Breaking the Transactional Mold: The Rise of Relational Commerce
Plus: Doing PR The Local Way | Amazon Ads: The Impact of Purpose-Driven Brands | The Customer/Employee Hierarchy of Needs
Aloha! Welcome Fringers. On the slate today:
Editorial: The Rise of Relational Commerce
The Latest: Walmart & Amazon are Exploring the Metaverse
BX: Rebuilding a Fashion Brand With Purpose Post-Pandemic
MX: Doing PR the Local Way
UX: Position Common Purchases As Upsells
CX: The Customer Hierarchy of Needs
EX: The Employee Hierarchy of Needs
DX: Amazon Ads: The Impact of Purpose-Driven Brands [Research]
Let’s get to it.
The Rise of Relational Commerce
Last week, I argued that the current Transactional Commerce model cannot, in its current state, sustain your business over the long-term.
Put another way, it’s broken, and has always been broken, in the sense that this model’s current focus is short-sighted by default. It’s not a bug, it’s a feature. And to break the mold requires a new approach, and a new way of thinking.
This means a shift from a model that’s NOT:
Short-term conversion focused solely
Limited by technology
Data abundant, but insights deficient
The blind following the blind, i.e. “best practices”
Because of rising buyer expectations, AI’s emergence, and other cultural influences, it’s imperative to move on from a purely Transactional Commerce model into a more Relational model for its long-term business potential and value-driven philosophy.
But that takes:
A new model
Which requires a new way of thinking
Current macro trends point in this direction. We’re seeing a big shift in how business is done and a seismic shift in various sectors and industries.
Business Macro Trends
It might not be noticeable to you right now, but take a step back, and consider the following trends or new ways of doing business:
The Rise of Direct-to-Consumer (DTC) Brands:
DTC brands have already shown that a focus on customer relationships is a huge differentiator. As more brands go this route (hello B2B), the principles of relational commerce will become more mainstream.
Adiós Third-Party Cookies:
As data privacy becomes a primary concern, the ability to collect first-party data through direct customer relationships will become increasingly important. You can’t avoid this.
The Experience Economy:
Consumers are increasingly looking for experiences, not just products. The demand is there, but the supply is lacking. Try to offer a unique experiences as product add-ons or extensions.
The Rise of Niche & Taste Communities:
Brands now realize the value of building communities around their products. What could you build community around?
AI and Personalization:
As AI becomes more sophisticated, the ability to offer highly personalized (or individualized) experiences at scale will become a reality. Technology is already driving the shift from transactional to relational commerce. How are you using AI to deliver better experiences?
Sustainability & Social Responsibility:
People are already making buying decisions based on a brand's values and social impact (see BX in this section for more). A relational approach allows for deeper storytelling and value alignment, which is having a direct impact on revenue. Just ask Patagonia or Warby Parker.
Subscription-based business models are all about long-term customer value over single transactions, making them a natural fit for a relational commerce approach. I know, you have subscription fatigue, but that’s not slowing this trend down. If anything, it makes people even more discerning in what they subscribe to.
The Pandemic Effect:
Maybe this should’ve been first on the list. COVID accelerated the adoption of eCommerce and simultaneously increased the desire for human connection. Relational commerce sits at the intersection of these two trends. How are you solving this problem for your market?
Micro-Moments & Omni-Channel Experiences:
This is a difficult one. The customer journey is increasingly fragmented across different channels and touchpoints. A relational approach allows for a more cohesive, unified experience. And good news: the tech is finally catching up.
Brand Trust & Authenticity:
In a world of fake news and mistrust, brands that can build and maintain trust will have a significant advantage. Even Influencers are taking a hit now—just take a look at the rise of “Deinfluencers”. And business is already seen as more trustworthy than other institutions, so that’s a wide-open opportunity for you.
All these signals aren't just isolated trends; they're pieces of a larger puzzle that come together to form the future of commerce. And that future looks relational, personalized, and deeply connected.
But it doesn’t stop there.
How The Relational Model Influences Other Sectors
Now, take a look at how this is affecting other sectors and industries, including sports, politics, and religion & spirituality.
Journalism & Media:
The media landscape has already seen a shift toward subscription models and membership communities. Yes, people are willing to pay for quality journalism, or someone’s deeply informed point of view.
People want to feel like they're part of a community and the explosion of newsletters and independent journalism platforms are also a testament to this.
Patreon, BeeHiiv, and Substack will come to represent the new media giants
The old model of politics as a "transaction" (I vote for you, you provide services) is giving way to a more relational model where constituents are coming to expect ongoing engagement, transparency, and authenticity from their leaders.
Social media played an obvious role in this, making politicians more accessible and, depending on who you talk to, more accountable. Expect this to continue.
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Dec 21, 2022
Even in scientific research, the old model of "publish or perish," where the transaction (getting published) is the ultimate goal, is now being questioned. Open science, citizen science, and collaborative research models are more relational in nature, and look to gain more traction.
The transactional model of education (pay tuition, get a degree) is being challenged by lifelong learning, online courses, and other models that focus on the ongoing relationship between learners and educational institutions.
Just take a look at what Gen Z thinks about going to college/university.
Khan Academy, Udemy, Udacity, Skillshare are disrupting traditional education
The transactional model of healthcare is this: you get sick, you see a doctor, you get a prescription, end of story.
But there's a growing movement toward more holistic, patient-centered care that considers the whole person and aims for long-term health and well-being, not just treating individual symptoms.
The trends are well-documented.
Non-Profits and Philanthropy:
The old model of charitable giving was very transactional: give money, get a tax receipt. But modern philanthropy is becoming more relational, with donors wanting to be more involved and see the impact of their contributions.
This is leading to more transparent, accountable, and effective organizations. Charity Water comes to mind. Pay close attention to their message around transparency. It’s powerful.
Streaming services have changed the game here. It's not just about the transaction of buying a ticket or a seat; it's about building a long-term relationship with viewers through quality content, personalized recommendations, and interactive features.
How many streaming subscriptions do you have?
Look. It’s not just a “business trend”. It’s a sweeping cultural shift that reflects broader changes in our societal values, which are, of course, influenced and accelerated by technological advancements.
In next week’s issue, I’ll dive deeper into its implications for business, and how to adopt this new model, both technologically and philosophically, in order to thrive in this new era.
Walmart & Amazon are exploring the Metaverse
What if I told you that the total addressable market for the Metaverse was in the range of $8 trillion and $13 trillion by 2030?
Would you balk? Scowl? Or fully embrace it?
Well, Walmart and Amazon are betting on this future. Here’s a few reasons why:
Changing Consumer Behavior: Thomas Kang, VP and general manager of Metaverse Commerce at Walmart, mentioned that virtual worlds are "changing the way we connect, play, and shop," anticipating the ever evolving consumer expectations.
Market Potential: That’s $8 trillion and $13 trillion by 2030 according to a report from Citi (yes, the bank). That's a pie both companies want a slice of.
User Engagement: It’s not Walmart's first rodeo. They delved into virtual fashion before which actually led to increased user engagement and purchases—indicating that there’s a there there.
Innovation & Experimentation: Both companies see the metaverse as a new frontier for retail, offering a chance to "redesign the shopping experience and invent the future of retail," as Kang puts it.
Maybe Zuck was right all along. You can read more here.
Holiday Returns: Expect More of Them
According to research done by True Fit, an AI platform, they’re projecting that one in every six fashion purchases made will be returned in the UK.
Ouch. What does this mean for the US? Probably the same. Some good news: people plan on spending more this year, so there’s that.
True Fit's COO emphasizes that fit assurance is crucial for online fashion conversions and that getting the right size and fit is key to building consumer trust and loyalty.
What can you do to reduce returns, particularly if you’re an apparel brand?
Fit Assurance: Given that finding the right fit is a significant factor in returns, you could use technology like virtual fitting rooms or AI-driven size recommendations to help consumers choose the right size. Let us know if you’re trying this. Would love to hear about it.
Flexible Return Policies: While it's essential to minimize returns, having a hassle-free return policy could build trust and loyalty. However, the policy should be designed in a way that doesn't encourage 'wardrobing' (buying, wearing once, and then returning—yeah, I’m talking to you ‘influencers’ out there).
Disincentivize Returns: Going against the previous point, what if you disincentivized returns by, say, charging for them? H&M and Uniqlo are doing just that. Also, they’re highlighting the cost to the environment, which is a core value among Gen Z and Millennials.
More Detailed Product Information: Providing comprehensive details about the product, including material, measurements, and high-quality images, can help consumers make more informed decisions. Doing everything within your power to help them find the right fit and style.
Customer Reviews and UGC: User-generated content like customer reviews, photos, or videos help people have a better idea of what to expect, reducing the likelihood of returns.
Dynamic Pricing: To balance out the costs associated with high return rates, you could also consider dynamic pricing strategies that take into account the 'true cost' of a sale, including the potential for returns.
Post-Purchase Engagement: Send people follow-up emails with style tips or care instructions. How can you help people get the most from their purchases?
Data Analysis: Does a particular item have a high return rate? Find the most returned products and do a mini investigation. And don’t forget to reach out to people and just ask.
Rebuilding a Fashion Brand With Purpose Post-pandemic
Phillip Lim and Wen Zhou
This is a deep dive into Phillip Lim and Wen Zhou, entrepreneurs who had to navigate the pandemic, and came out of it with renewed purpose and a few brands under their belts.
This is a lesson in crisis management with a focus on purpose and community, and how Lim's activism and community projects provide somewhat of a blueprint if you’re looking to engage more deeply with your communities.
Some other points:
The DTC Pivot: The shift towards a DTC model and how they made their transition
Brand Evolution: The way they repositioned their brand to reflect broader social issues shows that you can evolve your brand without losing its essence
Long-Term Thinking: Zhou's focus on building a "beautiful, holistic business" rather than chasing seasonal numbers is a mindset anyone can learn from
It’s a long read, so grab a drink and enjoy.
Their very minimalistic retail location
Doing PR the Local Way
Ever do PR? Well, unless you’re blowing people out of the water with your latest product releases, you’re probably wondering, “How can I use PR to get more attention?”
We’ll get to that. But first, the research.
According to this deeply researched article on PR by Buzzsumo, if you’re not localizing your PR, you’re not doing it right.
Some Key Takeaways:
Most linked PR Campaigns data
Localized Headlines Get More Links: Location-specific headlines like "By state," "Cities with the biggest," etc., earn between 9 and 17 links on average, compared to the overall average of 7 links for all PR headlines.
Localization Drives Engagement: Headlines that compare different locations tend to get more engagement. The terms "country" and "state" in headlines have the highest average engagement and links.
Hyperbole Isn't as Effective: Hyperbolic phrases like "the best," "the most," etc., get less engagement compared to localized headlines. Obvious, right?
Top 10 US States for PR: Georgia, California, Pennsylvania, Texas, North Carolina, New York, Florida, New Jersey, Michigan, and Virginia drive the most engagement.
Things you can do:
Go Local: If you're planning a PR campaign, consider making it location-specific to increase the chances of syndication and engagement.
Use Comparative Language: When using location-based headlines, add an element of comparison to make it more engaging for the reader. I’ll share examples later.
Be Specific: Use specific location types like "state" or "country" in your headlines to maximize engagement. Hey, it works.
That’s great, Paul. But what if I don’t have anything newsworthy to share? Well, then generate some news.
Some PR Ideas
People love to support businesses that are doing good for the planet. And that group is only getting bigger. You can tap into that, IF, you drive sustainable practices in your business. If not, don’t touch this one. You’ll end up doing more harm to your brand than good.
Customer Success Stories
Got a customer who achieved something remarkable using your product? Maybe they ran a marathon for the first time using your fitness gear or built a community garden with your eco-friendly tools. These are stories that people can get behind.
Partnerships are all the rage, and most want to do big brand partnerships. But what about local partners? Partner with local artists, influencers, or even other brands. Maybe create limited-edition products or local events.
People love to know how things are made. Show them. Whether it's a look into your design process or a day in the life at your warehouse, this kind of content humanizes your brand and makes for great PR.
Social Impact and Community Involvement
Maybe you're already doing something meaningful in your community—like running educational workshops or contributing to local causes. Be careful with this one. It should be genuine and authentic or it could look like a PR stunt if framed in the wrong way.
Milestones and Achievements
Did you hit a significant sales goal? Or maybe you've just shipped your 10,000th order. These milestones might seem internal, but they might interest your local community knowing that ‘one of their own’ has done well.
Industry Thought Leadership
Maybe you've got some unique insights into your industry trends, consumer behavior, or something else. You could release a whitepaper, host a webinar, or write an op-ed for industry publications.
Seasonal or Themed Campaigns
Whether it's a holiday gift guide or a summer essentials list, these can get picked up by media outlets looking for timely content. Trader Joe’s comes to mind.
Using Comparative Language
Earlier, I touched on the importance of using comparative language in driving more engagement. Using some of the potential PR examples above, let’s see what comparative language could look like for each:
For Sustainability Initiatives:
"Our packaging is 50% more eco-friendly than standard eCommerce boxes."
"Compared to traditional manufacturing methods, our process reduces carbon emissions by 30%."
For Customer Success Stories:
"Our fitness gear has helped customers achieve 2x faster results in their training."
"Users of our gardening tools have reported a 75% increase in crop yield."
For Limited-Edition Collaborations & Events:
"Our collab with [Local Name] offers a unique blend of street style and high fashion, unlike anything you've seen before."
"This exclusive line is twice as durable as our regular collection."
"Our customer appreciation day features twice as many giveaways as last year."
For Behind-the-Scenes Access:
"Our design process is 3x more detailed than the industry standard, ensuring each product is a masterpiece."
"We spend twice as long on quality control as the average brand, so you only get the best."
Social Impact and Community Involvement:
"Our workshops have educated over 500 community members, 4x more than any similar program."
"We've donated three times as much as our closest competitor to local causes."
For Milestones and Achievements:
"We've shipped over 10,000 orders, twice as many as last year."
"Our customer base has grown 3x faster than the industry average."
For Industry Thought Leadership:
"Our whitepaper was cited 50% more often than those from leading industry publications."
"Our webinars feature twice as many expert speakers as typical industry events."
PR can be hit or miss. I hope this helps you this holiday season.
Position your second most common purchase as an upsell
I just realized that this newsletter is getting a bit long. Let’s keep this one quick. Here’s one from Blue Stout.
From the article:
One of our apparel brands specializes in baby clothing and accessories.
Returning customer data revealed that the most likely second purchase is their blanket accessory.
When we created a section: “Add Our Best-Selling Blanket” with 3 different options on the cart page, it increased Average Order Value (AOV) by 6%.
The Customer Hierarchy of Needs
Leave it to Shep Hyken to use Maslow’s Hierarchy to understand customers better. From the article:
I’m not a psychologist, and I’ve not done formal research on this idea, but I’ve been studying customer and employee experience in some form for more than 40 years. I’ve identified five areas (at least) that are important to customers when they buy from you and put them into logical order.
The Customer Hierarchy of Needs
Employee Hierarchy of Needs
Yes, Shep wrote another piece on the employee’s hierarchy of needs. Because without great EX, you can’t have great CX.
The Impact of Purpose-Driven Brands [Research]
Yes, you read that right. Amazon Ads published a study on purpose-driven brands and how they’re shaping the buying criteria.
7 in 10 consumers make it a point to support brands that align with causes they care about
Globally, nearly 8 in 10 (78%) consumers are tired of brands acting like they are exempt from environmental responsibility (7% increase YoY)
Despite being more budget-conscious, 7 in 10 consumers—an 11% increase from 2022—said they make a point to support brands that donate money or supplies to causes that are important to them
8 in 10 (82%) of global consumers said it was important to support or buy from small-business owners during times of economic uncertainty
There’s more in there. Brand purpose, and perhaps ‘activism’ can sometimes get a bad rap, but in the end, it’s what markets demand.
And if someone is looking at two similar products, and they have to choose between one that’s wrapped in environmentally-friendly packaging versus one that’s not, then you have a better idea of which way most people are going to go.
Here’s Amazon with the last word:
Now is the time for brands to clearly demonstrate their commitments through authentic actions, both internal and external, of how they are aligned with consumers’ values.
This was a long one. Hope you found something of value. If you did, feel free to leave an emoji.
Enjoy your weekend, and be safe everyone.