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Using the recession to improve the online customer experience

18th May 2009
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MyCustomer.com

Customers may be buying more online but they are also more selective about where they spend their money - that's why good customer service and experience can be a key differentiator for brands when it comes to competing with their rivals.

By Anneli Olsen, fhios

Ordinary bricks-and-mortar stores may be facing a downturn in sales but the recession is proving a goldmine for online vendors. However, there is no room for complacency. As the number of online shoppers increases, so does their expectations, making good online retail solutions vital.

An online survey conducted by Harris Interactive revealed that around 90% of customers expect the service they receive to be as good, if not better than in a regular store. However, nine out of 10 respondents had experienced problems while conducting an online transaction during the last year. Out of these almost half stated that if they encountered problems in an online shop, they most often abandoned the shopping process in favour of another online competitor's solution - an increase of 12% since last year. In addition, 42% stated they were unlikely to try to use the failing site again.

"Investments in R&D during recessions are something that has been discussed and promoted as a way to prepare for the future. However, it should not be done without careful considerations over what to invest in.

Even though customers buy more online, they are selective about where and on what they spend their money. In a recession, the most commonly used tactic for companies is to decrease spending, which often means cutting back on research and development. However, this can have dire consequences both during the recession and after it ends, especially if customers are more critical of badly implemented online shops and poor customer experiences.

Historically, companies that had the foresight and resources to invest in improving their offerings and services often experienced a boom when times improved. Companies such as Dell and Intel made such investments during the recession at the beginning of the 1990's, as well as Apple, Google and MySpace during the last credit crunch. It meant they could then offer solutions which were much more sophisticated as soon as the will to invest returned, while their competitors often took years to catch up.

According to Apple, this strategy is being used during the current credit crunch as well. Amazon, too, has already started to release newly developed solutions for increasing their market share. An example of this is the Amazon Mobile application, which can be installed on Apple’s IPhone and allows users to photograph items in regular stores, add them to an online shopping cart and receive information about online prices for those items, often with a discount for using the tool.

Wiser investments

Investments in R&D during recessions are something that has been discussed and promoted as a way to prepare for the future. However, it should not be done without careful considerations over what to invest in.

During recession, it becomes clearer which are the sources of income and, therefore, the most important for a company. Customers who are willing to spend money in good times might not necessarily be those customers who keep the company alive when a credit crunch arrives. Hence, there might be benefits in refocusing the offerings provided according to the most beneficial markets now, and in the future.

An example of this strategy was adopted by Singapore Airlines. After noticing that the most reliable income was from full-fare business and first-class travellers on transcontinental routes, they cut back on short flights and spent more to serve these customer groups. During the recession in Asia in the late 1990’s, Singapore Airlines demonstrated a profit and came out much stronger than its competitors when the downturn ended.

"Customer service and the online experience represent a very important aspect of an online purchase. At the same time, value for money plays a vital role in times of economic downturn.

For an online retailer, this means clearly defining the target group and developing the online store to suit that group. It is very rare that an online solution can cater for all kinds of costumers. As previously mentioned, customer service and the online experience represent a very important aspect of an online purchase. At the same time, value for money plays a vital role in times of economic downturn.

Customers are no longer loyal to a store or a brand as such, but instead look to the costumer service they provide and the incentive programs they offer. With the competition only a mouse click away, online retailers cannot afford to lose or alienate their customers. Instead, it is time to secure the future by giving the customers what they want but also to exceed their expectations in order to make your site their first point of call for their next online purchase.

Anneli Olsen is research consultant at fhios

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