The once-in-a-generation shift we’ve witnessed towards online shopping has redefined everything we knew about consumer behavior. The retail industry is undergoing unprecedented changes, and only businesses that are ready to adapt will be able to set the foundation for sustained growth. One thing remains constant: Data is the core of future-proof decision making.
Customers have moved to online shopping
The retail industry is going through challenging times that will impact people’s shopping habits and patterns. One change is obvious: customers’ expectations keep evolving, as digital technology goes mainstream.
Changing people’s shopping habits is hard, but once they try something out, they are more open to new experiences. The outbreak had an undeniable impact on consumer behavior. We’ve witnessed 10 years’ growth in just three months. Customers were forced to shift online, so retailers were scrambling to find a way to meet their needs.
Digitally native businesses were faced with a challenge as well. Despite their digital-first mindset, they had to serve a new type of customers – first-time online buyers. These traditional shoppers that once were hesitant to shop online have tested this channel during the lockdown. However, retailers have to be aware that they might have different expectations, as digital is something new for them.
Audiences that are moving to digital right now are probably those who, in the past, had some hesitation to purchase digitally. As such, we’re looking to see how they behaviorally might be different than the customers we acquired in the past–and from there, we’re identifying opportunities to better serve these customers, knowing they might have different expectations and hesitations as digital is something new for them.
The best way to attract new customers while retaining existing ones is to look for behavioral patterns that will help you create a best-in-class online shopping experience for each segment.
On the other hand, the biggest headache for traditional retailers was how to transition from in-store to online purchases, without disruptions. Even though this is a multifaceted challenge and can vary depending on different factors, focusing on implementing proactive strategies has helped forward-thinking retailers move the needle and achieve online sales growth.
We’ve seen a dramatic acceleration in trends for digital, and we’re pivoting the business as fast as possible to adapt to the changes.
Some of the strategies that proved to be successful for many traditional and omnichannel brands like DXL include:
- Offering curbside pickup – Curbside pickup at retail stores surged 208% during the coronavirus pandemic. This turned out to be a great way to get more online sales from customers that want to place their order online, but don’t want for packages to arrive by mail. This strategy will be a powerful weapon for retailers during the new holiday season.
- Increasing spend on digital marketing – The ultimate goal for every business is meeting customers wherever they are. As they’re slowly replacing their real shopping carts with virtual ones, increasing your digital marketing budget can pay dividends in the long run.
- Managing inventory – Inventory planning and optimizing stock levels to respond to erratic customer behavior should be at the top of your priority list. Retailers that manage inventory in a way that creates a seamless omnichannel experience are the ones that will take the biggest piece of the revenue pie.
Even though the shift to online shopping might seem daunting to traditional retailers, the good news is that e-commerce is here to stay. So, the actions you take today will have a long-term impact on your business.
What’s more, customers remember good experiences. If you manage to meet their high expectations for engaging experiences, you will gain loyal customers. Data shows that 73% of customers will buy more from brands that have offered a good online experience.
The question is how to understand the ever-changing customer behavior and shopping patterns?
Data-savvy companies are doubling down on experimentation to enhance customer experience
Making high-stakes business decisions has always been tough. Today, in a completely changed landscape, when businesses are entering uncharted territory, making decisions based on a gut feeling is risky, and it can jeopardize your business continuity.
Companies that treat data as an asset, rather than a cost, are the ones that leverage insights to create unparalleled shopping experiences and increase the bottom line. Businesses like Dollar Shave Club, Bath Bath and Beyond and DXL rely on experimentation to make evidence-based decisions and introduce engaging customer experiences.
Their response to these uncertain times is doubling down on experimentation to respond to their customers’ rapidly-changing expectations.
Validating your assumptions and trying to understand what worked in the past and if that still works in the future is essential. We have a segmentation model where we create different customer personas based on their shopping behavior. What we’re really trying to do during this time is rapid experimentation and analysis on these customers sets to see if those behaviors are sticking post-COVID.
If you’re wondering how to test the waters with experimentation, the first step is defining where your company stands.
Ask yourself the following questions:
- How data-savvy is your company?
- Are you moving fast enough?
- Are you monitoring the changes around?
The next step is to understand the difference between optimization and experimentation.
The key difference between optimization and experimentation is that experimentation is used to make a discovery and gain insights that will fuel your business. Optimization, on the other hand, is making minor process improvements. They’re both important. However, only experimentation will give you a fresh perspective, and it will help you solve problems in new ways.
Tweaking around the edges is necessary, but the only way to validate innovative ideas is through experimentation. Even though it may seem like taking bigger swings is more risky, not making any changes and improvements in today’s ever-changing world is the fastest way to fail.
Experimentation velocity requires organizational change
Being data-driven is table stakes these days. For some companies, experimentation is part of their DNA; for others, it requires a mindset shift.
It makes sense: Strategizing and building experiments takes involvement from different parties. Suppose you don’t have everyone on board with how important it is to make evidence-based decisions. In that case, you’ll be faced with bottlenecks that will become critical to the experiment’s efficiency and output.
Stepping up as the trailblazer that will bring the data-driven mindset to the company takes courage and knowledge, but it pays off, as it brings the company to a new level.
Here is what you can do to take a leap towards creating a data-driven organization:
Every change looks scary and challenging at the beginning. That’s why it’s important to create evidence on a small scale and build the business case. Instead of creating an abstract goal for business growth, focus on smaller, measurable experiments like engagement on a product page or cart abandonment rate. That way, you’ll be able to convince the team of the importance of regular experiments. Baby steps.
The change always starts small, and you can then put a process around it. We’ve been able to make an organizational change by showing the data and the prioritization framework and creating organizational buying around the evidence of small changes.
Show that it can be done fast and efficient
To get people on board with more frequent experiments, you have to show them that they can be done quickly and efficiently. Otherwise, it will seem like you ask for extra effort from them. Understanding your company’s unique requirements and needs, setting up processes in place, and choosing the right testing tool will bring you closer to the organizational transformation.
The most obvious challenge for us was the velocity of experimentation. Our internal tool required a full group of engineers to launch experiments. We also needed expertise not just to show us what a tool may be, but how to actually utilize it at maximum capacity. Finding a partner that can help you launch and scale your experimentation program would be one of the biggest lessons that I’ve been able to take away.
Create a positive snowball effect
Testing one thing at a time and communicating the results with the company will slowly start to gain momentum until it becomes a core part of your company’s DNA. Becoming a data-driven company takes time, but the sooner you start, the faster you’ll build a culture of experimentation. By challenging everything you do, you’ll constantly strive to improve the customer experience.
To make sure you have partnership and support from everyone else in the organization, you need to make data available for everyone. Whether it’s the tests or the analysis/thesis development, democratization of data is more than just sharing results. The more you democratize data, the more you engrain testing into company culture.
Customer experience is the backbone of every successful business, and a strong culture of experimentation is the road to making data-driven decisions and creating best-in-class experiences.
Want to get a new perspective on how to navigate a shifting business landscape and lead change? Watch this recorded event where experts from industry-leading brands weigh in on how to adapt to the changing economy and consumer trends, with examples and insights of how they’ve overcome the same struggles and challenges.