Leverage Free Shipping and Customer Service to Maximize Online Revenues This Holiday Season

Retailers are making last-minute preparations and considering which tactics will help them attract and convert shoppers as the holiday season kicks off. An October survey of more than 1,000 consumers conducted by MarketLive and the e-tailing group revealed critical considerations and customer preferences for the 2009 season. Among other facts and indicators, free shipping and high-quality customer service rank top of mind for consumers.

Understanding the needs of consumers is the first step to capturing sales this season. The good news: The online channel remains strong this year.

Overall, 55 percent of shoppers indicated they plan to do their holiday shopping online this year, up from 49 percent last year. Holiday budgets also remain healthy, with 43 percent of shoppers planning to spend between $300 and $800, and 33 percent between $800 and $2,500. The survey also shows that the web continues to gain share of wallet, with 26 percent of shoppers planning to purchase more gifts online than last year.

The challenge for retailers is determining how to capture holiday sales profitably. Two findings from the survey indicate areas of opportunity:

1. Twenty-eight percent of consumers said they're willing to pay full price for gifts if retailers offer excellent customer service coupled with the availability of the right products.
2. The primary reason consumers shop online is convenience, but 62 percent of respondents also indicated that high shipping costs remain a barrier to purchase.

Let’s tackle free shipping first. We know that free shipping offers do work, but they must be implemented thoughtfully to reduce impacting profitability.

Deploy Smart Shipping Strategies
Profitable free shipping starts by considering which products, customer segments and time frames are most appropriate for free shipping offers. Retailers can implement free shipping promotions that attract shoppers and encourage conversions while maintaining margins. Here’s how:

* Use conditional free shipping. Merchants can limit their offers to certain subsets of their customer bases, as well as require customers to meet certain conditions such as spending a specified dollar amount, buying from a limited selection of products or purchasing within a certain time frame.

For example, a multichannel retailer recently sent a segmented email only to its loyal customers. The subject line read: “We appreciate You! Free Shipping on Over 3,000 Customer Picks - 2 days only.” The promotion leveraged high-converting, top-rated products with free shipping tied just to those products and only available for a limited period of time. By marrying these three conditions of customer segment, product selection and time frame, the merchant was able to drive sales without breaking the bank.

Deliver Great Customer Service
The second key finding of the survey is that it’s not only about discounts this year. Consumers indicated that they're willing to pay full price for the right product if it's in stock and supported by excellent customer service. Not only is excellent customer service critical to strong conversion, it greatly impacts long-term customer loyalty. Consumers typically remember bad customer service experiences much longer than special offers or sale prices.

One of my pet peeves is not being able to find a phone contact easily. A majority of retailers have toll-free customer service numbers listed on their sites. However, many don’t prominently display the number or make it readily accessible throughout the shopping experience. Positioning the number as part of your global navigation adds convenience, fosters trust and creates a proclivity to purchase.

Other customer service essentials that drive confidence and satisfaction include:

• multiple contact options, including phone, chat or email with hours of service listed;
• elevating frequently used customer service links — satisfaction guarantees, return policy, security and privacy policies, shipping fees, and delivery deadlines;
• providing “in stock” status of products tied to order deadlines and product availability; and
• self-service options, including order status and tracking, and product FAQs.

By implementing conditional free shipping strategies and delivering great customer service, retailers will be able to secure a more profitable holiday season this year.

Ken Burke is founder and chairman of MarketLive, an e-commerce platform and services provider for midsized specialty retailers. Ken can be reached at ken@marketlive.com.