Everywhere you look, the signs of a looming recession are unmistakable. Inflation is beginning to weigh on shoppers. The world’s biggest companies are starting to tighten their belts. Even the red-hot job market is beginning to run out of steam. Any way you look at it, economic indicators have started flashing bright red.
For eCommerce businesses, a recession means finding ways to retain customers and protect revenue. With competition in the eCommerce industry at all-time highs, that won’t be easy. There is hope, though. It rests in eCommerce businesses taking specific actions to keep their customers happy as the recession starts to bite. Here are five specific ways they can do that.
1. Adjust Product Lineup to Account For Customers’ Budgetary Constraints and Concerns
In times of recession, some consumers will inevitably stop buying certain products they see as luxuries. However, far more will instead purchase cheaper versions of the products they’re used to buying. During the last major recession in 2008, McKinsey found that at least 18 percent of consumer goods customers did exactly that. To capture as much of that revenue as possible, eCommerce businesses should begin to explore carrying cheaper alternatives for their high-volume products, if possible. Having those alternatives ready if sales start to slow will provide a means of winning back customers that would otherwise jump to competitors’ sites instead.
2. Manage Cash Flow To Avoid Stock Shortages or Customer Service Cutbacks
One of the biggest challenges that eCommerce businesses face in a recession is the sudden onset of cash flow problems. When that happens, the business could have little choice but to decrease product inventories or cut back on customer service operations. Both of those solutions could be fatal to an eCommerce business because they will lead to unsustainable customer attrition. Instead, it’s a much better idea for eCommerce businesses to turn to analytics to prevent cash flow problems in the first place.
To do so, they can use a free supply chain analytics solution like the one offered by 8fig. It can help eCommerce operators understand all of the costs associated with their supply chain and make detailed future cost projections. And if necessary, they can also access funding through the platform based on their analytics data. Disbursed incrementally, the funding can help smooth out their cash flow to improve operational stability—which makes getting through a recession far easier to manage.
3. Use Intent Data To Provide Personalized Discounts
Another excellent way to keep eCommerce customers happy during a recession is to surprise them with personalized discounts. To the customer, such discounts make it look like the business is trying to help them navigate their tightened budget. To the business, however, they’re a way of encouraging sales that would otherwise have never happened. The key is for eCommerce businesses to use buyer intent data to produce personalized discount offers that reach customers at the exact right time to induce a sale. The effect of this strategy is twofold. First, it encourages customer loyalty, which is essential during a recession. Second, it helps create additional revenue streams that will help the eCommerce business to offset any overall losses stemming from the recession.
4. Make Strategic Investments in the Customer Experience
Although it often seems counterintuitive for a business to increase spending during a recession, there are two areas where this makes sense for eCommerce businesses. One is in marketing, which is outside the scope of this article. The other, however, is in the customer experience (CX), which has a direct effect on keeping customers happy. Plus, research shows that businesses that invest in CX initiatives grow their revenue 1.7 times faster than those that don’t. Best of all, eCommerce businesses don’t have to spend a fortune on CX if they invest strategically.
They can start by using customer data they already have to personalize the shopping experience on their site. Then, they can take steps to make their sites as mobile-friendly as possible. Those are the kinds of low-hanging CX fruit that provide eCommerce businesses with the best results at the least expense. Another excellent way for eCommerce businesses to improve their CX is to offer additional payment options to consumers. Of particular value during a recession are buy now, pay later (BNPL) options. Payment services like Affirm and Afterpay offer cash-strapped customers a way to make the purchases they need exactly when they need them, which benefits both them and the eCommerce business.
5. Make Customer Feedback Central to Operations
Last but not least, the most important thing that eCommerce businesses can do to keep customers happy during a recession is also the simplest: listen to them. This seemingly-obvious bit of advice is worth following no matter the economic climate. It is, however, essential during a recession. To keep customers happy, especially during a recession, it’s a good idea to set up a variety of customer feedback channels and a mechanism for acting on the data collected.
Studies have shown that the simple act of answering a customer’s tweet can entice them to spend between 2% and 20% more on products they’re interested in. The same goes for all other modes of customer feedback. By showing customers that you value their opinions—and more importantly—that you’re willing to make operational changes in response to those opinions, you’re creating a loyal relationship that will outlast any recession.
Keeping customers happy is the best way for eCommerce businesses to weather a recession. The five strategies detailed above all offer excellent—and cost-effective—ways to do it. Together, they form a comprehensive strategy that will not only protect the bottom line of any eCommerce business that embraces them but will also leave them in a good position to thrive when economic conditions improve. In other words, they’re the perfect recipe for recessionary eCommerce success.