Leaders in e-commerce are being pushed to increase growth and cut costs. Many find themselves caught in a difficult economic situation — sandwiched between stubborn inflation, rising interest rates, and a potential drop off in demand.
If, however, the cutbacks have a negative impact on the CX (customer experience), this could slow down growth for years to come. To achieve this, ecommerce leaders need to balance cutting costs with improving customer experience.
The good news is that most business leaders are unaware of the fact they can simultaneously reduce costs and improve CX. Let’s look at ways to achieve both.
Start by re-evaluating your cutbacks
When economic uncertainty is present, it’s not uncommon for business leaders assume that all cuts in spending are beneficial. But cutting in the wrong areas — such as CX — can stifle long-term growth. CX is the main way that companies compete today. Studies show that brands that focus on CX make significantly more profit than brands that do not.
It is not wise to abandon CX upgrades, even if the business is willing to delay their growth plans. One survey We found that 65% consumers cut ties with a seller because of a bad customer experience. Companies that don’t take steps to improve CX are at risk of losing customers. Once a company’s reputation begins to decline, it is difficult to gain ground against competitors who continue investing in CX.
Reduce Costs and Improve Customer Experience by focusing on 3 areas of your business
Although it may seem counterintuitive, business leaders must invest strategically in order to reduce costs and improve CX. That means funneling time, resources, and energy into growth drivers — and cutting in areas that don’t serve those growth sources. In times of economic uncertainty, you should focus on three key areas:
1. Customer Retention
Business leaders often assume that growth can only be achieved by increasing sales. When sales and the economy are declining, the growth engine for the company is weakened.
Leaders don’t realise that they can increase growth and save money by reducing customer churn. Retention is important for a number of reasons.
- Costs are reduced: Businesses can reduce their customer acquisition costs if they focus on improving the experience of existing clients rather than attempting to find new ones. It can cost five times as much to acquire a new client than it does to retain an existing customer.
- It helps to drive long-term economic growth Focusing on your current customers can lead to new opportunities for upselling and cross-selling. Reports suggest that businesses have a 60-70 percent chance of selling to existing customers — compared to just a 5-20 percent chance of selling to new customers. This means that e-commerce companies can reduce customer acquisition costs while increasing customer loyalty.
2. Employee Experience
It is important to improve employee experience for several reasons. EX has a direct impact on the customer experience. Employees who are happier and more engaged will share positive experiences with customers.
Employee turnover is costly. According to IndeedThe cost of hiring one new employee ranges from $2,000 to $20,000. Businesses can save money by creating a better employee experience. This includes hiring, onboarding and retraining. At the same time, investments in the employee ripple out to the customer — and drive growth.
3. Data Analytics
Many business leaders sit on a mountain of data. However, they do not always get the most out of it. By using the right tools, companies can analyze data they are already collecting to identify opportunities for saving and improving experiences. Data analytics helps identify which strategic changes will yield the greatest value.
How to improve Customer Retention
Here are some ways to increase customer loyalty and retention:
Identify the critical touchpoints with your customers.
The first step to increasing customer retention is to identify 3-5 key customer touchpoints. These are the customer interactions that will have the biggest impact on whether a client decides to stay with your brand or not. Search for these critical moments across all channels in the customer’s journey — and always back them with data.
Understanding friction points is important.
Look for any friction or pain points in the critical customer touchpoints that may make it difficult to do business with you. Customer data and research can be used to determine the cause of a pain point, and then develop an action plan.
Customers are unable to pay online even though they reach the checkout page. Are there issues that are causing an increase in calls? This is a low-hanging CX fruit that can yield high returns.
Create a CX road map.
Develop a CX road map to address pain points. This will help you create enhanced experiences and new future states. Prioritizing each initiative should be based on cost, complexity, and customer value.
How to Improve Employee Experiences
You can improve employee experience quickly by:
Investigate the causes of employee turnover.
One of the best ways to improve employee satisfaction is to determine what causes them to leave. Is it a remote or hybrid culture issue? Is it a work-life or compensation balance? It doesn’t matter what the cause is, the first step in solving the churn problem is to recognize it.
Find training opportunities.
Not all companies will face retention problems. If this is the case, you should look at training and development options. Find out if there are any gaps in employee knowledge and skills by digging into the customer data. Use training to close those gaps.
Productivity can be increased by utilizing technology.
Employees are less likely to enjoy their work if they don’t feel productive. That’s why organizations need to use technology to help employees accomplish more — whether through existing tools or by bringing in new ones.
AI platforms can reduce the time employees spend writing emails and conducting research. Technology can help employees to free up time and do more meaningful work.
How to leverage data analytics
Here are some quick tips on how to use data analytics to reduce costs and improve customer experience:
Dive into digital channel data.
Locate the critical channels for the customer journey. Next, you can identify any chokepoints. If, for example, data on the purchase journey shows that prospects abandon the process once they have filled their shopping baskets. Consider the reasons and create a solution.
Find out what is driving your calls.
Speech or chat analytics tools can reveal why customers contact the business. This technology can reveal the most popular topics, customer sentiment and the root causes. The business leader can then fix it, reduce calls, improve CX and lower service cost. Another tactic which can produce high returns is to use a call center.
Businesses can increase growth in economic downturns
Leaders of e-commerce businesses can still grow their companies, even if the economy is in a slump. They must remain laser-focused on CX and EX as well as data analytics. By investing in these growth drivers, leaders can reduce costs and set up the organization to achieve long-term benefits.
