By Guy Keeling, MD of loyalty specialist, Maximiles UK.
The deterioration of high street sales recorded by CBI during the first quarter of 2010 has been followed by sharp growth in the e-commerce market at the start of the second.
In May, the IMRG Capgemini e-Retail Sales Index revealed that online sales increased 22% compared to the previous year, representing the highest level of growth recorded since June 2008.
The £45bn spent online in May, equating to £73 for every person in the UK, can be easily related to the high street exodus, but it cannot be viewed out of the context of the current socio-economic landscape. Culturally, we are currently experiencing an exceptionally emotive period for UK consumers.
The early arrival of the warm summer weather, combined with two bank holiday weekends in May, would have had enough of an impact in itself to significantly boost sales. However, these two variables have coincided with the start of an event that unleashes perhaps the most affecting impact on consumers, tapping into the national psyche and kick-starting retail spending – the football World Cup.
The Capgemini Index revealed the extent of the World Cup’s ability to boost online sales growth in the UK, with related products such as alcohol, electrical goods and sportswear shifting at a particularly high rate.
Capturing the mood
While the World Cup is an exceptional case, it is a classic example of how seasonality and national mood can impact on consumer spending behaviour. Capturing consumer sentiment is an essential part of the affiliate marketing processes for retailers all year round.
The fluid nature of online brings an extra dimension to this and navigated carefully can pay major dividends in transferring customers to your brand and retaining their loyalty.
It is not a case of simply trying to offer more rewards than your competitors, it is about creating promotions that are targeted and relevant to the consumer at that moment in time, whether it’s offering a particular reward, voucher system or cumulative points.
Targeted marketing, combined with a relevant reward or loyalty scheme ensures that customers know their investment is valued, which is especially crucial in the current climate of restricted finance.
Offering flexibility and the ability for consumers to gradually save points to use as and when they see fit has proved an effective system during the credit crunch with the success of loyalty cards from many high street stores.
However, with the shift to online, new strategies must be developed that build the level of interaction between the brand, consumer and shopping portal. Greater engagement and repeat business can be achieved when customers understand they are being offered the best incentives from the brands and retailers trading on a site.
Maximiles allows shoppers to collect points for a variety of online activity they carry out through the site, such as completing surveys, entering competitions, registering for services and even responding to emails.
This allows consumers to collect towards receiving rewards without necessarily having to make a purchase. These points can be saved for an expensive purchase or for more costly periods like Christmas and birthdays.
Transferring offline loyalty to the web
The recent popularity of high street loyalty cards highlights the willingness of consumers to connect with retailers in the difficult economic climate, and the need for offline businesses to build an effective system of awarding customer loyalty online.
What the downturn will undoubtedly separate is the companies that have realised the importance of incentives and those which still believe that brand loyalty alone will keep customers coming back. One of the fundamental reasons that buyers decide to take their business from the high street to the internet is to seek out best value, so maintaining loyalty across the divide is not guaranteed. The ability for consumers to compare and contrast products in one place creates added competition on this platform.
There are several things that should be considered for an online affiliate marketing strategy:
1. Research the portals
The quality of retail websites varies so you will have to be careful about where your product is placed. Ensure you choose sites that offer products of a similar calibre to your own. Online consumers will keep returning to a portal that offers quality goods as well as ease of use, competitive prices/incentives etc, but the huge amount of choice at their fingertips means they will rarely give a poor site a second chance.
2. Consider cost per order ratios
Dedicated loyalty programmes and relevant rewarding will ultimately offer a greater ROI than cash-back or discount vouchers as it allows goods to continue being sold at full price. It also appeals to the needs of those actually looking to make a purchase as opposed to window shoppers.
3. Understand your audience
By providing customers with incentives on their regular purchases, a brand can build up a clear picture of a shopper’s online behaviour which, in turn, allows for even more targeted communications in the future and greater opportunities for sales.
Ultimately, it is not speculative bargain hunters that will help the retailer out of the recession. Instead high street businesses need to focus on keeping their regular customers satisfied by providing everyday low prices and an adaptable reward programme or loyalty service.
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