Tips for Capitalizing on Tough Economic Times

Thursday Jul 17th 2008 by Sally Curran
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Some successful strategies for keeping the virtual cash register ringing during a down economy.

It's no secret the economy is suffering. Gas prices are over the four-dollar mark, and a trip to the grocery store means digging deeper into already overstretched budgets. Consumers have traditionally turned to online resources to snag a deal on all manner of goods-after all, a bit of time comparing prices at a bunch of sites is faster, easier, and often cheaper than hopping in the car and searching the aisles of a local stores.

And although the verdict is still out as to whether we're in the midst of an actual textbook recession (meaning two or more consecutive quarters of declining gross domestic product), e-tailers have a prime opportunity to make the most of the droves of shoppers desperate to find a deal online. Tactics suggested by industry watchers include special — and creative — promotions, e-mail marketing, free shipping, basic product page optimization, alternative payment methods and stellar customer service. (We've covered many of these topics in-depth; see Editor's Picks for details.) Meanwhile, here's what our experts have to say.

The Connection Between Gas Prices and Shipping

With everyone reeling from fill-up shock at the gas pump, it's no surprise that gas-related promotions are becoming popular, but how does this play for online merchants? Scott Silverman, executive director at Shop.org, writes in a recent blog: "For the last couple of years, I have resisted the idea that consumers... would shop online to save money on gas. But, with the prices as high as they are right now, I think we've reached the tipping point. The question then, for online retailers, is whether you make 'buy online, free shipping, save money on gas' part of your marketing message. Is it helpful to remind people that they are spending so much money on gas? Shipping costs are going up. If you are offering free or discounted shipping, it will further erode your margins. Any thoughts?"

Many e-tailers responded by saying that the lure of free shipping, if done correctly, will help boost sales, and cite examples of those already doing so. For instance, one comment notes that, "eBags sent out an e-mail campaign…(saying the following) 'Paying too much to get from here to there? Skip the mall we'll ship it to you for free.' They had a graphic of the gas pump showing current gas prices for regular, mid-grade and premium…then one for ebags which was set at $0."

Another example is eBillMe, which just launched a promotion that gives new customers a $20 gas card. So, clearly the competition is offering gas-related promotions, which means it's worth considering creative ways to employ them for your e-business as well.

Back To Basics

Meanwhile, no matter the economic climate, a key step in keeping sales up and growing your business is making sure your business is one with which consumers like to conduct business. So take steps toward ensuring that your customer service is stellar.

Create a detailed FAQs section based on common queries you receive, and post contact information in a logical place. If you have phone line support service, make sure your employees are going the extra mile to efficiently and courteously interact with consumers. Find and fix broken links throughout your site, and take steps to ensure site pages load quickly.

Install a quality site search engine, and make sure checking out is easy. Advertise the fact that your site is secure (and if it isn't, make securing it a top priority). Prominently display any deals or specials on the site's main page. Brush up your product descriptions and make sure they're concise, accurate and engaging.

Get The Word Out

Another way to stand out is to stay in touch with customers through e-mail. These missives don't even have to be overtly sales-oriented. Take the extra time to personalize the message. This can help give the perception of an exclusive deal, which consumers are often more apt to take advantage of. Also, limit the time of a deal to create a sense of urgency. Provide a clear-cut way to opt out of the mailing list, as well. Gift registries and wish lists are options for customers to keep track of items they like. In addition, friends and family members can use these lists to shop for birthdays and other special occasions.

Give your site's URL all the visibility you can. Include it in the e-mail signature line of every employee, any printed catalogs or brochures, and postcards. Also print it on packing materials and boxes. Register common misspellings of the site's domain name — do all you can to help consumers find your site.

Let's Make A Deal

Online shoppers love free shipping. But sending the goods to the buyer gratis can snap the bottom line. People don't expect freebies on small-ticket items, so don't offer it. And if you decide to offer free shipping, go for second-day, not overnight, and build a few extra dollars into the list price.

Be careful not to confuse making money and making sales, and ascertain what the goal is when running promotions. Your business should always be gaining because of a sale: You don't need to be nice to make money. If you're promoting a giveaway, it should be inexpensive and relative to whatever is for sale. If your site is service-oriented, offer free trials to whet appetites.

Another way to keep the cash register ringing during slow economic times could include creative payment options. Alex Rampell, CEO of TrialPay, said that regardless of the state of the economy, people will always find value in brands. His company offers a service that allows a company to team up with another to boost sales.

For example, a greeting card company might offer a deal on a florist when a consumer buys a certain number of birthday cards. Rampell said that TrialPay is basically a call to action that gets people through the virtual door of your e-commerce site. Rampell explained that people have certain needs (or perceived needs) and it doesn't usually matter what the source is. Offering an additional perk (a discount or deal for another company) can tip the balance from another source to yours.

Buy Now, Pay Later

Another popular option is that of deferring payment with services such as BillMeLater. Using this, a shopper goes through a quick approval process (you have to provide the last four digits of your Social Security number, as well as your birthday) and payment is collected at some point in the future, said Vince Talbert, the company's vice president of marketing. Integration is fairly straight forward and requires a merchant account. There are a number of other similarly formatted payment options, as well.

Five Tips for Tough Times

Finally, Lauren Freedman, head of the e-tailing group, inc., echoed what others believe to be successful strategies for capitalizing on a down economy, and adds her own insight. Here is what she considers the top five ways to keep your business afloat in these tough economic times.
  1. The right assortment. Regardless of how cheap your merchandise is, it still has to be of value to the consumer. Freedman notes, "At the end of the day, retail comes down to product."

  2. Free shipping. While much has been said about whether or not free shipping is prudent for small Web shop owners, Freedman said that she doesn't expect to see any change in respect to consumer expectation on this topic, forcing the hold-outs to cave in and join the competition. "We expect that merchants will lay down the gauntlet in early fall and many others will quickly follow suit." The holidays always see increased shipping offers, and that will likely occur again this year. Free shipping is an effective tactic, she said, coupled with nearly any promotion.

  3. Give the lady what she wants. Freedman emphasized that top-notch customer service is something e-tailers must not take lightly. "Customers expect and elevated shopping experience online." Offer a visible 800-number and a strong guarantee at the very least.

  4. Creative promotions. Put on your thinking cap and cook up some out-of-the-box promotions. A well-stocked outlet, Freedman said, is perfect for customers on the hunt for a deal. Include daily specials, as well as recently discounted items. Drive traffic toward it with e-mail.

  5. E-mail. Freedman said that communication is of utmost importance. Merchants must convey new products and services throughout the fourth quarter. Think creatively while compiling messages and feature in-product stock. As the holiday season draws ever nearer, she said, focus on last-minute items and tailor promotions toward the busy shopper.

In addition, Freedman referenced a recent study her group conducted regarding must-have features for facilitating shopping and increasing order size. Among the tactics that merchants have seen the highest return on investment are keyword searches, cross sales, seasonal promotions, "top sellers" and "what's new" features.

Sally Marek Curran is a frequent contributor to ECommerce-Guide.com.

This article was first published on ECommerce-Guide.com.

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