Warren Buffet is quoted as saying, "Price is what you pay. Value is what you get." Retailers need to understand the difference between price and value – and ecommerce retailers need to know how to communicate that to their customers without the benefit of face-to-face interaction.
How does value affect a purchase?
Consumers may think they make purchases strictly based on their needs or desires as well as their budgets, but retailers should understand that the psychology of “seeing value” comes into play as well. A prospective buyer will spend more if they believe that the product they are purchasing provides enough benefit.
For example, when consumers buy large-scale electronics, the salesperson often tries to sell the client an additional warranty plan. Many people may consider that unnecessary, but the buyer who has recently broken a gaming system or blew their TV may look at that as an added value and is more willing to pay for it. Keep in mind that value doesn’t just mean an additional perk. Many companies offer the same product, but customers value one brand over another – often regardless of price. Consider stores like Starbucks or Whole Foods Market. They are traditionally more expensive than their competitors, yet have no problem selling their products to eager customers.
While online retailers can’t "read" a person to determine what they need on the spot, what they do have in common with all these specialty stores is that their success is dependent on finding and attracting the ideal customer. Ecommerce shops must be much more detailed about a prospective client’s needs in order to meet them right on the webpage. They have to understand not just their target market, but what that customer looks like in detail, everything from their demographics to their buying habits.
Entrepreneur’s article "Determining Your Ideal Customer" is a good starting point for figuring that out. Retailers need to dig into their invoicing records, access Google Analytics, engage in newsletters, track social media, gather customer satisfaction information, provide surveys and more to research their current customers, including what is driving them to the site and what is turning them away.
Once a brand has researched its ideal customer, it then must define what makes it stand out from its competitors: its unique selling proposition (USP). It helps to begin with a list of top successful competitors to see what is driving traffic and customers to their site. After that, brands need to consider what those competitors are not providing their customers and how that meshes with their own USP. In "What a Unique Selling Proposition Really Means & Why Your Business MUST Have One,” Kissmetrics offers this tip for brands developing their USP:
When you attempt to be known for everything, you don’t become known for anything.
They give a hypothetical example of a company that specializes in web design and does search engine optimization (SEO) on the side, and a company that specializes in SEO. Which would you pick when selecting an SEO firm? Ecommerce retailers need to laser focus on that one thing that makes them stand out from the crowd of online retailers rather than being all things to all customers. They must create a narrative that weaves that USP through all their interactions.
When a brand has determined its ideal customer and USP, marketing must use that information to drive traffic. SEO, functional site design, newsletters, social media, live engagement and advertising are some of the tools retailers should be utilizing to drive traffic in a way that reflects the retailer’s USP. Analytics tools for both website and social media are also a must-have in order to track engagement performance.
Once companies have a good grip on their marketing objectives, the next step is selling products and upselling additional items. Obviously, this means the ecommerce site must be functional and as bug-free as possible. Investing wisely in the best software solution and reliable web hosting services can provide customers with a valuable experience, but additional features that address convenience for the ideal customer also provides value. For example, online chat services for customers can help upsell additional products, address problems and provide the visitor with a feeling of real engagement.
Upselling can also be accomplished with a related items feature, warranty offers or a notice of progress towards the minimum free shipping requirement if there is one. Easy-to-find return policies, gift options and possible free offerings that target the ideal customer will also go a long way to providing increasing a retailer’s value.
This might have readers wondering if pricing matters. Of course, price points have to be competitive even with a stellar USP, especially for new companies. It is again useful to look at competitive ecommerce retail shops to not only discover pricing, but to review their policies on returns and shipping fees as well as when sales are taking place. Review their SEO, marketing and visual layout tactics. Every online store has a different approach to sales, but it should still keep in line with the brand’s USP in order to retain customers who have only come by for the first time due to a special sale price. Having a deep discount sale (50-75% off) will not entice customers to return for full price items. Brands will acquire sales and but not clientele.
Understanding value is a critical element for any online retailer that wants to remain competitive or dominate their field. Communicating value may have special challenges online but it’s a necessary factor in marketing. Price alone will not create loyal customers.