By Gene Ku
The last twenty years has seen a dramatic shift in the retail landscape ever since Amazon burst onto the scene. Offering a vast selection and ever-shorter shipping times, Amazon came to dominate retail sales, starting with books and quickly expanding to other categories.
Yet for all of Amazon’s disruption, the online giant is not invincible. Many retailers and etailers have built significant businesses by refusing to accept the status quo. Any business can learn to beat Amazon by incorporating these five easy tips:
1. Create a unique voice.
Many businesses believe they are unique when they really do not have anything that truly sets them apart. In order for a brand to stand out, it must have a story that aligns with both their business values and personal values.
A prime example of the embodiment of this principal is TOMS. The shoe company uses its own personal philosophy, “One for One,” to engage consumers; for every pair of shoes sold, the company donates another pair to a child in need.
TOMS’ philosophy has helped shape the brand and allowed the company to branch out further with sunglasses, bags, and even apparel. By leveraging its unique voice, consumers want to align themselves with a company that shares their beliefs and principles.
2. Focus on customer retention, not acquisition.
Catching the eye of shoppers is difficult enough with attention spans dwindling and choices expanding. According to research by Bain & Company, it costs six to seven times more to acquire a new customer than retain an existing one. One certain way to financial ruin is to spend massively on customer acquisition without accounting for the true customer lifetime value.
Large retailers such as Amazon can afford to play the customer acquisition game due to their scale, but smaller retailers need to focus on retaining their customer base to conserve cash and reduce acquisition costs.
The good news is that the research shows that a customer is four times more likely to defect to a competitor if the problem is service related versus price or product related. Service is an area any retailer can focus on to compete against Amazon’s low prices or product selection.
3. Excel in customer service.
A happy customer is a repeat customer. As Harry Beckwith puts it in Selling the Invisible, “a customer’s satisfaction is the gap between what the customer expects and what she gets.”
Every company gives lip service to customer service, but few truly excel. The ones that do reap the financial benefits, such as Southwest Airlines, Nordstrom, Zappos, and other brands known for the legendary service that they provide.
This is why some say the human resources department is the most important department at a company. It is critical that a business invest thoughtfully in hiring and training individuals who have high “emotional intelligence quotients” (EI). A happy employee naturally leads to good customer service.
“Our philosophy has been that most of the money we might ordinarily have spent on advertising should be invested in customer service, so that our customers will do the marketing for us through word of mouth,” says Zappos CEO Tony Hsieh in a Harvard Business Review article. Leverage the advantage of human interaction to compete against Amazon’s algorithms.
4. Offer free value-adds beyond the purchase.
What can a company provide that Amazon can’t? One of the most impactful, and often underutilized, means of customer retention is offering free value-adds after the customer makes a purchase. Stores such as Sephora and Ulta offer product samples with each purchase; customers can earn coupons for future visits at retailers like Old Navy and Kohl’s.
Another great way to keep customers returning to your business is to set up a customer loyalty program. Monthly emails with coupons or a point-earning system that can be redeemed for merchandise have proved profitable in the past and can continue to drive customer retention in the future.
Loyalty programs are only bound by the imagination of the retailer. Consider how credit card reward programs such as American Express’ Starwood Preferred Guest offer access to one-of-a-kind events that include private tasting with renowned chefs or concerts, opening up a whole new realm of differentiation beyond just products.
5. Experiment with innovative pricing, packaging, and products.
Amazon’s main attraction has been wide product selection and low pricing, combined with quick shipping. Innovative retailers can invent new models of pricing that drive sales; examples include subscription box services such as Birchbox, BarkBox, and ipsy.
Even something as simple as the humble shaving razor can be built into a business empire, as is the case with Dollar Shave Club. Opportunities also exist to create a walled garden of exclusive products not available on Amazon that caters to a particular segment, such as Betabrand.
Finally, consider the use of crowdfunding platforms such as Kickstarter and Indiegogo to test the viability of any new product or generate buzz prior to the product launch.
Amazon may be the current leader in online retail, but there are always opportunities for any retailer to thrive. By utilizing these five tips, any business can flourish and create a lasting impression with customers.
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