The crucial relationship between online customer experience and business growth in a supplier-funded world

by Darren Hitchcock

The Independent newspaper recently highlighted the fight for survival in the retail sector for 2018 and with it, the focus around winning market share and dealing with compliance. With profit margins severely impacted and discounting rife across all sectors – routes to survival are limited. However, there is one option that has traditionally only been an option for big retailers and big brands (with deep pockets).

Online supplier-funded promotions have typically been led by dominance or restricted by a desire to maintain control and yet they yield the highest margin returns of any digital activity.

So why is this area not explored to a greater capacity in the current economic climate?

CONTROL: Nobody likes the thought of losing control, particularly in today’s cut-throat retail environment. After all, you’ve spent time and money building your brand and its value – as well as your supplier relationships – and there’s no way you want a third-party coming in and putting all you’ve built at risk.

COMPLIANCE/TRANSPARENCY: As if that wasn’t enough to deal with, there’s the worry over compliance. Compliance is an issue for all parties involved in the fly-wheel; from industry conduct codes and data protection to the need for greater transparency, visibility and relevance. Different departments become entwined in the program and all have to consider to the ultimate enabler of survival for the business – its customers.

CUSTOMER EXPERIENCE: Customers are king in any retail environment, but particularly online. They hold the power – to buy, to rave… and to rant and damage your reputation. As the head of Amazon, Jeff Bezos, said: “If you make customers unhappy in the physical world, they might each tell six friends. If you make customers unhappy on the internet, they can each tell 6,000 friends.”. With this in mind, any changes to your online platform need to reflect a seamless or improved customer experience.

Balancing growth and customer experience is a time-consuming problem and adding a broader supplier funding program on top leads potentially to further issues. For example the simple algorithm-driven advertising approach can mean a lack of control and relevancy. The history or perception of ‘monetisation’ typically starts with banners and distraction, while managing supplier funding can be resource intensive and slow, plus it doesn’t scale well across a whole site. The outcome means you have to choose between relevancy or reach without considering how to effectively sustain and scale an effective program.

Who is winning with agile supplier-funded promotions?

The most advanced retailers [such as AMZ] have learned how to solve the problems by defining controls through technology and then enabling participation. This effectively sustains growth, breeds stronger business relationships, opens room to scale but is controlled by rules and definitions.

The likes of Amazon have huge engineering teams to navigate through the multitude of roadmaps, desires, updates and necessities. For others it’s just another line item on the wish list and again the program is stalled by control.

Third-party solutions are now beginning to appear to help solve this conundrum. Elevaate, for example, prides itself on primarily supporting the need for control [relevance/UX] by helping retailers and their suppliers to work together using a concept called ‘Open Trading’. This form of technology provides the tools and data needed to help create an exceptional customer experience. One that increases product discovery, supports shopping missions and balances marketing and trading ambition.

Concepts like this offer greater scope in supplier-funding programs to not only support online metrics [e.g. conversion, average basket values etc] but also drive an additional revenue stream.

If control is an inhibitor based on the principles of compliance and customer experience, then a technology solution that can act as a middle layer to provide opportunities for future growth is critical to consider. As without it, suppliers continue to find more dynamic and trusted ways to invest shopper/trade budgets as every penny now in marketing needs justification.

As more and more retailers seek stronger supplier relationships, extend ranges outside their control and leverage marketplace activity – digital monetisation initiatives are now an option for all – however big or small – they can all add additional profitability to their bottom line.