Wednesday, 24 April 2013

The digital conundrum

Today’s question: we’ve arrived in the digital age, everyone’s online, Blue Nile’s cleaning up on diamonds, and the whole world seems to have gone social media mad – so, should we jump on the bandwagon too? For the small family jeweller, or even the large high street family jewellery chain, it’s a question that has taxed business owners and marketers with increasing frequency over the past few years. Indeed, now that the smart phone accounts for nearly as much online traffic as PCs, and the website is almost every retail chain’s largest single store, it’s a question that has gone from one that might have been shelved until now to one that may well be business-critical imminently.

So what are the basic decisions that need to be made, how do we decide what to do, and how should we prioritise? The first is simple: the decision is based on a simple set of questions, all around threat/opportunity. Can we compete without going online? Can we gain any benefits from going online? And to answer this, the process is relatively straightforward. You need to ask yourself how you relate to your customers.

For example, are the majority of your customers one-off purchasers? If so, are they really? In other words, do they buy on several one-off occasions (wedding, birthday, Christening, Bar Mitzvah, anniversary)? And if so again, is there something you can do to keep a relationship going? Of course, retailers already do a lot of good things, from a great in-store experience, knowledgeable and engaging staff, appropriate (via self-selecting customers) range of products ... but how do you follow this up and keep in touch? Digital channels may provide one answer of course, as email – today’s postcard – costs pennies to generate and send, even in relative bulk.

If you have a few hundred customers it’s fine to do this by hand, because you can do this instantly and more or less from memory, but again digital’s power here is the ability to divide customers up into groups (husbands, over-50s, partner’s birthday in October, anniversary in May) and automatically send the right message to the right person at the right time. Simple segmentation like this can mean compelling messages, as opposed to the one-size-fits-all approach most retailers seem to take. In fact, an approach like this uses the power of digital to re-create the personal service-based relationships of old.

For this kind of approach of course you need data. The big retailers have this down pat and collect data at point of sale (age, marital status, reason for visit, products looked at and bought, birthday etc.) and add it to a centralised database (which could be as simple as an Excel spreadsheet or as big as a Single Customer View database integrated with your EPoS system). You can augment this data at the till, or by leveraging your website. To do this you might consider asking customers to visit the site and they’ll get some value exchange, perhaps free engraving next time they buy, or a free trinket (first of a collectable) for their daughter, or the chance to win something. This kind of simple value exchange gives you an opportunity to learn both about the individual and about your customers in general. This in turn gives you data from which you can start to make decisions and of course, the data with which you can create targeted, timely and relevant campaigns to drive sales and support your ongoing (if infrequently manifested) relationship.

One benefit of a relationship supported and bridged online is that you can use it to ask questions about your strategy. For instance, if you’re trying to work out if your customers might buy if you built an e-commerce site, ask them. You may be surprised, they may tell you things you never knew (“we browse in your shop because it’s friendly but we buy from your competitors online because it gets delivered to the recipient gift wrapped.” or even “My family used to come to the shop but we moved away and only get there once a year, we might buy more often if we could do it from home!”), but of course you do have to ask in the right way. Most people like to be asked their opinion though, as the implication that you value their opinion confers a sense of belonging and ownership. Your website is the perfect venue for this, especially as a simple survey can be extremely cheap to produce and promote.

The benefits may not immediately justify spending thousands (or even hundreds of thousands) on a serious e-commerce strategy. But, by creating relationships with your customers, by using cheap and easy channels like email to help bridge the long gaps between visits to your shops, you can easily develop loyalty and brand fealty, at a very low cost.

By the time you have hundreds of thousands of customers, and you start changing the purchase patterns – say frequency, or order value – of swathes of them by a few percent, you could be talking millions in incremental revenue. Even for the independent family jewellers, the difference between a declining, ageing customer base visiting spontaneously and a loyal, engaged customer base who increasingly use the internet to keep in touch, make decisions and use the web to book appointments to view and choose wedding rings, may even be the difference between fading away and reinvigorated growth.