The economy faces significant challenges in 2023. The war in Ukraine, the continuing post-COVID supply chain issues, persistently high inflation, and raises in interest rates have combined to produce a stubbornly difficult economic situation, both in the US and globally.
To help retailers and merchandisers stay on top and to address the impacts of this uncertain economic climate, Monetate has created a new playbook, featuring 20 CRO (Conversion Rate Optimization) quick wins that can be implemented today.
While the effects of the economic slowdown on eCommerce are not completely clear yet, what we can say with some confidence is that the rampant growth of the last few years, where consumers had little else to do than make purchases online, has come to an end.
What this will be replaced by remains to be seen, but we can at least see an outline of the new situation.
So, what does this mean for eCommerce? Let’s take a look at a few of the emerging trends we’re seeing as a result of this looming recession, before exploring how we can drive conversions.
Current Trends: Impacts of an Uncertain Economic Climate
As retailers and merchandisers consider the customer journey and how to best deliver personalization, it’s important to review some of the current trends we’re seeing that are being driven by a looming recession.
Ecommerce growth continues to slow
The good news here is that online sales are indeed still growing, even as we enter a recession. According to Digital Commerce 360, Q4 2022 saw growth of 7.7%, which is still much higher than the growth figures before the pandemic but continues the trend of slowing growth established in the latter part of 2020.
How people get online is changing
Monetate’s quarterly benchmarking report covering data from Q3 2022, shows the devices consumers use to shop have shifted globally, the most significant change is from tablet traffic, which has fallen by over 20% YoY.
This is an indicator of people returning to work: Desktop traffic is up 4% YoY. Mobile traffic, which is still the biggest driver of online traffic, is flat.
Traffic is strong, but conversions are down
Traffic and browsing in categories such as apparel & accessories, health & beauty, department stores, outdoor & sporting goods, and specialty products have stayed largely the same. However, conversions are down: 9% in the US, 9.8% in the UK, and a striking 27.8% in the EMEA region, according to Monetate’s quarterly benchmarking report covering data from Q3 of 2022.
Average Order Value (AOV) is also down (4% YoY). These declines show customers are happy to continue to shop online but are becoming more budget-conscious and discerning.
So based on these trends, how can refining and tailoring the customer experience make a big impact on merchandisers and retailers? The answer lies in personalization.
Personalization & the Customer Experience: Why Do It?
The current environment for eCommerce has changed considerably since the end of the pandemic. The new situation can be characterized as one of:
- Increased Competition
- Constrained consumer spending, leading to slowing growth
- A tough economic outlook for the economy in general
In this new environment, maintaining a relentless focus on personalization and the customer experience is essential.
So why do it? Why should you focus on building the best customer experience possible with personalization?
Consider the following:
Pre- and post-click alignment is crucial to maximizing value from ad spend
If you’ve just spent a big chunk of your precious marketing budget on a high-profile campaign, you need to make sure you’re getting all the ROI you possibly can. Making sure what your customers see when they land on your site aligns with what spurred them to click through is a key part of this process.
Understanding your customers reduces bounce rate
For example, if you’ve got a sports star to feature prominently in your online ads, but when visitors click through, she’s nowhere to be seen, your bounce rate will soon shoot upwards.
Understanding your visitors’ intent, what’s driving traffic to your site, and what the expectation is on arrival all contribute to post-click optimization. It means you can maximize ad spend and reduce customer acquisition costs, both of which are crucial during a looming recession and economic uncertainty.
Personalization directly affects conversion rates
This doesn’t just apply to the page customers land on after seeing a high-profile ad campaign. To maximize conversions, you need to apply personalization at every step of the customer journey. If a customer’s session behavior tells you they’re interested in discounts, show them recommendations that include your special offers on Product Listing Pages (PLPs), cart, and checkout pages.
Personalization isn’t an added extra that online brands can afford to drop when times get tough. Creating a customer journey that shows visitors you understand their needs and intent has a direct impact on revenue.
So how can retailers position themselves for success? Let’s take a close look at driving the conversion rate and explore a few “quick wins” to maximize conversions.
Improve Conversions By Creating Urgency with Social Proof & Badging
According to Monetate’s Ecommerce Quarterly Benchmarking Report Q3, 2022, conversions are falling in all categories and are down across the board.
Tablet conversions show the biggest falls, dropping 20.8% globally, while desktop is down 14.6%. This might be expected considering the move back to the office, but mobile conversions are also down, if somewhat less severely, by 5.6%.
So if conversions are down, what can we do as retailers and merchandisers to improve our conversions?
Social Proof and Badging offer an interesting use case and impact on driving conversion rate.
Consider the following:
Improve Conversions with Social Proof
Using scarcity or popularity messaging with social proof provides a sense of urgency and gives your customers an extra reason to buy, helping your conversions over the line.
Monetate recommends trying the two following “quick wins” on your eCommerce site to help you kick your conversions over the finish line.
Improve Conversions with Badging
Badging provides reassurance, giving your customers the confidence to complete their purchases. Check out these two tips to drive conversions by leveraging product badging.
Make it Count: Every Conversion Matters
While traffic, browsing, and conversions are flat due to the impacts of the looming recession, every conversion matters. Every visitor you can move toward the finish line with intelligent, 1-to-1 personalized messaging represents a win.
Social Proof and Product Badging are two areas where Monetate customers have seen success, by drawing on FOMO (Fear of Missing Out) and the endorsements of other shoppers to drive purchases.
Take for example our customer Toolstation who saw 30x ROI with social proof. Think about what the impacts could be for your brand as you try to catch the attention and drive the behavior of visitors and customers who are carefully managing budgets and spending.
For more quick wins that you can implement on your eCommerce site, download our latest playbook and check out even more ways you can positively impact your metrics through personalization.
Monetate’s ease of use, combined with our after-sales professional services, means our clients’ feature adoption rate is consistently high. Continuous engagement with our personalization experts means a faster time to value and maximum ROI. Set up a meeting today and get recession-proof.