Engaging E-Commerce for Loyal Customers

It’s expensive to acquire new customers. According to Forrester, actually five times more expensive than retaining your old customers. Also the likelihood of selling to an old customer is many times higher compared to all new customers, says Marketing Metrics, and Gartner boldly states that 80 percent of a company’s future revenue will come from just 20 percent of existing customers. A loyal customer seems to really give you more bang for the buck.

In e-commerce, determinedly building customer loyalty is an efficient way of fighting against the challenging price competition. The mighty and great Amazon is almost always mentioned as an example of a successful e-commerce retailer, yet it seems that the popularity and massive volumes of Amazon are after all based only on wide selection and cheap prices. Will the customers remain loyal if Amazon someday decides to raise the product prices in hopes of better profitability? Zappos, an online shoe and clothing shop and now a subsidiary of Amazon, has taken a different approach: 75 percent of Zappos’s daily sales is generated from repeat customers (Forbes). Why? Because Zappos’s customer service is legendary for their insanely long customer phone calls and customer service representatives who are willing to do almost anything to make the customer happy.

Customer loyalty in e-commerce is nothing new. Already in 2002 researchers presented eight factors, the 8 C’s, which have a significant impact on e-commerce customer loyalty in an article published in Journal of Retailing:

  • Customization. The ability of an e-retailer to tailor products, services, and the transactional environment to individual customers. Customers want products and services targeted for their own needs and preferences.
  • Contact interactivity. The dynamic nature of the engagement that occurs between an e-retailer and its customers through the web site. The speed and quality of customer service and the possibility to have a discussion with a human affect customer loyalty.
  • Cultivation. The extent to which an e-retailer provides relevant information and incentives to its customers in order to extend the breadth and depth of their purchases over time.
  • Care. The attention that an e-retailer pays to all the pre- and postpurchase customer interface activities designed to facilitate both immediate transactions and long-term customer relationships. You can’t leave the customer alone; active customer communications is the key.
  • Community. An online social entity comprised of existing and potential customers that is organized and maintained by an e-retailer to facilitate the exchange of opinions and information regarding offered products and services. Word-of-mouth and customers sharing their authentic experiences and ratings increase credibility and loyalty.
  • Choice. An e-retailer is typically able to offer a wider range of product categories and a greater variety of products within any given category. The products don’t have to be in e-retailer’s own stock, but they can be delivered directly from partner’s stock which decreases the risk e-retailer has to take.
  • Convenience. The extent to which a customer feels that the web site is simple, intuitive and user friendly. Shopping experience should be so easy that it requires as little effort as possible from the customer.
  • Character. Creative website design can help an e-retailer build a positive reputation, brand image and characterization for itself and to stand out from competitors.

One of the latest trends in e-commerce is to use game elements in boosting customer loyalty and engagement. Game elements are usually incorporated in the loyalty program of the online store. Naturally customers should be rewarded for buying, but also for regular visits, social media shares, recommendations and product ratings, just to mention a few. A good example of successful e-commerce gamification is the online clothing store Gilt and their loyalty program Insider which is based on a simple model of using points. Gilt’s flash sales concept based on limited product quantities and time-constrained sales reminds a lot of a game itself, so it’s no wonder they’ve decided to use gamified elements in their loyalty program.

In addition to engaging customers, gamification can be used to influence customer behavior in all parts of the e-commerce sales process starting from promoting online presence and marketing (check the image). Game elements can be used, for example, to encourage customers to fill in their customer information which in the long run will increase customer understanding significantly. In marketing, games and gamification have already been in wide use for a long time; check out, how advertisers gamified their marketing campaigns in this year’s Super Bowl.

Gamification in E-commerce

Online stores shouldn’t always be the cheapest options automatically since the customer value can also be created for example as better service, easy and fun shopping experience and engaging customer loyalty program. The rise of e-commerce in no way diminishes the importance of loyal customers, but customer loyalty is generated both in “brick” and in “click” in human encounters. Even e-commerce is all about people.

Retailers of all kinds can build lasting relationships with customers, both on and offline, by recognizing that the human brand experience they provide customers is even more critical than the products and services they offer. (Chris Malone)

Virta CRM offered more than Fleet Innovation had expected

Fleet InnovationFleet Innovation is the only independent outsourcing partner in car-related matters in the Finnish market. Fleet grows its business with active B2B sales.

The sales management team of Fleet had defined the company’s sales process and they were looking for an easy-to-use system to support the process. Based on prior experience, the management felt that CRM deployments usually were challenging and painful which they wanted to avoid this time.

Fleet innovation deployed Cloudriven’s Virta in only a couple of days. Fleet’s sales process was configured to the system and the salespeople were trained to use Virta CRM.

“The easiness of the deployment had us all surprised. The customer service has worked very well and all our questions have been answered fast and promptly”, says Fleet’s CEO Pekka Piipponen.

The salespeople have also been satisfied with the new sales management system and many have been surprised of how easy it is to use Virta as a sales tool.

“CRM system has to be user-friendly and it has to support customer’s sales process. Only this kind of system has the requirements to boost business growth and provide support for sales monitoring”, explains Cloudriven’s Business Director Antero Törhönen.

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Only Used Information Systems Are Productive

In the previous blog post by Anu the meaning of motivation in learning was addressed and gamification was offered as a solution for motivation. In this article, the issue of motivating different types of learners is discussed. By different types of learners here we don’t mean the traditional classification of learning styles (auditory, kinesthetic, etc.) which Anu has already issued in her prior blog post. When game elements are used to motivate learners, one first needs to find out what kind of people will “play the game”. From Richard Bartle’s classic player types Andrzej Marczewski has derived four different user types that are an asset when trying to find out ways to increase motivation with gamification.

  • Achiever wants to compete and battle against other players and he is motivated by mastery
  • For Free Spirit it is important to discover new territories and places and create new things. He’s motivated by autonomy.
  • Socialiser wants to socialise rather than play the game itself. It is important for him to interact with other players and he’s motivated by relatedness.
  • Philanthropist wants to help and offer unselfishly his help and even points to other players. He is motivated by purpose.

In order to make the information system as useful as possible and into active use, one must take into consideration the different motivation factors of different user types. This has to be done both when taking the system into use and when the system is in production use.

This is how you maximize the benefits of your information system by engaging users

This is how you maximize the benefits of your information system by engaging users (see also Yu-Kai Chou’s 4 Phases of Player’s Journey)

Traditionally on-site training is held in order to get the personnel to use the purchased system and to make sure they use it right. With the traditional training the maximum benefits for the organization or personnel are not usually gained. When the system has been taken into use and trainings have taken place, the user should be lead to the path of constant self-learning by motivating her.  Little by little the user gains confidence, new skills and eventually knows how to apply the things she learned into different needs.

The user’s journey towards the complete mastery of the system goes through four steps (see picture above). First the user needs to know what is expected of her (Discovery). Is she using the system for doing her everyday tasks? How much time does the usage of the system take and what benefits are there of the use of the system from the point of view of the employee’s work? In the second phase the user has to study how to use the system in order for her to complete the tasks that are required of her (Onboarding). How to update the customer data? Where can the HR instructions be found? How to save a new deal into the system?

In the third phase the user is already engaged in using the system in a productive way as part of her own work (Productivity). Using the system fits in naturally into my work routines, it is easy and offers me benefits all the time! In the fourth and last phase the user is able to apply her know-how, help others and develop the system (Mastery). I understand how the advanced features of the system work and other employees ask help from me.

In the first two cases users can be motivated with extrinsic motivators like rewards and points, but in order to reach the productive level, the user has to find the system meaningful to herself. This can be attained by using intrinsic motivation factors, like offering meaningful challenges, a sense of control or the possibility to boost the user’s status.

For example SharePoint’s default features make it possible to bring simple game elements into the use of, for example, intranet (see also Jussi’s blog post). From usage reports it is easy to look who visits the site most and rewarding that motivates players of the achiever type. Encouraging people to discuss, update their own personal information, commenting as well as adding tags and rewarding those motivate the socialiser player. Philanthropists enjoy forums where end-users can ask questions and everyone are free to answer to other people’s questions. Solving shared problems increase team spirit among personnel. Community site with all its default features (points, badges, scoreboard etc.) is often a place where, in addition to philanthropist, also achiever feels like at home. For the free spirit it pays off to give her the opportunity to create new content. Also it might be a good idea to follow the visits in different sites from usage reports and reward those who explore sites carefully and visit places where the hastiest people don’t bother to visit. Perhaps it would be a good idea to “hide” a chance to win movie tickets into a site. Free spirit is sure to acknowledge that as motivating.

However, in addition to basic features one needs also more effective ways to keep the system usage rate high after the initial launch. With the help of different game elements the use of, for example, intranet can be merged into a motivating and meaningful part of user’s every-day work tasks. Of course the ultimate goal is that working with the system is meaningful, productive, instructive and even fun for all the users. Game elements only work, if they are built using different people’s motivational perspectives. That’s why you should find out what player type you represent with Marczewski’s test 🙂

Winter regards

Free spirit Anu and Achiever Jukka

P.s. Are you struggling with system implementations or user training? Our Habit gamification platform offers an easy tool to maximize the profit of your system investment.

White Paper: Driving the People Business − How Gamification Creates Sustainable Competitive Advantage for Your Business

Gamification market is growing fast. M2 Research has predicted that the market grows
116 percent in 2013 and 88 percent in 2014. According to MarketsandMarkets, the size of
the global gamification market would be 5.5 billion dollars by 2018. The biggest market is
North America but Europe and Asia are right behind. But what is gamification all about?
How does gamification help you to drive more customers and business?

Efficient business processes are important for the success of a company but even more important are the people who should be acting according to those processes. Gamification is all about people: how to find the best ways and most efficient tools to motivate, teach and engage employees, customers and partners?

Cloudriven’s new white paper Driving the People Business − How Gamification Creates Sustainable Competitive Advantage for Your Business gives an answer to the question of how you can create long-lasting business benefits with gamification. It’s an excellent read for everyone who is interested in business development, management and gamification.

Download the White Paper for free in PDF-format

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Dear Santa, Can I Get More Sales for Christmas?

Santa Claus Brings More Sales for ChristmasMany CEOs are sending a letter to Santa Claus this year requesting a significant improvement in the productivity of sales. Most of the business leaders I have discussed with recently have presented their concern about how the general market situation and fierce changes in business environment have decreased average sales.

I dare to claim that instead of a productivity revolution there will be a lot of coal in those CEO’s gift boxes, if they don’t work together with sales, marketing and other employees to find the solutions for the following things:

1. How to qualify leads more efficiently?

a) Does the collaboration of sales and marketing work?

b) Does the collaboration of sales and other employees working with customers work?

2. Is the sales process structured enough?

a) How do sales people prioritize their time management?

b) How is the sales process managed?

3. Is your offering customized to the customer’s needs?

a) Is your sales person a pusher or a servant?

b) How to differ from competitors?

c) Is production efficient?

d) How the sales is involved in the execution of strategy?

The TAS Group demonstrates the above themes in concrete numbers.

Once the challenges of sales are found it is time to think about the solutions. The following three companies gamified their sales – and gained amazing results!

1) Lawley Insurance improved the accuracy of their sales forecast

The ability to predict sales even better is in the wish list of nearly all the sales directors I’ve met this autumn. Often the customer’s CRM system doesn’t hold enough data to make reliable predictions which holds up the implementation of new sales forecasting models.

Lawley Insurance had difficulties because of tumbled data concerning sales opportunities. The predicted closing date and the phase of the sales project were usually not up-to-date. Lawley gamified the way data was updated to CRM and the results were evident after two weeks: the closing dates of the sales projects were updated 152 % more often compared to the previous eight months period altogether. Up-to-date data had an immediate effect on the precision of the sales prediction model.

Lawley’s example is an excellent demonstration of how gamification can be used to support sales management and management of one’s own sales work.

2) Autodesk increased the quality and number of leads

Many SaaS vendors that sell their services over the internet have noticed that offering a free trial increases the number of trial users and with that also sales. Few vendors have succeeded in guiding the trial user into using the application as efficiently as Autodesk.

Autodesk’s 3D modelling software is mainly used by creative professionals in the game and movie industries. The company gamified a workflow that helped the user get to know the valuable features of the software within the 30-day free trial period. Gamification was implemented around a story that led the users to try out different features. As a result, they gained:

  • 54 % increase in trial uses,
  • 15 % increase in sales and
  • 29 % increase in channel sales per started trial use.

Autodesk is a great example of how it is possible to improve the quality and quantity of leads with gamification. Gamification of the trial period will most likely produce relevant information also for software development and it helps to serve potential customers more personally with their needs in mind.

3) Hewlett-Packard improved their partner sales

A well-managed partner network is one of the keys to success for the world’s leading technology companies.

Hewlett-Packard’s partners are mostly retailers. There are two typical challenges for managing a partner network: firstly, the principal can’t decide how the partner’s employees manage their time and secondly, there are always competing technologies in the partner’s sale portfolio. Hewlett-Packard gamified their partner portal by integrating game mechanics in the sales results and training.

The company gained impressive results with the new approach:

  • Almost 80 % of the 1200 sales people registered into the portal
  • The goal was a 50 % increase in sales – realization was 56,4 %
  • In the first three months of the financial year 2011/2012 sales grew by billion dollars

Hewlett-Packard’s example shows that engagement, motivation and loyalty counts.

Take the first steps towards sales gamification

As seen before, it is possible to increase the sales productivity notably and fast with gamification. When you are about to gamify your sales, it is crucial to:

1) find out the main factors that are proven to gain better sales result

2) define the actions which you want to increase either in quantity or quality

3) give instant feedback and rewards by the means that support the organizational culture and are appreciated by the sales people

How can your organization improve sales with gamification? Throw us a challenge and book a free appointment!

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