- Precision commerce is the next generation of ecommerce, connecting the post-purchase experience with ownership lifecycle moments to deliver personalized experiences and offers based on knowledge of the products that consumers already own.
- The pandemic has reshaped the roles and relationships between brands, retailers, and consumers.
- It’s imperative that brands identify and precisely target product owners to build superior direct relationships.
- Brands that embrace precision commerce will see improved sales, higher engagement, and increased customer lifetime value.
Due to the COVID-19 pandemic, the shift to ecommerce has accelerated by five years, highlighting the importance of selling directly to stay-at-home America.
Many durable goods brands will likely continue the antiquated ways of spreading a wide net across a broad audience with the hope of generating more sales. The brands that distinguish themselves to consumers, and have more success, will be those that are precise in their marketing and precise in their ecommerce efforts.
Precision commerce is the next generation of commerce in which brands tailor an offer to the specific individual and present it based on relevant moments in their post-purchase customer lifecycle, or what we like to call ownership experience.
This more effective way to create revenue growth and improve brand loyalty results from engaging new and existing product owners when they are likely ready to buy, with products that are likely to interest them.
Times have changed
The past few months have structurally reshaped the roles (Read more...) relationships between brands, retailers, and consumers. However, many durable brands have not caught up with their consumers’ behavior.
Amazon plays a considerable role in ecommerce sales, especially for a consumer buying a brand for the first time. Over half of product searches begin on Amazon and the vast majority of those finish on Amazon.
Brands that continue to rely on retailers or online marketplaces to own the relationship with the product owner will see increased challenges and diminishing brand equity. Brands have an opportunity – really an imperative – to leverage their understanding of their consumers to build superior direct relationships,
At the same time, brands typically rely on broad audiences, using general messages that are often ignored, resulting in ineffective advertising spend to sell more products. As durable brands adapt to the new environment and move to selling more direct, it can be cost-prohibitive for them to find a new audience.
It requires significant investments in data and technology, and it takes time to reap the benefits. But brands cannot afford to wait. Brands will lose relationships with their consumers to e-tailers and big-box stores.
Ownership moments that matter
It is critical that durable brands take greater control and directly influence the next purchase. A single product purchase is merely a transaction.
On the other hand, the ownership experience is a series of moments over an extended period of time that offer a brand the ability to reach a distinct and responsive audience of current product owners at the optimal time. This approach brings the opportunity to continuously and directly market complementary products and services.
It costs three to five times less to retain a customer than to acquire a new one. The return on initial advertising spend (ROAS) is more significant by focusing on product owners or existing customers.
Therefore, a brand must have the ability to identify as many owners as possible and provide a personalized, hyper-targeted ecommerce experience based on what the consumer owns and the moment in their particular ownership lifecycle.
These ownership moments include post-purchase onboarding and welcome messaging, a product portal, service and support interactions, and more. Brands should connect consumers back to their ecommerce site for relevant parts or accessories, an extended warranty, upgrades, subscription services, and other promotions.
For example, a home appliance company found that when consumers proactively provide their owner information, they are twice as likely to engage with the brand, purchase extended service contracts or related products, or respond to marketing efforts.
As a result, for this company, 25-50% of corporate profit comes from aftermarket sales.
Standing up a brand store is not enough, and an ecommerce site should not merely be a place to manage inventory, browse products, and add things to a cart. Brands need to be more strategic by leveraging valuable, individualized information for digital-first customers.
Knowledge of the consumer, including product ownership, allows brands to create and leverage loyalty and know when and why a consumer is in the market for a new product.
Next-generation ecommerce, or precision commerce, connects the post-purchase experience with the ownership lifecycle based on personalized knowledge of the products the consumers already own. Brands can then drive value-add, post-onboarding sales.
Using precision commerce, a fitness equipment company realized a 16x increase in service plan sales through a digitized ownership experience approach and a fivefold increase in customer lifetime value. Other brands can achieve these results.
By tailoring the offer and delivering it at the right ownership moment, a brand can enter into a rewarding cycle that further endears customers. And that is what precision commerce is all about.
As Managing Director Collin Cohen leads Registria, which helps brands identify product owners and derive value from the broader ownership experience. Registria serves over 300 well-known brands across a wide range of industries including consumer durable goods, electronics, fitness, home appliances, and more. With over 30 years of executive experience, Collin is a graduate of Stanford University and Harvard Business School.