9 Best Practices While Building an “Infrequent Purchase” Startup
All of us in the broader startup ecosystem obsess about ‘sexy’ consumer Internet businesses which have high frequency (daily, weekly or monthly) engagement with customers. However, a big share of spending by consumers goes to purchases made infrequently, once every six months or year or even two years. These businesses generally offer high-value items. For our lack of imagination, let’s call them “infrequent purchase businesses” or IPBs. Perhaps because they are a hard-to-define mix between pure Internet and pure offline, most startup-oriented blogs and books don’t address IPBs properly, and so we did some checking around with startups building to such businesses to distill best practices and here’s what we learnt.
Companies like Zappos have been built entirely on providing exceptional customer service. The key to success here is delivering a transformative experience that is 10x better than the alternatives across all the online and offline touch-points. In fact, mapping out the entire consumer journey is a helpful starting point to see how you can create delight at every interface. As per a CXO who has run and worked in multiple such companies, “Most customers have learnt to tune out marketing communication — the moment of delivery and physical touch point is probably the best place to generate more brand love”.
Best practices from a customer operations perspective:
- Enable seamless transitions between online and offline: Customers take longer to make these decisions and require more extensive (and usually offline) handholding. They will go offline to online and back while making their choice. Make sure your systems build and track one consolidated view of the user. Users hate to repeat information they’ve already shared with the company and we’ve all had the glorious experience of speaking to Four Different Vodafone Support guys who want the same information you’ve already entered on their website.
- NPS is God: Net Promoter Score (NPS) is a good way of quantifying customer delight. NPS assesses the association of the customer with the brand using the question ‘On a scale of 1 to 10, how likely are you to recommend this product to friends/family?’ Pro-tip: An NPS of 50+ is a good benchmark to aspire to.
- Treat negative experiences very seriously: More here than in frequent purchase businesses, word of mouth can make or break the business. People are quick to judge negatively — given the infrequency of purchase, there’s little opportunity to make up for it the next time. In the dire case that you do mess up, go out of your way to let the customer know you’re sorry and treat it as an opportunity to create a ‘wow’ moment right there (read: personalized sorry letters, flowers, cakes).
- Set expectations right: It’s always better to under-promise and over-deliver versus promoting something your operations can’t provide. An instance I personally experienced was when a company promoted a 14 day returns policy but was okay taking the goods back 30 days post-delivery.
Best practices in human resources to drive customer delight:
- Hire from outside the industry: Hire customer-facing teams from outside the industry in order to avoid the baggage and bad habits people have learnt at legacy companies. Genius Bars at Apple stores have tech enthusiasts / Apple geeks to help aide customers as they make a purchase decision as opposed to having ex-retail store salespeople who are only committed to the cause of closing as many sales as they can.
- Integrate NPS into compensation: Have salary incentives for the entire company based, at least partially, on NPS. Do this especially for customer service, support and sales. We heard of a sales incentive structure where there was a minimum NPS threshold for any commissions to be paid out.
- Treat customer service/call center staff well: Treat them at par with your engineers and product managers in terms of office space and perks and not as second-class citizens. Happier support staff has a healthy correlation with happier customers. Empower them to take decisions that can engineer these ‘wow’ moments (Eg. The freedom to offer account credit in exceptional circumstances).
Brand is key. By definition, these decisions are not made frequently by a customer and so your name has to pop into the customer’s head whenever they think about their problem. Here are some best practices we heard about:
- Stand for something: To stand out from the clutter, you need to stand for something, have a distinct positioning that is emphasized in every communication with your user. Are you the fastest? Cheapest? The one with the most options? Indigo Airlines (‘On time is a wonderful thing’) is probably the benchmark when it comes to creating and driving a positioning, internally and externally.
- Continuous engagement: Sustained content marketing is one way to keep the relationship alive and achieve ‘top of mind’ recall for when the time comes for your customer to actually transact. Houzz is an example of a company that does this really well. Offering adjacent use cases also helps keep the user engaged on the platform through the lifecycle of the product and not just at the time of purchase. An example would be a used car buying platform with servicing and maintenance services which ensures lock-in and increases the probability of the customer returning to the same platform when he looks to buy his next car.
In summary, infrequent purchase businesses are the long distance relationships of business so basically stay in touch and keep blowing their mind. We believe impact companies can be built in this category and in case you’re working in a company that falls in this space or are simply interested in building great user experiences, we’d love to hear from you on what’s worked.
We would like to thank current and former executives from Lenskart, CarDekho, Shift, Okutech, Intuit, Bluestone, OneAssist, OLX for their input. Okutech and OneAssist are Lightspeed portfolio companies.