There’s no denying it, these are challenging times for both businesses and their customers. Organizations are grappling with a wide range of issues, from supply chain disturbances, geopolitical conflict, labor shortages to volatile, inflationary economies. For their part, consumers are feeling the pinch as prices rise across the board. Every purchase is scrutinized as people try to get the best deal with the least possible sacrifice, all while holding onto as much of their hard-earned savings as possible.
At a time when brands should be working harder than ever to meet customer expectations, a disturbing trend has emerged. There is a growing mismatch between what customers want – and what brands think they want.
Instead of building their propositions around affordability and authenticity, commerce businesses are hoping to differentiate themselves through innovation and purpose-led messaging such as their sustainability initiatives. If brands are going to emerge unscathed from these turbulent times, they must align themselves much more closely with consumers’ needs.
To help commerce companies understand those needs in more detail, PayPal commissioned Forrester Consulting to conduct two surveys among Enterprise Businesses and Consumers in five global markets: Australia, France, Germany, United Kingdom and United States of America, for the 2023 Evolution of Commerce Report. We wanted to know how businesses and consumers react to the economy, their preparedness and priorities into 2023.
Customers want to know that they are protected at all points in their purchasing journey. Our research reveals that many brands are still sadly failing to meet expectations, even with the growing number of technologies at their disposal.
Chatbots and live chat are failing to live up to expectations with 42% of consumers finding the latter too automated and unable to resolve problems satisfactorily1.
When brands do offer human customer service representatives, consumers find the wait is often too long to get through to them (37%) or they have trouble connecting (39%)1.
The role of customer service cannot be underestimated and is never more important than when things go wrong. In an ecommerce environment, returns are an inevitable part of the process and how commerce brands handle them is often a litmus test for future customer loyalty.
Over a quarter of consumers have some kind of difficulty when it comes to returns, which is a significant proportion of the overall customer base1. Nearly a third (29%) state it takes too long to get a refund while 27% complain they can’t get a refund on their original payment method, having to be content with store credit1.
The cost of shipping and returns is often a deal-breaker. When almost half of respondents (49%) state that more promotions and deals are important to them, this sends a clear signal to brands that every penny counts1. Indeed, our research found that 60% of consumers expect free shipping and returns which helps balance the budget1.
Happily, deals and free shipping or returns is one area where commerce brands are sitting up and taking notice. According to our research, 77% have added free shipping and returns in the last year and 76% of those who added more promotions found it effective or at least somewhat effective in improving customer loyalty2.
And yet, not all brands are getting the message because more than a quarter (26%) of consumers in the report find they must pay to send back purchases, adding more cost to already stretched budgets1.
There are wider implications of the customer focus on controlling spend than looking at direct monetary values. When they commit to spend, they want to make sure they have made the right choice. Quality and authenticity are important drivers of conversion as customers feel more secure knowing this is a genuine product and more likely to last than a product of lower quality or even counterfeit in origin. This is supported by findings elsewhere in our research that showed customer reviews as a top three priority for 53% of consumers, second only to affordability (60% of consumers)1.
Supply chain transparency is increasingly important, cited by 46% of our respondents as a future expectation1. Knowing a product’s provenance or production adds confidence, as do brands that make it easy for customers to verify the product’s authenticity (important for 41% of consumers)1.
Instead of picking up on these important cues, brands are still following their own agenda, believing that innovation is the game-changer in today’s market. While consumers focus on product quality and value for money, brands are perhaps too easily swayed by the next big thing. A somewhat startling 64% of brands felt that live-streaming shopping was the way to boost conversion in the future, while more than half thought online shopping appointments (54%) or AR tools to help try out goods (53%) would increase sales2.
It is easy to be seduced by the sheen of new technology which promises to deliver customers to brands in new and exciting ways. But companies need to reflect on what truly matters to customers. In today’s market, that’s value, authenticity and service.
If commerce organizations are to weather the current storms, they need to take simpler yet much more effective steps, primarily in providing customers with detailed information about their purchase, offering free shipping and returns to remove friction and highlighting product authenticity to increase confidence.
Download the Evolution of Commerce report to learn more about consumers’ priorities and challenges.
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