Building Digitally Native Vertical Brands by Redefining Value

Back in the 1970s, opening holiday gifts was an emotional minefield. Would this toy work? Chances were high that at least some would be duds. Back then, lots of cheap toys (and other goods) came from faraway lands still figuring out how to consistently make good things cheaply and in large numbers. As one of those 1970s kids, I made allowances for the misfit toys, especially if they came stamped with something like “Made in Japan.”

Fast-forward a few (ahem) years, and the Japanese companies have certainly fixed those issues. We now live in a world where product expectations have dramatically changed. These days, no matter where a brand is from, it can’t afford to sell bad stuff. That is especially true for digitally native brands focused on a given vertical. Fail to pay attention to quality, and your business will suffer a brutally quick "Death by internet." Exceed expectation and your marketing costs are reduced from word-of-mouth buzz on your product.

Quality today means more than how the product works or what problems it solves. These days, it also requires a maniacal focus on customer experience, because the way consumers define quality is far more complicated. In fact, a huge portion of product “quality” now resides in the user experience of finding, comparing, acquiring and even returning a company’s product.

That’s particularly so for digitally native vertical brands. Yes, cost and some objective level of quality matter, but your product needs more. To succeed, you must provide the kind of laser focus on a quality user experience that helped companies like Zappos, Trader Joe's and Southwest Airlines differentiate in the marketplace.

So, what does that maniacal focus on user experience look like? Here are some crucial components:

• The Cost/Quality Ratio: Every consumer today is looking to optimize the cost/quality ratio of anything they buy. Whether consciously or subconsciously, they’re thinking, “for the problem I need to solve and for the amount I have to spend, is this the best product I can get to do the job?” As venture capitalist Fred Wilson wrote years ago, “Marketing is for companies who have sucky products. If you build something that is amazing … people will adopt it because it is amazing.” Wilson’s point is still true. Price and quality matter a lot on the internet, where comparison shopping is too easy. But they’re just the beginning, part of the "implicit expectations” that every consumer starts with these days. You need to give users more if they’re to feel like they’re getting true value.
• Exclusive Product: In today’s marketplace, you can’t just resell other companies’ products. Sooner or later you’ll be squeezed out because customers can just buy directly from the original source or find a better price elsewhere. Offering unique products keeps you in the value chain. This not only differentiates your brand, but makes comparison shopping much more difficult. It also gives you a chance to offer customization and unique access as a reward for being a customer.
• The Shopping Experience: How many clicks does it take a customer to navigate to the thing she wants? How long does it take to compare options and prices, and to order the product? And what’s the experience on mobile, which is crucial for digitally native brands? The goal for all these questions is about reducing friction in the e-commerce shopping funnel. These are just the basics. Once you nail these, you start to differentiate with look and feel, using imagery, video and copy that's emotive and defines the brand.
• The Checkout Process: Another key aspect of user experience is the checkout process. Is it efficient and does it instill empathy and trust? There’s an old retailer maxim: when someone wants to give you money, let them. Make the process of paying you as frictionless and fast as possible. A review of 37 studies by Baymard Institute in the U.K. found that more than two out of three online shopping carts were abandoned. One study Baymard reviewed found that one in four carts were abandoned because of a “too long/complicated checkout process.” That was just one of several fixable issues that can prevent purchases from being made.
• Customer Service: Good customer service is about solving problems and making people happy. The best customer service is about making them happy enough to promote your business to others. With a great website and a solid product offering, you can sell anything to anyone, but your approach to customer service, particularly when dealing with conflict, is what determines the bond with a customer. One of the keys to winning here is ease of contact, being ready when they need you and communicating how they want to communicate, whether that means voice, chat or Facebook Messenger. Listening is probably the second most important thing when thinking about service. When someone has an issue, they want to solve the problem, but they also want to let you know how you made them feel. Listening for the real pain points, sharing empathy and apologizing goes a long way here. Getting customers on and off the call quickly is another key focus. Time is a significant measurement of success in service, and this means having well-trained, knowledgeable staff that have access to the information they need to solve problems. The up-front money spent here pays dividends in the long run.
• Fast Shipping: Amazon.com has made a fetish out of fast delivery, which is credited for driving its vast success and creating a new set of expectations for consumers. Now, impulse buyers want to be sated by near-instant delivery. If you can’t get your product to someone in several days, you need to set realistic expectations, and then exceed them. Customers will wait a few more days for your product, especially if it's something they can’t buy anywhere else, just make sure that the wait is worth it and exceed their expectations on delivery whenever possible
• Product Reviews: Reviews of your products can be decisive in customer decision making, in sometimes surprising ways. Reviews not only help customers decide to buy a given product, they can tip someone into trusting a new brand, or choosing where to buy it. Anyone with a smartphone can quickly find plenty of reviews. Good ones can be the reassuring advisor supporting a purchase commitment. One Dutch study found that “free and easy access to such information has weakened the power of marketing communication; information provided by online peers influences customer perceptions, preferences and decisions much more than information provided by companies.” You’ll need a certain minimum density of reviews, a chorus of approval, to encourage consumers to buy. How do you make it possible for customers to rate your products? And how do you respond to those reviews, even negative ones? Active engagement, even with negative reviews, can help turn critics into loyal fans. And remember, reviews typically come after the purchase is complete. You’re not done selling until they’re done talking about what you sold.
• Pricing Transparency: Obfuscating the cost of your product, perhaps to avoid comparison shopping, merely frustrates and annoys consumers. Furthermore, if you’ve hidden some fine print about their real commitment in a purchase, you’re just creating much larger problems down the road. Give consumers as many opportunities as possible to understand what they’re getting, at what price, and as part of what (if any) larger commitment. Online apparel retailer Everlane has used transparency to its advantage. It goes deep into the costs associated with creating its socially conscious products and why they may be more expensive than the alternative.
• Easy Returns: For most companies, nothing seems more painful and difficult than allowing customers to return their purchases. It’s one of the hardest things to get right and keep costs low, but being good at it is not a choice. Make returns painless and you make the purchasing process risk-free. The cost of easy returns is the cost of building trust and encouraging consumers to try your products. If you do it at an exemplary level, like Zappos does, it turns into free marketing. Less risk leads to more purchases, and more loyalty. You’re trading a short-term annoyance for a long-term gain in loyalty and ARPU. It’s part of a larger “post-purchase” component of the buying process that has emerged in recent years, McKinsey says. How consumers feel about a product continues to evolve even after the purchase. You’re not done until they’re done.

Online retail is already big and growing quickly. eMarketer projected e-commerce sales in the United States in 2017 would rise nearly 16 percent, to $453 billion, or 9 percent of the entire retail pie. That’s more than double the share e-commerce had just seven years earlier. For digitally native vertical companies, this epochal shift represents a gigantic opportunity.

But to thrive, such companies must maniacally focus on creating value through a much more expansive definition of the user experience in buying their products. Such companies must differentiate what they do and give consumers a truly engaging and empowering experience. Provide that focus and your marque will be one that customers will treasure in the digital retailing world looming before us.

Shawn Gold is corporate marketing officer for TechStyle, a California-based subscription fashion company whose brands include JustFab, Fabletics and Shoedazzle.