Subscribe to Red and Blue Customers Newsletter Today

Know the differences to grow your business. Free insights delivered to your inbox every week.

"This is provocative and practical"
Pam Radford, Senior Director, Global Marketing

"Super interesting - a new and predictive way to understand customers."
Mark Staples, Editorial Director
McKinsey & Company

Ecommerce Companies Need Conservative Customers in 2023

Ecommerce Companies Need Conservative Customers in 2023

2022 was a brutal year for the broader ecommerce market, and 2023 looks mixed at best. In-person retail surged 10.2% in early 2022 as pandemic restrictions eased and customers got out of the house. Overnight, ecommerce growth evaporated, experiencing its first contraction in decades. It felt like whiplash after two years of pandemic-driven demand that pushed ecommerce growth five years ahead of forecasts.

2023 is looking more like a bridge year for getting back to normal growth for online businesses, but how do you build that bridge? Conservative customers offer one solution for three compelling reasons: geography, customer value, and purchasing power.

When the pandemic hit and in-person retail slowed or shut down, more liberal than conservative customers went online because of geography. Liberal customers live in more densely populated areas with more retail, so a disproportionately higher number of liberal customers went online to buy more. The opposite happened when in-person retail opened up in 2022: liberal customers returned in greater force out of sheer proximity to stores. As a result, conservative customers now make up a higher percentage of total customers for ecommerce than before.

Conservative customers also tend to have a higher value. They are happier with products, complain less, and change brands less often than liberal customers. That all adds up to a higher lifetime value. So if 2023 looks like a bridge year for ecommerce, one way to shore up financial outcomes is to get more conservative customers.

Conservative customers may also have more purchasing power than liberal customers in 2023. Liberal customers, on average, have higher income. Yet conservative customers have a lower cost of living, so their income goes further. In a more typical economic environment, the purchasing power of both groups is about the same, depending on the specific market. However, that may not be true in 2023.

Consider that conservative customers have lower mortgage balances and a higher rate of homes fully paid off than liberal customers. As a result, they have less exposure to higher interest rates, especially those with more disposable income. So, depending on your market, conservative customers may have more to spend on your products in 2023 than liberal customers.

Geography, customer value, and purchasing power demonstrate how conservative customers can deliver better business performance for ecommerce companies in 2023. It’s one way to buy time and regain footing for eventual, more robust growth with both groups.

The one exception is with new, innovative products. These products invariably attract more liberal customers due to their greater change acceptance. Intentionally selling something new, innovative, or disruptive to conservative customers would be a mistake until the product demonstrates success and becomes more familiar. Holding off on innovative new products in ecommerce may make more sense until the overall market recovers.

Evaluating a conservative customer strategy is pretty simple: The first step is understanding the current mix of liberal and conservative customers during and after the pandemic. The next step is to look for built-in predispositions for one group. This involves looking at product positioning and communications. From there, ecommerce companies can develop test plans to determine if this strategy makes sense in 2023. None of this has to incur any incremental cost. Customer insight, market segment strategy, and market testing are the ordinary course of business.

To understand conservative customers better, look at the previously explored topics of Change Boundaries, Self-Moderation, Thought Styles, and Success. These are four of twenty-seven attributes businesses can use to appeal to both markets or one. They all involve a dispassionate understanding of both markets to create alignment where it makes good business sense.

You would think that the decision to test this strategy would be pretty straightforward, but unfortunately, it’s not. There’s a huge barrier that’s also the source of even greater opportunity: Political divisiveness combined with the fact that the worldview skew of marketers is overwhelmingly liberal, which includes this author. Some will feel uncomfortable with attracting conservative customers because it can tread on personal convictions. The same would be true if the situation were reversed.

For those that can keep politics out of the evaluation and focus on worldview, it becomes an even more unique, compelling strategy. There is also a surprising upside beyond the business benefit waiting for you at the end of the evaluation.

Getting to know conservative and liberal worldviews - the roots, similarities, and differences - invariably makes “the other side” less mysterious. Greater familiarity breeds less contempt, no matter which side you are on. So the exercise not only yields potential growth, it will make a small dent in reducing divisiveness, which is not a bad way to start the new year.

This article originally appeared in the newsletter, Red and Blue Customers

Back to blog