Businesses all over the world are shifting their operations towards a customer centric strategy that defines the customer as the core pillar of success. This shift towards customer obsession is accelerated by digital transformation that has led to the adoption of advanced customer relationship management tools and other vibrant platforms that have give brands full visibility of the customer journey map. According to statistics appearing on Forbes, digital transformation and a focus on customer experience can generate a 20-30% increase in customer satisfaction and economic gains of 20-50%.
Understand different generations of consumers
Online businesses will attract different generations of consumers that exhibit extreme shopping patterns driven by micro and macro environmental activities that took place in their generation. Baby Boomers born between 1946-1964 enjoyed immense economic prosperity, post-world war 11 peace. Kenyans were involved in a unstable political environment while fighting for independence. They only use technology when it is necessary and may not spend a lot of time on different digital channels. Generation X born between 1965 – 1980 where influenced by campaigns to mainstream capitalism and consumerism culture. They are ambitious and adopt technology very easily as a tool to stay connected with their aging parents and tech savvy children.
Generation Y or Millennials was born between 1981- 1996 when technology and entrepreneurship was becoming a global phenomenon. They are a global generation since they share the same values in many countries thanks to globalization and their connection through the Internet. Generation Z was born between 1997-2010 when digital was mainstream, internet and mobile phones were readily available. They spend a lot of time on digital platforms, self-taught through tutorials and have a real time access to global news and entertainment.
Identify Target Customer
From all these generations of consumers, it is important to identify a target market that consists of consumers who exhibit similar characteristics like age, income, geographical location etc. It is also possible to have more than one target customer group segmented as primary, secondary or even tertiary customer segments. Primary customer is the core target of any business where more resources are allocated while the rest may get limited attention. For the purposes of this article and better understanding, we will have the millennials as our primary target customer.
Develop Customer persona
Now that we know our primary target customer is a millennial, we need to go deeper and create a persona that befits our target customer. Customer persona is a fictional profile that represents a target customer. You can also create negative persona to represent those you do not want as a customer.
Customer persona should be a vivid description that profiles the characteristics of the target customer. Let us name our Persona Niki, she is 34 years old a University of Nairobi bachelor of Commerce graduate currently working at eyeballs as a business account manager earning USD 30,000 PA. she lives at South C and is a single mother of two children. She loves to travel, hangout with friends and has started playing golf of late. Write down as much information as you can about the persona so that you are able to vividly envision the customer you are targeting. Most of the digital platforms will ask you to key in this details when developing an advert. Use this persona every time you are doing meetings to help the team have the customer in mind when developing creatives and other marketing programs. I encourage teams to have imaginary photo of the persona hanging on a boardroom wall and even go further and have a seat for the imaginary customer. Ask yourself, what would the customer say about your creatives, Marketing programs, website customer journey maps and key touchpoints?
The Middle of the pyramid purchasing power
Data from the Kenya National Bureau of Statistics indicate that 36.1 per cent of Kenyan households are classified as poor with the remaining 63.9 per cent or 30.39 million being non-poor. Domestic data put the low-income earners as those taking home 23,670 shillings (about 216 U.S. dollars) and below while those earning between 216 dollars to 1,094 dollars are classified as middle class.
Our persona Kiki is a middle class with a decent job and salary which translate to high status and peer pressure to live up to industry standards. As a business, you have to consider how much discretionary income Kiki has after spending on necessities like rent, food, clothing, transport, insurance, Mortgage etc. You will probably be fighting to get a share of the remaining 15% of Kiki discretionary income.
You also have to find out how many Kikis form part of the target customers in the target market and determine if the number is big enough to sustain your business.
Most tech -startups will target the middle class due to quick uptake of technology, smartphone penetration and ability to afford data, their disposable income and other factors that make this customer segment attractive. However, they later discover that that market is too small and only concentrated in urban centres. That is why most start ups will launch very fast in several countries in capital cities where there are middle class with disposable income.
Hyper-personalized Customer experience
Millennials are driven by the desire to get personalized experiences. They are willing to pay a premium for great experiences. To deliver hyper-personalized customer experiences, working on the customer journey map and identify key customer touchpoints. Marketers have been debating the relevance of the legacy marketing funnel that mapped customer journey from awareness to a purchase which was develop in line with legacy marketing channels. The modern customer has evolved and marketing channels are now fragmented thus the modern customer has multiple touchpoints that spread throughout pre-purchase, purchase and post purchase experiences.
I prefer the bowtie data insights marketing funnel that gives complete visibility of the customer journey from pain point to loyalty. It presents a deeper understanding of customer acquisition, conversion and retention touchpoints that can be optimized for higher conversion.
Map out Niki purchase decision making journey and touchpoints throughout brand discovery (eg Search engine, Social Media, TV etc), interest in your product ( website, Email, call etc) consideration ( audit your competitors digital assets) Conversion ( How will kiki pay once she decides to make a purchase) loyalty ( how will she give feedback? Either through reviews and ratings on website, social media comments or even email) Optimize the ecommerce platform and creatives to the liking of Kiki. The images, videos and content should be tested on Kiki to increase conversion rate.
Retention Optimization
Retention refers to the percentage of users who come back to buy your product after their first purchase within a certain timeframe eg if 200 users buy your product today, and 40 of them come back the following month, then your one-month retention is 20%. Online businesses focus a lot on daily active Users (DAU) or Monthly active Users (MAU) as a key metric to analyze stickiness and retention rate. This is determined by the industry you operate in.
A study by Invesp shows that acquiring a new customer can cost five times more than retaining an existing customer and increasing customer retention by 5% can increase profits from 25-95%.The success rate of selling to a customer you already have is 60-70%, while the success rate of selling to a new customer is 5-20%.
Create power user curves by focusing on specific segments, determine what drives their actions and purchase behavior. Some users have longer sales cycle or lead generation cycles while others are shorter. Power user curve can help you better under engagement per cohort, determine user actions and determine what should be changed based on their purchase patterns.
Implement omnichannel customer support services that allow consumers get support through channels of their convenience and preference like website, social media, email or even face to face. Collect customer feedback and complaints and genuinely make attempts to incorporate or communicate effectively and in a timely manner.
The global adoption of ecommerce was accelerated by COVID-19 Pandemic that forced customers to adopt online shopping to maintain social distancing.
In 2021, the global retail e-commerce sales amounted to approximately 5.2 trillion U.S. dollars and is projected to grow by 56 percent over the next few years, reaching about 8.1 trillion dollars by 2026 according to Statista.
According to EcommerceDB report, Kenya is the 55th largest eCommerce market generating revenue of US$ 3.4B in 2021 ahead of Qatar.
This positive performance has motivated entrepreneurs to set up venture capital backed ecommerce supply chain startups. Retail stores have also incorporated online stores in their business structure with the e-retail sales estimated to contribute 24% of the total retail sales by 2026.
In Kenya, most of the ecommerce start ups are struggling to stay afloat like Kune that shut down after one-year operation, Sky garden that was facing closure after failing to close a round of financing and Sendy, a fulfillment and logistics business that announced 20% downsizing. A recent research by startup Genome shows that 9 out of 10 startups fail, 7.5 out of 10 venture backed startups fail and 1 in 12 entrepreneurs succeed.
With roughly less than 75% of venture backed ecommerce startups failing, stakeholders must interrogate ecommerce business models, operations and projections to identify leaks that lead to failure. I have identified some of the dominant failure magnets that trap ecommerce startups.
Business Case.
It is important to research on the market and identify the consumer pain points before launching a business. A lot of research goes into identifying the problems that need to be solved and the right product features. Development of a minimal viable product (MVP) at the initial stages will help better test some of the hypothesis before making huge investments.
A business that has created MVP has a better chance to grow 20 times faster than one that hasn’t. It is important to build a business case and generate business and functional plans that will guide the team. Rolling with the punches and build-as-we-learn approach sounds great but unsustainable in the long run.
A detailed business case gives a realistic visibility of the entire business and helps develop sustainable strategies and processes.
Ecommerce Adoption Readiness
The adoption of ecommerce is to a large extend affected by different dimensions of readiness including organization, industrial and national. Organization readiness to adopt ecommerce is determine by its culture towards digital transformation and resource allocation to grow ecommerce investment and ability to upskill an reskill talent resource to become competitive.
The existence of industry related ecommerce bodies drive development of global standards, practices and ethics that guide organizations towards maintaining global best practices. Such bodies don’t exist or are not as vibrant as they should be to generate positive impact in the eCommerce industry
Fast adoption of ecommerce is also affected by national infrastructure including connectivity, policy and legal frameworks driven by the state to create an enabling environment for local and foreign investors. Governments in Africa are in the initial stages of creating a favorable business environment for Ecommerce.
The shopping cultural behavior and especially the fact that Shoppers in the Sub-Saharan Africa are yet to trust online businesses with huge transactions has slowed down the adoption of ecommerce.
Fulfillment and Logistics
Ecommerce has multi-layered logistics that require visibility of the entire supply chain in order to navigate the logistics and delivery process. It is very expensive to set up a seamless fulfillment experience that will enable tracking of inventory, customer order tracking and timely last mile delivery. An efficient fulfillment experience will attract “added cost and rates” that has to be paid by the customer making the total order value more expensive. Practicing a cost transparency policy makes it very hard to optimize conversions since pricing is a key consideration in conversion rate optimization. The multiple fulfillment touchpoints including warehousing, hauling and repacking, fulfillment centers and last mile delivery logistics is an investment that can be covered by either high value goods or large volume sales. Building a model that allows the business to generate revenue from the different ecommerce value chain touchpoints or introducing complementing services can lead to financial health of an ecommerce start up. Last mile delivery in Africa remains a challenge since most households and roads are not numbered making it difficult to map out a delivery route.
“Imported” Venture Capital business Models
While it is important to appreciate the investment, role played by venture capitalists, it is also necessary to interrogate the different templates they present from other markets where the business model has worked. Markets have different structures, consumers shopping habits and adoption diffusion curve. Most of the business templates should be localized and customized for the local market to enhance connection with the target audience.
Most investors are obsessed with success and will focus on aggressive user acquisition and growth which in most cases is a blindfold to other valuable business processes. The scaling models make Startups overspend in different phases of the business leading to unrealistic view of associated costs that become unbearable in the long run.
Phygital Shopping Experience
Retailers all over the world are adopting a phygital shopping experience that combines online shopping elements with brick–and-mortar. Businesses that adopt omnichannel strategy are able to collect more data by interacting with multiple online customer touchpoints and in-store interactions.
The changing consumer shopping patterns call for customer centric leadership that understands the shopper journey maps at granular level and identifies phygital touchpoints to creates hyper-personalized customer experience.
Ecommerce Start ups should be ready to serve customers at their convenience by integrating online retail stores with brick-and-mortar stores.
E-retail Platform Agility
Different generations of consumers have exhibited varying technology preferences throughout their shopping journeys. There is a shifting from legacy web shopping platforms to instant messenger platforms and social commerce channels due to their accessibility and versatility. Integration of secure remote commerce/click to pay can lead to higher conversation rates.
Ecommerce start ups should study consumer technology preference and stay agile enough to rollout new platform features in order to stay connected with different customer segments and offer optimized customer experience through their convenient platform features.
Focus on right success measures through unit economics
There are numerous ecommerce metrics that can be tracked, analyzed and interpreted to generate valuable business insights. The process of tracking ecommerce metrics can be overwhelming due to the magnitude of data and glamorous vanity metrics involved. There are several priority measures that can gauge and track the success of ecommerce business.
Keep your eyes on Total Merchandise Volume, Average Order Value, Customer Purchase Frequency, Customer Acquisition Cost, Customer Lifetime Value, Fulfillment Cost Per Order, Conversion rate etc.
Make sure to maintain the Life Time Value (LVT) ratio to Customer Acquisition Cost (CAC) between 3 and 5. Less than three means your CAC is high and your business may not be sustainable in the near future while above 5 indicates a need to increase user acquisition efforts.
The growth and adoption of Social media and ecommerce has given consumers more power and control in the purchase decision making process. The disruption of the marketing funnel has forced marketers to use creative strategies that connect with the modern consumer shopping patterns and desire for hyper personalized experiences.
Shoppertainment is fast catching up with the west and African market after successful experiments in South-East Asia. Lazada, a leading ecommerce brand in china has successfully used the blend of entertainment and ecommerce to engage customers and grow sales. Shoppertainment offers unique and engaging customer experience through different concepts including use of interactive content, online influencers or even hosting live events.
According to insider intelligence, Livestreaming commerce will account for a remarkable 19.2% of retail ecommerce sales in China by end of 2023. Total sales will rise from $562.62 billion in 2023 to $843.93 billion in 2025. The wide adoption of live commerce in China has been enabled by ecommerce and social platforms like Lazada, Taobao and Douyin, TikTok sister app in china.
Apparels and fashion is the leading category in livestream events controlling more than 35.6% followed by beauty with 7.6% then fresh food, electronics and home decor.
A recent study by TikTok found that videos on the platform led 89% of consumers to make a purchase they hadn’t planned to make. Also, one in three customers wanted a more fun and entertaining shopping experience in general. TikTok recently launched in-stream shopping in the US indicating a trend that is catching up with the modern shopper.
YouTube already offers a range of in-stream shopping options for brands and has recently launched livestream social commerce in South Korea as it eyes the Vibrant South – East Asia Market.
In November this year, Amazon announced a partnership with Snapchat to allow users buy its products directly from Snap Ads. The Amazon ads on Snapchat will display product details, real-time pricing, delivery estimates etc. In the same month, there were discussions and possible deal between Amazon and Meta that will enable Facebook and Instagram users to purchase Amazon products in-stream without leaving the social media apps
Shoppertainment delivery channels
There are different channels and platforms that can easily facilitate shoppertainment. Most of the brands and SMEs will use social media live stream channels like Facebook, Instagram, TikTok and Youtube . Websites are also ideal for livestream events where host incorporate videos, quizzes, gamification etc. Hosting a real live event especial in fashion stores, car bazaars or any other vertical with a host and entertainment connected to different online channels works wonders.
Key drivers of Shoppertainment Connecting with Creators
Influencer marketing is a growing form of online marketing being adopted by brands across the globe. A sustainable shoppertainment strategy require a long-term partnership with online key opinion consumers (KOC) and not necessary use of short-term campaigns with Key Opinion Leaders (KOL). KOLs are social media influencers with a big number of followers.
While online consumers are looking for entertainment as they shop, they also want to engage with authentic brand content. GenZ and millennials trust product recommendations from their peers more than advertisements from brands. KOCs constitute nano and micro influencers who have less than one hundred thousand followers.
Personalization of shopping experiences.
The modern shopper is obsessed with the hyper-personalization of shopping experiences that provide convenience. Shoppertainment connects with the shoppers at their channel of convenience and allow them to enjoy entertainment while still shopping. Livestreams offer access to detailed product description through text, sound and images. Shoppers are able to engage further through in-stream Q&A options and get instant feedback from the hosts.
Use of entertailing shoppable content
Brands need to loosen up in social selling platforms and use entertaining content that simplify the purchase process towards checkout. It is now easier to create shoppable posts and adverts on social media and ecommerce platforms. Showcase behind the scenes processes, infuse humor and deliver the intended message while still entertaining the customer.
Boost Engagement and loyalty
Livestream selling model drive more brand engagement since it directly connects with the audience through influencer campaign, grabs viewer attention through videos, audio and text during the livestream and a deeper post purchase connection If well executed. The key touchpoints can deepen engagement and connection with customers getting them hooked on the process and offers. Customers will keep coming back for the experience and offers ultimately remaining loyal to your brand especially if there is gamification involved.
Optimize conversions
Shoppertainment creates a process that give consumers an opportunity to make a purchase. Incorporating incredible offers, clear call to action and a complete ecommerce solution that allow checkout can increase conversions. The use of influencers to sell and peer to peer social media influence also lead to impulse buying. Spending time to optimize the conversion path will definitely lead to higher conversion.
Shoppertainment challenges
The process: The process of setting up livestream selling is quite involving with a pre-stream campaign that involves influencers and other channels to create awareness, setting up of the livestream experience and post stream delivery of purchase and follow up with customers. It also requires several departments to come together to make it a success.
Technology integration: Successful shoppertainment that generates sales require end to end technology that attracts customers, enables payment and takes care of delivery. Most social media platforms are still struggling with the ecommerce element that completes a purchase while ecommerce platforms lack the ability to attract consistent visitors to the website.
“Groupon effect”: Shoppertainment selling require highly discounted deals to attract and convert customers fast. This leads to over dependence on discounts to make the livestream a success which may affect ROI in the long run.
Adoption readiness: Shoppertainment does don’t follow the traditional customer buying decision making funnel and processes. Customers may still struggle with the concept of watching a video or following a livestream to buy a product. They may still prefer the well know purchase path of browsing catalogues, considering different options before making a purchase decision.
The future of shoppertainment
Key Opinion Consumers: Brands will make less investment in mega influencers and gravitate towards mano and micro influencers to deliver an intimate campaign that is authentic and connects with the consumers.
Digital immigrants: Shoppertainment is an everyday experience for the digital natives (GenZ and Millennials). We will see more of digital immigrants (Gen X and baby boomers) embrace shoppertainment.
mainstream channel: Shoppertainment will become a mainstream sales channel integral to the overall marketing strategy. Big brands and SMEs will adopt it as a part of the sales delivery channels.
New verticals: brands will go beyond the basic verticals likes clothing, footwear, electronic. New sectors like healthcare, government, consultancy etc will embrace shoppertainment.