12 Reasons to Become a Salesforce Platform Developer
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Some parts of the global economy are starting to improve, but U.S. shoppers aren’t buying it just yet. Retail data shows U.S. online sales were flat in the first quarter — the first period of no growth since we started tracking the trends in our Shopping Index.
Our data shows the first quarter of 2023 was a mixed bag for digital commerce. After a comeback in the fourth quarter, global online sales fell 2% year over year. This decline was driven primarily by decreased demand in the U.S. market. But we’re seeing some positive signs around the world:
Keep shoppers coming back by reimagining your brand loyalty program. Our guide shows you how to build your strategy.
The negative online growth in the U.S. mimics what the European market experienced a year ago, also due to declining consumer sentiment and discretionary spending. With Europe as a model for these economic headwinds, U.S. retailers and brands should focus on keeping existing customers loyal rather than on the increasingly costly acquisition of new customers.
Our Shopping Index retail data underscores that customer retention could be a game-changer for U.S. retailers in 2023.
Here’s what you need to know:
In 2022, consumer loyalty shifted. As prices rose, shoppers chose brands based on product pricing and the value of promotions rather than product availability and fulfillment convenience. Globally, as economic conditions deteriorated, consumers became more price sensitive. They reported that the #1 reason they switched brands in 2022 was better pricing.
Additionally, consumers did a lot more research before making a purchase. While online traffic volume grew, online sales and online order volume continued to decline. Why? Consumers went comparison shopping online. In Q1, global online traffic rose by 6% from a year earlier. That marks five straight quarters of traffic growth despite five consecutive quarters of declining online order volume. When they do buy online, shopping carts are smaller: The number of units sold per transaction decreased by 6% worldwide.
This means every visit to a brand or retail website is becoming less profitable, looking at total online sales divided by total visits. Globally, the amount of money spent per visit fell to its lowest point in the last nine quarters — $2.30 — a year-over-year decrease of 7%. In the U.S., the average spent per online shopping visit fell 4% year over year to $2.98. What’s more, efforts to attract new traffic to a website are more costly than ever, further cutting into online margins.
What you can do about it: Develop marketing strategies that utilize intelligent audience segmentation, personalization, and messaging. This ensures you’re not only driving traffic to your website, but that it’s the right traffic.
Still, there is some good news. Existing customers are more willing to stick with their preferred brands and retailers if the price is right. The share of online orders coming from repeat buyers in the first quarter rose by 3% over the first quarter of 2022 and 16% over the same time period in 2021. This metric has been improving steadily since 2020. To capitalize on this, leading retailers are pivoting to rewarding loyal customers rather than battling to find new ones.
As part of this strategy, our research shows experiences are just as important to consumers as products that retailers sell. Brands like Neiman Marcus see tremendous opportunity in retaining their most valuable customers. CEO Geoffroy van Raemdonck recently told Fortune that just 2% of Neiman Marcus’ customer base contributes 40% of its annual revenue. As a result, the retailer chose to enhance the shopping experiences of its core customers. Another example of catering to key customers is Saks, which now provides a full suite of luxury services for top-tier shoppers, including access to upscale travel subscriptions. While some view the moves as exclusionary, Saks and Neiman Marcus are on the right path.
What you can do about it: Understand your loyal shoppers, activate customer data to build personalized experiences, and deliver a frictionless, high-value shopping journey. This may also mean expanding into new product, service, and business lines to capture more share of wallet.
Building loyalty doesn’t end after the sale is complete. The most critical moment in determining long-term customer loyalty is when consumers reach out to your customer service centers.
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Our retail data research shows 80% of consumers will switch brands after three bad experiences. And, due to increasingly complex buying journeys and ongoing labor shortages, the likelihood of a bad service experience has increased. Consumers want quick, friendly, and consistent responses, and, more than ever, they are choosing digital engagement like live chat services to get the job done. The number of live chat sessions increased by 16% year over year in the first quarter.
What you can do about it:
Your business strategy should mix productivity and efficiency with retention and growth strategies. However, in a time of economic uncertainty, changing internet algorithms, and rapidly evolving consumer behaviors, going back to what you know is critical. And you know your loyal customers best. So focus on strategies and programs that surprise and delight them, offering added value and more bang for their buck. This is how the European markets are turning things around, and it’s a good bet that it will work in the U.S. as well.
Boost your bottom line with data from 1.5 billion global shoppers.
Powered by Salesforce platform data, the Shopping Index uncovers the true shopping story. We look at the previous nine quarters to uncover a deep understanding of how consumer behavior is evolving and how the market is moving. The Shopping Index analyzes the activity and online shopping statistics of more than 1.5 billion unique global shoppers from more than 67 countries. This battery of benchmarks covers both the recent history and current state of digital commerce. Several factors are applied to extrapolate macroeconomic figures for the broader retail industry, and these results are not indicative of Salesforce performance.
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