While there might be some debate about the technicalities of a debate, we do know that right now the economy is softening. People are spending less money, largely because of inflation and also a sense of uncertainty about where the economy is going. If you have an eCommerce business, you might be especially concerned about the effects of a recession.
With that in mind, the following are some retail and eCommerce tips to keep in mind.
1. Think About the Lifetime Value of a Customer
Your repeat customers are essential to your eCommerce business. This means that you need to identify ways to engage them in the post-purchase phase. This could include transparency in shipping and delivery, offering special deals to repeat customers, and having a clear, easy-to-understand return policy.
Your repeat customers in an eCommerce business can increase your profits anywhere from 25 to 95%. As customer acquisition is increasingly expensive, focus instead on your customer’s lifetime value.
To do this, find the right customer segment. Identify those people who are your most valuable customers, and then you can start to target them in more specific ways. Another way to improve the lifetime value of a customer is to add something complimentary when they’re making a purchase.
Smart bundles and loyalty programs are also helpful here.
2. Pricing Optimization
When there is a recession or even just a period of uncertainty, consumer spending is almost always going to decline. If you’re an online retailer, you can try to offset these declines in spending by finding ways to provide instant value to customers.
The right pricing strategies are one of the best ways you can do this. If you’re in a period of low revenue, focus on price optimization that allows you to maintain positive margins even if your sales slow down.
3. Eliminate Friction
When you’re in a tough situation economically, anything you can do to reduce friction and make life easier for shoppers is valuable. Friction happens anywhere that the flow of a customer’s experience is impeded, leading to distractions or something that could discourage them from buying.
One way to eliminate friction is to use something like a progress bar on your mobile checkouts. These progress bars are a visual confirmation of progress. You can also personalize checkout with forms that are pre-filled, so your customers aren’t wasting their time or worrying they’re entering something incorrectly.
Another tip is to offer a discount at checkout that can help push a customer over the edge to buy. Urgency helps your customers avoid thinking too much about something, instead, taking fast action. For example, you could indicate on your checkout page that ordering right away will allow for faster shipping.
4. Reduce the Risks
Around 75% of online shoppers want to know what the return policy is before they buy anything. If a return policy isn’t clear or visible to them, it leads around 15% of shoppers to abandon their cart. When your customers are already more cautious about purchasing because of the economy, you need to take as much of the risk out of buying as you can.
Too often, retailers make the mistake of not having a well-defined return policy where their customers can see it. They tend to think that if they don’t make the refund policy apparent, it’ll reduce returns. In reality, what it’s doing is reducing conversions.
As well as listing your return or refund policy where your customers can easily find it, you might want to offer free returns if you can.
5. Invest In Your Top Sellers
When you’re in a recession or a weak economy, you want to conserve resources where you can and cut your costs without cutting quality or service. That’s why you should try to focus primarily on the products you know are best sellers. You want to prioritize the opportunities that are likely to give you the highest return on your investment.
You may feel a temptation to try and market a lot of products to see what sticks with a broad audience, but a recession isn’t the right time for this approach.
6. Build Your Brand
Finally, use a recession as a time to focus a lot of your time and attention on building a strong brand that’s going to be able to withstand challenges. Communicate often with your customers and connect with them. When you’re able to continue effectively communicating with customers, even when times are tough, it differentiates your identity and shows your customers how you’re better than your competition.