Focus on what customers want, not what you think they want

The world of commerce is in an uncertain place right now. With inflation causing double-digit price rises, supply and labor shortages restricting product availability and growth slowing, consumers have understandably shifted their purchasing priorities.

For the 2023 Evolution of Commerce Report, PayPal commissioned Forrester Consulting to conduct two surveys among Enterprise Businesses and Consumers in five global markets: Australia, France, Germany, United Kingdom and United States of America. We wanted to know how businesses and consumers react to the economy, their preparedness and priorities into 2023.

Tightening their wallets, our research found that consumers today are looking for the best possible deal without having to sacrifice product quality or authenticity. Saving and getting the best value for money is where consumers are focusing right now. Worryingly, brands aren’t giving economizing the same level of attention, and this could be a mistake. In fact, our research identified several areas where brands priorities don’t match their consumers’.

Consumers prioritize information while brands focus on innovation

When consumers research a brand, they want as much information as possible about the product to be certain they’re making the right choice. Seeking detailed product information is important for most consumers worldwide, however it is most valued by the French (62%) while Australians focus on it the least (53%)¹.

This does not match brands’ priorities, with 42% of global brands putting innovation at the top of their list². Instead of providing customers with all the detail they need to make an informed choice, businesses are focusing on adding innovative products and services or adding more tools to their websites, such as appointments and augmented reality.

While brands believe that innovation will help them stand out in the market, they may actually be hampering their competitiveness by not giving customers what they need the most. It will be the businesses that provide that detailed information and offer promotions and deals to price-sensitive customers that will get a head start over competitors.

Carts matter more than a full shelf

It’s understandable that companies are keen to address product shortages at a time when supply chains have been disrupted. They don’t want to disappoint customers. But again, they’re focusing on what they think customers want, not what customers say they actually need.

More than a third (35%) of companies feel that the answer to their conversion challenges is to add more products and services². A quarter believe that adding a waitlist for backordered products will stop customers going elsewhere and nearly a fifth (19%) would rather change a supply partner to make sure they could fulfil requests².

Instead of worrying about product availability, what consumers are actually concerned about is ease and product costs. Too many steps to complete checkout are a turn-off for customers, as is discovering there are extra charges just before they click ‘pay.’ In fact, many see shipping fees as unnecessary and won’t buy if they come across them. 63% of global consumers will not purchase from a brand if it charges shipping fees¹.

Customer loyalty is a cost-effective way to grow

It is an accepted fact that it costs less to retain a customer than it does to acquire new ones. But commerce businesses still must invest time and effort in understanding returning customers’ needs and working to keep them loyal. Unfortunately, brands are often mistaken about the benefits customers look for.

Customers told us in our survey that they value product authenticity the most. They want to make sure that what they’re paying for is the real thing, and that they haven’t been duped into a lower quality alternative or worse, a counterfeit. It’s a concern for over 60% of consumers globally, with the French the most concerned and American consumers the least (72% vs 56%)¹.

In contrast, brands favor creating structured loyalty programs, with more than two-fifths (42%) already implementing one and a further 35% planning to in the next 12 months². Companies also believe that subscription-based initiatives that offer special perks are what’s needed, with nearly a third (32%) already using one and 43% planning on offering one within the year². Similar VIP-type packages are attracting roughly the same levels of interest from brands – but not so from consumers¹.

Brands should focus on what customers actually want, rather than what they think they want. That means in today’s market, businesses need to provide detailed information, offer free shipping and returns, make checkout simple and secure and highlight their product’s authenticity.

These are not particularly demanding tasks to accomplish – many are much easier to implement than the strategies brands are focusing on. By taking a more straightforward and simplified approach, as well as paying close attention to customer needs, brands can gain the advantage, even in today’s challenging and evolving marketplace.

Download the Evolution of Commerce report to learn more about consumers’ priorities and challenges.