July 22, 2016

By Matt Langie

ECommerce Marketers: Stop training bad behavior in your customers

At its essence, an eCommerce business must create the best possible shopping experience for the consumer while, at the same time, increase revenue for the business.  ECommerce Marketers are looking for every possible solution to achieve these sometimes unparalleled goals.  One solution is costing them revenue and training for bad customer behavior.

Finding new customers, getting them to the site, dropping a product into the cart, and ultimately getting that sale is no simple task for the millions of online businesses competing for that transaction.   And it’s only getting harder given the diminishing attention span of today’s consumer (down to 8 seconds, according to a Microsoft study) and the fact that some 33% of consumers report “there is so much information on the Internet that it is hard for them to find what they are looking for” when shopping online.

There are plenty of resources and advice on the key eCommerce strategies & technologies you should be considering from insightful sites like Internet Retailer, MarketingProfs, and many others focused on retail thought leadership. But one key issue I want to raise for what NOT to do is the experience (and expectation) being created for consumers today who express abandonment behavior.  What I’m talking about here is the “inevitable discount if I don’t click buy right now” scenario.

To put this in context, my real world example is from last autumn as my wife and I were shopping for new furniture for our home we recently built.  She had placed several pieces of furniture into her shopping cart (at a site I won’t disclose, as I see this occurs across too many sites) and was about to click the buy button.  Knowing what I know about digital marketing, targeting, segmentation, cart abandonment, etc. — I told her to wait for the “cart abandonment email” which would arrive in a few days.  Sure enough, we received the “come back and finish your purchase” email with the expected 15% off discount and free shipping offer.

Were these discounts and free shipping offers critical incentives for us to make the purchase?  No, not at all.  We would have bought that furniture at the list price as we needed them, given time-sensitive issues with visiting family arriving soon.

What this experience highlighted for me was the “bad behavior” many retail businesses are training in their consumers—don’t complete the transaction today and you will get the inevitable discount offer to follow.   I’ve seen desperate offers on sites that, as soon as you mouse over the browser close button, you get a pop-over with a discount offer pushing for the sale right then.  To me, this is akin to a store clerk running after shoppers leaving the mall with a discount offer to get them to turn around and shop in the store.  Not exactly a shopping experience that inspires a sale for the right reasons.

The key is segmenting site visitors with the right strategy (and supporting technology) to ensure certain behavior does not result in profit-eroding responses.

This is training the consumer to expect discounts with every shopping experience that only erodes margin, profitability, average order value, and ultimately, the overall customer experience you’re trying to create.  When you reward a customer with a discount for abandon behavior, you’re training them to expect this discount every time they shop with you.  This createslearned behavior, and can be a relatively permanent change in behavior as the result of this experience.  Are you willing to offer 20% off your bottom line every time?

Sure, site and cart abandonment are real concerns for eCommerce marketers trying so hard to drive that consumer to make a purchase.   In fact, the average cart abandonment rate is 68.53%, according to a study by the Baymard Institute.   But is the response to this really to erode retail performance with discounts that consumers are now being “trained” to expect, nearly every time they activate that “abandonment trigger” in your eCommerce processes?  There is another way to close the sale with these consumers without losing revenue.

One driving factor behind this trend is not engaging the right visitor segmentation strategy.  Not unlike how the airlines are able to price each seat based on complex pricing and supply & demand models, retailers need to consider better segmentation of site visitors so that an initial abandonment behavior does not necessarily create a knee-jerk discount reflex.   There are visitors who will turn into buying customers without needing the discount.  The key is segmenting site visitors with the right strategy (and supporting technology) to ensure certain behavior does not always result in profit-eroding responses.

Providing a discount stimulus for all customers who show abandon behavior is akin to rewarding your favorite pooch for their bad behavior. Customers can be conditioned to only respond to a discounted offer, resulting in lost revenue.

Providing a discount stimulus for all customers who show abandon behavior is akin to rewarding your favorite pooch for their bad behavior. Customers can be conditioned to only respond to a discounted offer, resulting in lost revenue.

With retail products and services purchased online totaling nearly $3.6 trillion worldwide by 2019 according to eMarketer projections,  it’s critical that ecommerce business leaders get this right and avoid leaving revenue on the table with discounting strategies that may ultimately be unnecessary for the right segment of customers.

Now, how to start turning that revenue lost into revenue lift?  We’ll explore that in part 2 of this blog series when I cover the key segmentation strategies to address these scenarios.

Stay tuned…