With the ongoing risk of a recession, it can be tempting for eCommerce businesses to hunker down, cut back, and wait for the storm to pass. However, this reactive response is unlikely to position you strongly in the long run. The brands that not only survived, but thrived, during the 2008 recession did so by facing the challenge head-on, adapting their business models, and investing in marketing to weather the storm. They understood the importance of reaching out to their target audience, building brand awareness, and evolving their strategies to meet market demands. So, as we approach a new recession in 2023, this approach is likely to be the key to recession-proofing your eCommerce business. But how can you achieve it?
1. Maximise customer lifetime value with a revenue-driving retention strategy
Customer acquisition is costly and has increased by 60 per cent over the last five years. To navigate the recession and establish stability during uncertain financial times, eCommerce brands need to shift their focus to a marketing strategy that maximises the lifetime value of existing customers, maximising their investment in driving potential customers to their site. This involves increasing average order values and encouraging customers to return repeatedly. Building a robust retention strategy and fostering a community of loyal customers is crucial in overcoming the challenges posed by a global recession.
2. Introduce a recurring revenue stream
During financial instability, brands often face unpredictability. Implementing a successful subscription offering can help counter this by providing a recurring revenue stream that mitigates the effects of a recession. Subscriptions allow businesses to maximise the lifetime value of their customers and capitalise on the investment made in acquiring them.
For brands, subscriptions provide relative revenue stability, a competitive advantage for customers valuing convenience and reliability, and a means of generating loyalty. For customers, subscriptions offer a practical and cost-effective way to receive their favourite products. When executed effectively, it’s a win-win situation.
3. Make purchasing easy for customers
User experience (UX) plays a vital role in eCommerce, and it becomes even more critical as consumers become more cautious with their spending. To facilitate purchases on your site, it’s essential to remove any barriers that might discourage customers. This involves re-evaluating the user experience (UX) and implementing conversion rate optimisation (CRO) across your website to maximise its conversion power. Ensuring a seamless and user-friendly buying process can significantly impact your business’s success during uncertain times.
4. Harness the power of AI and automation
Artificial Intelligence (AI) has gained significant attention in recent months, and its potential impact on eCommerce is undeniable. While some may be sceptical or concerned about its effect on the workforce, many acknowledge its potential to transform businesses. By leveraging AI tools to enhance customer service, improve product recommendations and introduce efficiencies, you can curate exceptional user experiences and create a more agile business that’s better positioned to navigate economic downturns. Implementing AI technology can position your business at the forefront of innovation and resilience.
5. Explore opportunities presented by new technologies
During the 2008 recession, Amazon embraced new technologies and expanded its product offerings, leading to remarkable profit growth. By investing in new innovations, brands can differentiate themselves from competitors, gain market share, and reduce costs by streamlining operations through AI and machine learning. Furthermore, utilising new technology can help brands create unique user experiences that attract and retain customers in a highly competitive market.
In times of financial instability, eCommerce businesses must adopt a flexible approach while proactively taking steps to recession proof their operations. The five key points discussed above empower your brand to better attract and retain customers, maximising their lifetime value and curating experiences that help you stand out in what will become an even more competitive market.
By resisting the urge to batten down the hatches and instead taking a strategic and data-driven approach to marketing, you can continue to connect with customers, build brand awareness and maximise profitability to put your business in a stronger position when we emerge on the other side of a potential recession.