Know Your Marketplace
Competing in an online marketplace, with frequently changing prices often contributes to lower profit margins where time and again, ‘chasing the price to the bottom’ appears to be the only way to achieve a sale.
The enticement of a low entry price is a commonly used technique; however it invariably covers over additional charges or sales points which add to the original, standard entry price item. The purpose of these add-ons is to deliver higher percentage profit points for the business.
If your business operates in such a market, focus should be on the lifetime value of the customer to the business. Marketing efforts should be concentrated on supplying additional products which align to and complement your customers’ needs. This will deepen the engagement with the customer; strengthen the relationship while at the same time deliver a higher profit margin to satisfy your own business needs.
Be aware of why your customers choose you
It is vital to have an understanding why your customers chose to buy from you in preference to other businesses in the same market: finding this out should be a priority. Examine feedback from previous satisfied customers who have rated you highly. Look at which elements received the most positive comments i.e. satisfaction with the product or service itself, the delivery/supply, the post purchase customer support or what it was which gave them confidence, or conveyed the level of the trust, they needed to begin a relationship with your business.
The simplest way to discover what made them buy is to ask them!
This can be done using the same medium they used to interact with the business: for example click and collect provides an opportunity to include a couple of simple questions during ‘the collection procedure’. Alternatively often the most effective way to elicit this valuable information is via a post sales email. By adding an incentive such as a coupon reward or prize draw higher participation numbers will be achieved.
It should be noted that as part of the customer consultation process it is equally important to discover and take note of negative comments. Reacting to critical feedback should inform decision making and guide a change to management of online systems and processes by resolving as many highlighted issues as possible thereby removing obstacles to purchasing.
Maximise the benefits of complementary products and services
Within their core business many single product/service providers fail to align themselves to additional, complementary products or services resulting in a failure to fully address customer needs. As a consequence it could be said that they have diversified and diluted the business by acquiring new customers without utilising a cross-sell opportunity.
Going ‘off on a tangent’ may not be a bad thing as it can give rise to further business areas to develop. This then affords the opportunity to drill deeper into the needs of the new segments of customers which in turn can inform ongoing marketing communications allowing them to fit with individuals and the additional marketing segments.
There are a number of ways to find product(s)/service(s) to bolt into the business and align with customer needs. However the most profitable way is to let this be customer led: that is having consulted your customer base and identified a need your customers would like you to fill, add theses product(s) and service(s) to satisfy your customers.
Consult your customer base with a view to designing product(s) and service(s) around the feedback. If feedback numbers are too small to realistically point to a clear way forward, postpone a decision until adequate data is available.
N.B. It is always useful to review your competitors to get ideas and proof of customer sale numbers.
Ensure you stay closely aligned to the needs of your customers. Try taking pre-orders for the new products or services as a way of ensuring you receive that vital customer validation. Use this information to make such meaningful business decisions that will produce increased sales and so to prevent low profitability by understanding the needs of your customers.
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