Always a key event on the online seller’s calendar, Amazon Prime Day is fast approaching. So, now is the best time to get prepared.
The UK is facing a cost-of-living crunch, and customers may become more price conscious as a result.
So what can you do to keep sales up when people are tightening their purse strings? One word: value.
What is value?
Simply put, value is the proposition that your customer is getting a good deal on whatever service or product you provide.
Rather than price, which indicates an immediate saving if something is low cost, value implies that whatever you’re offering makes financial sense in the long run. For instance, while a cheap pair of shoes may only last a few months, a better-value but slightly more expensive pair will outlast the cheaper option many times over, yielding more savings over time.
Of course, some price-conscious consumers will always go for the cheaper option, either because they mistakenly perceive it as being better value or because they simply can’t afford more. But the big problem with basing your sales strategy around low prices is that it’s not sustainable – someone will always undercut you.
But if you can keep your prices reasonably low and effectively communicate good value, you can win over – and retain – price-sensitive customers.
How to create value
To create value, you need to focus on two key elements: keeping the price relatively low and the quality high.
Improving quality can be tricky – obviously you’re limited by your existing business model. Just make sure that whatever products you’re offering are as good as they can be (within reason) and keep it under review.
You can also improve the quality of your overall customer experience as well as the products themselves. Offering genuinely useful free content – such as blog posts of videos – is a great way to do this, particularly if it helps customers get the most out of your products.
Secondly, look for opportunities to cut your back-end costs. There are plenty of ways you can try to do this. Perhaps you can negotiate with your suppliers for a bulk-order discount, or wrangle with your credit card processors to cut some of their fees.
Product returns can eat into your margin, so try to reduce them. Accurate product descriptions, good photography (or even videos) and detailed sizing guides can all help customers make better decisions.
Expanding the window for returns can also help. Though it seems counterintuitive, the longer a customer has your product in their hands, the more likely they are to end up keeping it.
Automation is another great way to cut costs. Are there any expensive intermediaries that you can swap out for a cheaper, tech-based solution? Can you streamline any processes by automating them, saving you time and money? It’s certainly worth looking into.
If you are working with international suppliers you could also see how working with a reputable currency broker like Currencies Direct could also save you money on your international transfers.
Incentivise valuable behavioursYou can also try to incentivise behaviours that are both good for you as a seller and provide value for your customers.
For example, you could offer consumers the option to subscribe to your products and receive a small discount in return. This way, you’re enticing them to become a repeat customer by offering a better deal.
Another method is to offer free delivery when certain conditions are met. This might be over a particular order value, or for new customers, or during a limited timeframe.
How to communicate value
Tell your customers
As well as creating value, you also need to communicate it to your customers, and the most straightforward way to do this is to just tell them.
Make value an explicit part of your marketing message. Explain why particular products could save money in the long run, and emphasise benefits over features. And if you do manage to cut back-end costs and pass savings on to consumers, shout about it on social media or on your blog.
Boost your brand
Another way to communicate your value to customers is through your brand.
Your brand is your company’s complete identity, and it comes through in everything you do – from your products and marketing strategies to your customer service.
Having a strong, consistent brand implies value. And as customers grow to recognise and trust your brand, that association strengthens.
The process of building a brand deserves its own dedicated article, but here are the basics: first, create a unique identity that’s true to your business through design, copywriting and the way that you operate; then make sure that identity is consistent across every audience touchpoint.
Be upfront about costs
Price-conscious consumers tend to feel a lot of friction when it comes to purchasing, so be upfront about the cost of delivery or any additional fees.
If they know the full price of their purchase from the beginning, the cost-sensitive customer can make an informed decision moving forward. But if a delivery charge is tacked on at the checkout, they may feel like that good-value purchase is a little too expensive after all.
Finally, now is a good time to review your pricing strategy.
Like branding, pricing strategy deserves its own deep dive. There are some eye-opening studies out there on consumer psychology and the different ways that pricing affects sales, so it's worth researching.
The tactics you choose will depend on your business and your customers, but it’s good to experiment with pricing. You can keep using the techniques that work and ditch the ones that don’t.
Create and demonstrate value
While the cost-of-living crunch could put a squeeze on spending, sellers who offer and effectively communicate good value will be much better placed to attract and retain increasingly price-conscious customers.
If you’re an established or new online seller and have international payments to manage we can help you maximise your returns and protect your profit. Get in touch with our team on [email protected] or call +44 (0) 20 7847 9400.
Currencies Direct is one of Europe's leading non-bank providers of currency exchange and international payment services. Since we were formed in 1996, we've maintained our focus on providing innovative foreign exchange and international currency transfer services to corporations of all sizes, online sellers and private individuals. We have also expanded our services to provide dynamic and pioneering "business to business" solutions to help companies, tier 2/3 banks and other non-bank financial institutions to process their international payments. Our headquarters are in the City of London (United Kingdom) and we have operations in continental Europe, Africa, Asia, and the United States. Currencies Direct is jointly owned by private equity firms Palamon Capital Partners and Corsair Capital.