News

Research suggests online retailers lose sales through irrelevant promotions, poor follow-up

Survey underscores retail's disconnects: Three quarters of online retailers promote irrelevant products, while others fail to build customer relationships that drive repeat purchases.

November 13, 2014

Nearly three-quarters of online retailers (74 percent) miss out on sales by promoting irrelevant items to online shoppers, according to new research from OrderDynamics. As retailers prepare for the crucial holiday shopping season, many could be driving customers away by promoting irrelevant products, failing to build customer relationships through intelligent follow-up, and ignoring consumer preferences on end-to-end order tracking, the company said.

The OrderDynamics study compares customer acquisition and retention to a "dating game" and found that retailers miss the mark in many areas of the customer relationship. The study focuses on retailers' effectiveness in securing a "first date" or purchase, as well as creating long-term relationships that lead to additional purchases and increased order values. The study was based on surveys of more than 60 retailers and 2,000 consumers and was conducted by Opinion Matters on behalf of OrderDynamics.

Key findings include:

• Seventy-four percent of retailers promote irrelevant items to shoppers. A majority of retailers received failing grades in shopper follow-up by sending irrelevant information. For example, an apparel retailer sent promotional emails about women's sweaters to a researcher that saved men's fleecewear in an online shopping cart, while a pet supplies retailer sent promos on cat and dog food to someone who exclusively browsed the aquatics department.
• One third of retailers never follow up with shoppers, while others bombard them with emails. A surprising number of retailers — 33 percent — never followed up when researchers signed up for their mailing list, missing out on a key opportunity to build and nurture the customer relationship. Others went overboard; one retailer, for example, sent 17 emails in a four-week period — a sure turnoff for consumers.
• Poor site search results lead to missed sales opportunities. Forty-six percent of shoppers prefer to go directly to a retailer's website to search for products, yet many retailers' e-commerce sites miss the mark for online search accuracy — leading to customer defection and lost sales. For example, one retailer's site returned 65 results for "silver cufflinks," but only three items were cufflinks, while the others were silver but not cufflinks.
• Only 15 percent of retailers offer order tracking through their website. A majority of consumers expressed a strong preference to receive order tracking information directly from the retailer, yet only 15 percent of retailers empower consumers to track orders through their websites.

"Our message to retailers is simple: Customer relationships are theirs to win or lose, and retailers must focus on these disconnects in their customers' experiences to succeed during the vital holiday push. They must use data more intelligently and effectively in order to engage and win shoppers," OrderDynamics CMO Kevin Sterneckert said in a statement. "Retailers must walk a fine line between romancing customers and over-approaching them to ensure that shopping is a seamless experience. If retailers disappoint shoppers, they risk losing not only the initial sale but the customer relationship as well ... We call these disappointments and disconnects in data and operations the Ghost Economy, and it is worth more than $800 billion annually to global retailers to solve these issues and create frictionless experiences for their customers."