How to talk to customers so they’ll buy
Managing information channels is critical for online retailers as buyers often gather information from multiple sources before making a purchase decision. Buyers use different channels to get information about hedonic and utilitarian products, so retailers can use this knowledge to allocate their online marketing resources accordingly. Retailers of hedonic products can invest in social media marketing and make their product pages more experiential to push sales. Retailers of utilitarian products can benchmark their products and prices and invest in Search Engine Marketing to boost sales.
Before a customer decides to click on the “Add to cart” button, they go through a process of gathering information and comparing alternatives to make an informed decision. This
“customer journey” is even more critical for e-commerce retailers due to the large number of information channels available to buyers, for example, retailer websites, reviews, social media, search engines, and deal sites. Variations in offerings, target markets, and product categories, as well as the interconnection of information channels, make the allocation of resources to customer touchpoints something of a gamble. A study explores how buyers access and use information for purchasing utilitarian and hedonic goods to answer the question: What is the best way for online retailers to manage customer touchpoints for utilitarian and hedonic goods?
The study found a clear difference in the information channels buyers use when purchasing utilitarian products (products meeting specific requirements, e.g., groceries or office
supplies) and hedonic products (products bought for experience or emotional appeal, e.g., toys or games). Buyers of hedonic products prefer social media (e.g., Instagram) and product page views on the retailer’s website to get information about the product. On the other hand, buyers of utilitarian products opt for search engines like Google, third-party review sites like Mouthshut.com, deal sites like Coupon Dunia, and product page views on competitors’ websites.
The study also found a difference in the usage of information channels over the period of the customer’s journey. For hedonic products, buyers access social media sites and retailer product pages up to two weeks before the purchase. Closer to the actual purchase date, they rely more on social media for information. In contrast, for utilitarian purchases, buyers access third-party review websites at an early stage. Closer to the time of purchase, they use more of search engines, deal sites, and competitor product pages.
Interestingly, there is a difference in usage of information channels even for unconverted
purchases, that is, purchases the buyer considers but does not ultimately go through. For utilitarian products, the lack of conversion results from a lack of information as customers tend not to utilise any of the information channels. For hedonic products, however, the lack of conversions seems to spring from guilt-justification as buyers seek information more from deal sites and competitors’ product pages rather than social media.
The study has significant implications for e-retailers’ digital spend allocation and online
marketing strategies. First, for retailers selling hedonic products, it is a good idea to invest in social media marketing as its impact as a source of information for purchases is growing steadily. They can use social media sites to drive traffic to their websites and distribute offers that will increase the product’s experiential value and reduce the guilt that might lead the buyer to abandon the purchase. Second, they can monitor their product page views and improve their experiential features to encourage potential buyers. Moreover, they can reach out to heavy browsers and offer them special promotions to encourage purchases.
For retailers of utilitarian products, the first step is to benchmark prices and products against competitors. They can use this benchmark to analyse how their product and prices compare
to competitors’ products and prices and also to understand what customers look for when searching for similar products. Second, they can invest in Search Engine Marketing (SEM) to drive buyers to their products. SEM refers to the ads that pop up when you search for a product. Further, because searches for utilitarian products focus on features and benefits, they can purchase keywords that highlight these attributes of the products. Retailers selling both types of goods can design a marketing strategy that combines these measures based on the specific product categories.