The “bricks to clicks” trend of retailers ramping up their e-commerce presence to keep up with the likes of Amazon is at light speed amid the pandemic, and it’s upending retail supply chains everywhere. There are many reasons for this turmoil: Retailers may keep less stock on hand, people may not be buying as many things for outside the house (clothes, jewelry, etc.), manufacturers themselves may need to slow production, and the list goes on.
The disruption is driving a need for manufacturers to take more digital paths to market. Don’t get me wrong—supply chains will always exist—but we’re seeing an increase in the number of manufacturers who are shifting how they connect with customers. And it’s raising the bar for customer shopping experiences, making the demand to offer extraordinary digital experiences an imperative.
The Benefits of Connecting Directly to Customers
The burning question from manufacturers is: “Why can’t we forge our own connection directly with our customers?” It’s a good question, and the answer is: You can.
Due to the recent popularity—and necessity—of the bricks-to-clicks trend, existing supply chains are offering digital paths to customers such as selling products through the digital properties of retailers, as well as Amazon. Even aside from these built-in digital paths to market, there are numerous advantages to manufacturers making direct connections with their customers:
Lower Costs, More Profits First, and most obviously, manufacturers can forgo fees associated with the supply chain: transportation costs, retailer costs and more.
Digital Is in Addition to (Not Instead of) the Existing Supply Chain Developing a direct digital path to market isn’t an exclusive option. As long as there are no exclusive sales channel agreements with existing retailers, manufacturers can cultivate both options simultaneously.
E-commerce Is a Proven Channel For some manufacturers e-commerce may seem like a new venture, but in general, it’s been around for a long time. Loads of best practices, platforms like BigCommerce, Shopify and others for businesses of any size, and other resources can help make setting up a digital storefront a reality for manufacturers.
Customer Loyalty and Repeat Business By developing a relationship directly with customers, manufacturers can benefit from some of the same things that retailers do. There’s a reason that retailers prioritize loyalty so much. Loyal customers buy from you again and again and again. Adobe notes that loyal customers spend 67% more through repeat purchases. Now, manufacturers can take advantage of that same revenue boost.
What Should Manufacturers Look Out for When Going Digital?
As with retailers, financial services organizations, insurance providers or any other company that prioritizes customer experiences and aims to win customer loyalty, a number of different KPIs and metrics come with selling to customers. Here are a few things to consider measuring as you launch your direct-to-customer digital experiences:
This is the percentage dropoff of customers. For example, a customer that shows up to your sign-on page but doesn’t complete the process is said to have “abandoned” you. When selling products to customers, abandonment is always an issue. Whether it’s a sign-on, a web page, an email click-through or a support call, abandonment exists. Manufacturers should measure and aim to reduce abandonment wherever possible.
Customer Interaction Frequency
It’s also beneficial to calculate a value for each customer interaction. For example, say a customer spends $10 every fifth time they visit your e-commerce site. That means each customer visit is worth $2. With that data, you can determine the return on investment for increasing visits to your e-commerce platform.
New customers mean more revenue. Period. Manufacturers should track how many new customers are being acquired on digital properties, what helps to drive that acquisition, and what that means for your top line.
Many factors feed into revenue generation, and manufacturers should keep a close eye on all of them. Understanding what drives revenue and testing tweaks to those processes to see their effects will drive your digital business to success.
Customer Lifetime Value (CLV)
Customer lifetime value represents the value of a customer over their entire lifetime with a brand. This is an important metric for manufacturers to track because it dictates how much you can spend to acquire a customer.
Customer Identity Drives Digital E-commerce Success
Customer identity is a critical piece of the puzzle when considering the above metrics. It reduces abandonment during registration and sign-ons, which means more new customers and customer interactions. It ensures customer data is protected and that customers have insight into and control over their data to build the loyalty and trust that creates repeat shoppers. All of these things work together to increase customer lifetime value and revenue.