases that we’ll be inhabiting, and have considered how retailers can approach and solve the challenges unique to each.
Pandemic phase one: panic and protect
Retailers, like the rest of us, have had to scramble to make sense of a world turned upside down overnight. As the past few days and weeks have unfolded, there could only be a highly reactionary clamber by all brands, difficult decisions being made in real-time with the latest public health pronouncements. Decisions such as shutting all brick and mortar locations have been followed up with the cold realisation of what the consequences will be. Sales down, all plans and goals for 2020 thrown out. Driving customers to retailers’ online properties is now more important than ever.
Key to this initial phase is a major shift by customers to focus primarily on “essentials” ie, those items and needs that make them feel comfortable, safe, and prepared. During this phase, retailers must find ways to help contribute to customers reaching this level of psychological and physical safety, in any small way they can. Once this point has been reached, some degree of normality around purchase considerations will return.
What we’ve heard from some retailers so far is that, although website traffic has remained somewhat consistent to date (people at home are looking at the same sites they would have been in the office), with the current economic uncertainty customers are spending less and saving more. The alternative trend, reported by male fashion retailers for example, is the rise of the direct-to-buy or functional purchaser. Someone who knows exactly the products they are after, their style, and size, etc. These are often items they may have picked up in-store previously. Both of these considerations should play a part in your messaging and communication strategies.
Revenue generated from recent email campaigns has dropped slightly. Digital marketers in retail have also seen a significant decrease in both clicks and engagement rates. There has, however, only been a minor drop in email open rates. These initial data points for email indicate that people are still receptive to messaging from their brands but this should not be taken as a given. If retailers haven’t done so already, now is the time to consider an “opt-down” or “change my cadence” message. Turbulent times require adaptive approaches; getting sent daily offers is fine during a normal economy but in the early days of a disruption as major as this, brands must ask consumers for their new communication preferences in the short-term. For example “only send me things that are vital for a month.” This simple empathy is what we all should demand and expect.
After the initial notifications and messages from CEOs, retailers need to provide some comfort, assurance, and entertainment to empower their audience with some buying confidence. You are in a fortunate position of having a great deal to work with — your products make people feel good about themselves. Wherever possible, retailers must change all their store-targeted offers to online ones. They should also look to build on the purchasing habits that are still occurring and create targeted email campaigns. These should be powered by personalised offers and valuable incentives — such as free shipping. Remember, before coronavirus, 73 per cent of US customers reported making purchases via an email offer, with 36 per cent doing this directly from their mobile device.*
Returning to online retail properties, which will only be receiving more and more web hits, look for new and different ways customers can engage with your brand online. It doesn’t take much to create a repeatable interactive experience; a real-time fashion poll or topical quiz embedded on your page or at the bottom of your blog. Find new ways to delight an audience already set on browsing and looking for respite from the maddening world around them. Create alternative avenues to tap into your existing online community, foster stronger shared ties, and encourage the sharing of stories. Simple examples here could include a UGC upload/social hashtag public gallery where people share their stories, or perhaps their love for the products. Internally at Cheetah Digital — using Cheetah Experiences — we created a way for colleagues to upload and share their home office setups.
Once the initial shock wears off from the societal changes brought on by the impact of coronavirus, customers will start buying non-staples again. This leads us to considerations around phase two.
Pandemic phase two: acceptance and acknowledgement
After the initial shock, retailers will get used to the new normal, and plan to maximise what can be done within a different set of constraints. Although we’re not there yet, with further twists and turns inevitable at time of writing, many of your customers are already getting more acclimatised to the new normal. They’ve had their movements limited, and are already working from their homes. They know their trips to the shop will be for groceries and essentials, not to enjoy retail therapy in the traditional sense. Retailers, too, must accept, and start planning within, these confinements.
Medium- to long-term, ask how can you most effectively reach customers online, with the right messages at the right moments, whilst they are at home on laptops and mobile devices. Effectively, 100 per cent of shopping activity for retailers will be done digitally in the next few weeks and months, vs. the 15 to 18 per cent average today.* What can you do to help simplify and further encourage this sudden shift, to ensure some of these purchases are happening on your properties? When it came to driving sales in the US before the coronavirus, email bested paid and social ads by 180 per cent.* Email will be even more important now.
In creating a new and even more comprehensive email strategy for the times we are living through, consider broadening your reach. Use your messaging platforms to reach large known audiences in your database with an expansive range of items customers might be interested in, but perhaps haven’t considered before. Shopping habits will still carry similar hallmarks, ie if an individual can buy two similar items from the same trusted retailer they likely will — they just need to know such items are available. Such an approach should run alongside the continued specific targeting of heavy existing customers, those who are already known to buy a particular product or category online. This is where good offers, timely promotions, and awareness campaigns all help. Something we will further elaborate on now in discussing loyalty.
Currently, 55 per cent of customers in the US already have a retail loyalty app or are members of a retail loyalty programme. This is another number that will only increase as people purchase more often from retailers directly. For those retailers with an existing loyalty programme, we have already written a comprehensive piece on Helping Your Loyalty Programme Members Deal with COVID-19, which we would strongly suggest checking out. This piece also covers points on how to attract new member sign-ups. Three key points worth immediately stressing here: highlight and clearly communicate the offers and benefits available to members and, just as importantly, non-members alike. Secondly, simplify, expedite, and make more economical shipping and returns for your customers in your programme. Finally, remember and utilise member preferences, habits, and practices. The more insight, knowledge, and actionable data you have available to work with in challenging times the better.
Customers will be reviewing and making smarter choices on all their upcoming spending decisions — they will be more deliberate and intentional with their purchases. Loyalty programmes with true incentives can attract new customers, and keep existing ones engaged and purchasing. Around 64 per cent of US consumers say they will remain loyal to a brand by paying more or waiting longer to purchase an item. In times like these, that bond is more important than ever. If you haven’t already, take the time, put a team in place, and research the benefits of loyalty. Not only will your business thrive in times of prosperity but when challenging times come again, you’ll be glad you had it.
Returning to creating branded digital activities and building on what was discussed above, retailers will need to come up with additional ideas on how to improve customers’ shopping experiences from their work-from-home situations. Look to experiences that mimic in-store activities. Create fun and alternative ways to encourage buying decisions. Here, product selectors, product recommenders, and virtual fitting rooms can be highly effective. These may take a little more time and resources to initially set up than a poll or quiz, say, but they will increase interaction now and in the future.
Key industry trends that were in motion before coronavirus will be there after this virus passes. Now may provide a unique chance to plan to get ahead of these. One of the most significant is the demise of third-party data and the cookie. Most retailers have started to map out their zero- and first-party data strategies which will be the future of personalised advertising in retail.
Contests, giveaways, quizzes, and social initiatives not only provide great ways for brand-customer communication to be interactive and two-way, but also allows retailers to collect data and grow their email acquisition rates. If it is possible to further invest in such initiatives now, then do. These activities will give your brand a renewed and freshly connected audience to sell to when customers return to buying. Creating messaging opportunities based on transactional data is great, but using zero-party and psychographic data to personalise those messages will differentiate your brand from your competitors in the long-term.
In planning for the future, we have to acknowledge that it simply won’t be a cause of business-as-usual. There will be a step change in the overall share of sales, eCommerce, and direct-to-consumer revenue vs. in-store. This is very important not to forget as we move into considerations for phase three.
Pandemic phase three: plan and project
Collectively we will get through this challenge, even if it’s one that none of us have experienced in our lifetimes. Fear will be replaced with determination. With the right plans in place, the
future is something that we can be optimistic about.
This acceptance of the mass disruption to business as usual provides a unique chance to truly put everything in review, from tools and strategies to partnerships. Such a chance may never come around again. As we outline in greater detail here, phase three is where retailers must get introspective, and take a hard look at the foundation that is set to power their future. Ask the big questions, for example: can you personalise to the level customers expect? Can you orchestrate meaningful messaging or offers in real-time based on customer interactions? Can your marketing efforts get smarter with machine learning and analysis on all of your disparate datasets? Where are your areas of opportunity going to come from in the future?
In email and messaging terms, this is the opportunity to embrace new ways and standards that will arise. A greater acceptance and willingness on the customer side to embrace SMS and push notifications, for example. An expectation that retailers are talking to their customers directly with greater personalisation. A chance to try new email technologies that change the way things are done and products are sold, such as Cheetah Tap.
With interactive experiences, now is the time to triple-down on data acquisition strategies and activities. If you decide at this point your focus should rather be on retention — rather than turning unknown browsers into known individuals — experiences should be used on re-engaging your existing audience to see if the information you have on them is still relevant. Again, many retailers are in the privileged position of having vast datasets, and they should look to make these work harder for them, especially when the going gets tough. Finally, why not think big about some bigger, broader, and far more integrated digital experiences. There always exist those brilliant but challenging ideas that would have taken too much time and resource otherwise to take from conception to delivery. Now is the time to take on those high value but time intensive initiatives.
With loyalty programmes, in the US 27 per cent of customers who may buy a given brand claim they are not loyal to that brand because they were not offered any encouragement to remain loyal. An early lesson for all retailers that has come out of this pandemic is that repeat business is what can keep you going. When the world is in such flux, attracting new buyers is almost impossible so it is even more important that you keep your repeat customers satisfied and engaged. If this isn’t a call-to-arms for the creation or re-establishment of a loyalty programme, then we don’t know what is. Your customers are loyalty-savvy — time to get up to speed.
*Cheetah Digital partnered with Econsultancy to conduct research around how consumers feel about loyalty, privacy, and control of their data. All stats referenced in this resource are from that research. Find out more here.