Why eRetailers Should Turn to Experimentation Rather Than Surge Moments to Boost Business Growth

By Carl Tsukahara On Sep 9, 2019

Amazon Prime Day is a bigger event with each passing year, drawing the participation (or competition) of ever more eCommerce retailers who find the potential Sales lift too tempting to pass up. In this year’s shopping fest, Amazon ratcheted up its approach by upping the day of deals and offering one-day shipping. Much like Black Friday, the ‘holiday’ famed for bringing retailers out of the red and into the black just before the end of the year, the 2019 Prime Day spree registered as a magnitude 8.0 on the retail Richter scale. Businesses operating at over $1 billion in annual Sales particularly saw a dramatic increase in sales on the July 15-16 holiday with an increase of over 68 percent. For smaller companies – those operating below $5 million in annual Sales – the jump was significantly smaller, but still meaningful, at 28 percent.

On its surface, Prime Day seems like a safe bet for businesses, whether owners participate directly, host their own sales or benefit from the general uplift and additional buzz the event brings. (Rising tides lift all boats, after all.) But what these numbers don’t reveal are the risks associated with surge moments that may actually make it a better business decision to not participate; nor do they reflect evolving business growth strategy and tools designed to deliver the same effects in a more resilient fashion.

Why DXO Is A Better Approach to Business Growth

Digital Experience Optimization, or DXO, is the more stable, strategic foil to surge moments, which are just that – high-pressure shopping blitzes. In contrast, DXO empowers businesses to reliably plan for growth throughout the year by facilitating constant experimentation and iteration to land on digital experiences that resonate with customers and inspire them to engage time and time again with the brand. This sustained, always-on testing provides a constant influx of data that allows the business to course-correct at a faster pace than they would with one standalone moment in time.

It also enables strong Personalization, which goes one step further to present a web experience customized to the individual. Evidence shows that testing and personalization drive long-term brand loyalty, the ultimate objective of any business. Not only that, they help create a first experience with the brand that ultimately drives the initial purchase, kicking off what will likely be a strong, lasting relationship.

But it’s not just about what DXO offers businesses that make it a compelling approach to growth; there are also risks associated with participation in surge moments that disincent their use as a Sales device.

Unintended consequences

Perhaps more important than growing Sales is acquiring the right kind of customer. The ideal customer is someone who is willing to spend more than the bare minimum most of the time (but who is still responsive to specific sales incentives). It’s also someone who is likely to be a loyal, long-term customer.

Though many brands see a Sales lift during and around contrived shopping events, the surge shopping tactic ultimately attracts buyers whose first priority is savings; they are least likely to convert to long-term, repeat customers. In the case of flash-sale buyers, the focus is on paying the absolute minimum for goods. Incidentally, they may end up buying goods they don’t explicitly need, which is part of what contributes to the success of these days; but in the end, they predominantly care about getting a great deal on a product. They are not necessarily considering how the product they buy today may draw them back to make more purchases next month.

Plus, businesses risk unintentionally conditioning their customers to expect flash discounts, causing them to only buy when there is a sale. Lost in this is the nurturing aspect of bringing a customer along a journey, which sets them up for a long-term relationship with the brand.

Conversely, DXO promises strong brand interactions and encourages positive associations and long-term relationships with the business. This can be achieved by creating the optimal number of checkout steps, the use of product suggestions, elevating specific calls to action, and much more. The key is that DXO allows businesses to whittle their digital assets down to precisely the experience that is right for their customers – and when customers are happy, they are significantly more likely to go through with a current purchase and to come back for more.

Questionable profitability

While surge moments contribute to moving product quickly and high sales, after fees, promotional expenses and lost profit margin, experts debate whether surge moments like Amazon Prime Day are truly profitable, especially for companies operating on thin margins.

In the first 24 hours of Prime Day 2019, for example, Amazon took an 88 percent share of the market, leaving little room for other retailers to truly benefit, reflecting a consistent downward trend in Amazon marketplace sales compared to Amazon Product Sales. More and more shopping holidays are driven by individual brands (consider the Alibaba-inspired Singles’ Day in China, the world’s most formidable shopping holiday), which stand to gain the most from the major events they create.

Brands should consider DXO to be an always-on version of Flash Sales – which are themselves a major undertaking in experimentation – on a much smaller scale. At any time, brands can wield experimentation with precision to understand what motivates their customers, isolate the strongest-performing content, products, and features, and leverage those strong performers to make their customers feel seen and heard, as opposed to being lost in a vast ocean of faceless shoppers.

Shopping holidays present a significant degree of temptation for businesses, and understandably so. It’s challenging to boost sales by the single digits, let alone double digits, without a market-moving event like Prime Day. But, with the exception of a few fortunate retailers, joining in the fray of surge moments presents meaningful business risks and may not even be profitable.

Luckily, there are tools and strategies – like always-on Digital Experience Optimization (DXO) backed by Testing and Personalization — that present a more stable, year-round course to business growth. If brands can view DXO as a low-risk, smaller-scale cousin to surge moments, they can leverage it to create an opportunity for themselves that surge moments can’t – a true shot at longevity.