5 ways the covid-19 crisis will change consumer marketing
Bianca Crown, Strategy Director at Profusion.
Given the dramatic change to all aspects of our lives over the past few months it’s fair to say that how we as consumers choose to spend and behave is going determine the shape and nature of the UK economic recovery, as we ease our way out of lockdown and head in to a post corona-virus world.
This pandemic has affected everyone differently, some people might be enjoying the slower pace of life and spending more time at home whilst others are struggling with a lack of social interaction and missing Friday nights at the pub. Many are of course worried about financial implications including unemployment. All of these factors have an impact on our buying habits so what will the new normal look like?
Here’s a few predictions on the impact this could have on the retail landscape.
- Increased momentum for digital transformation in retail
Lots of everyday life has moved online resulting in digital first habits being expedited. In fact, over a quarter of respondents to a recent survey by Retail Economics said that this crisis would permanently change the way they shopped. Which prompts the question, can retailers who have previously relied more heavily on the high street keep up? A report by McKinsey found that digital and analytics leaders outperformed competitors that didn’t have robust capabilities in place. A striking example of this is Primark who’ve gone from £650 million per month sales to £0 due to their lack of online presence. The momentum for digital transformation within retail and the high street will accelerate and could also call for nuanced thinking in the types of innovations which perhaps weren’t at the top of the agenda before the crisis. Of course, consumer spending is likely to remain low in the short term as the economic crisis hits consumer confidence, and therefore businesses will remain focused on controlling costs, but the two aren’t mutually exclusive.
2. Re-evaluation of physical stores
Consequently, this crisis will also have accelerated and altered thinking on the re-evaluation of physical stores and their locations. Embracing data and predictive modelling can maximise efficiency in revenues by closing unprofitable stores and understanding locations which could benefit from increased investment. Areas of the country might react differently to the post-covid era, with some customers hungry for an instore shopping experience and sense of normality while others continue to shield from the health risks. AI and predictive modelling will be useful in distinguishing between the dramatic short-term change to shopping habits and which are likely to remain in the longer term. For instance, the grocery sector has reported that buying patterns have reverted to how they were 15 years ago, with an increase in big weekly big shops and a move away from visits to the smaller on-the-go stores. It is dangerous to extrapolate these trends into the future, as we assume life will gradually return to normal it is worth considering which of these behaviours that consumers have adopted during the Covid 19 period might outlast it.
3. Innovations to decrease barrier to purchase online
Targeting customers effectively with products that are right for them is also crucial in optimising onsite conversions and repeat visits. Tools to support purchase decisions could help decrease barriers to purchase and being able to understand customers at an individual level is key in doing this successfully. Especially for products which are easier to sell face-to-face. Take cosmetics and perfumes, a solution for this is a recommendation engine. We have experience in the creation and success of this ourselves with one of our clients Coty, who manufacture many luxury perfumes including Chloe, Burberry and Balenciaga. The model which was based on customer behaviour and personalities was used to give customers perfume recommendations resulting in 82% of respondents indicating they liked the perfume chosen for them. A fantastic way to get personalisation right at scale and be helpful to customers.
4. Re-think on customer loyalty strategy
Now more than ever could be a time to rethink your loyalty strategy, what special services and resources could you supply to this group or give early access to as a way of acknowledging their value? Understanding what problems your customers face and tailoring your messages around that will also help in maintaining engagement and ensure you stay front of mind when the time comes to browse and buy. Data and analytics can be used to understand how a customer’s situations has been affected and how you can remain valuable to them, now seems like a perfect time to survey your customer base to gauge attitudinal and perceptual data. Sending out an NPS survey to measure customer loyalty could help to identify those who rank you highly (promoters) and potentially identify new loyal customers and those at risk.
5. Re-evaluation of customer churn and winback strategies
Purchase frequency is another area which will have changed. Understanding changes in demand patterns is key in providing focus to your marketing ensuring it reflects your customer purchase patterns. If you already utilise churn models you may well be reconsidering what the new natural rate of churn is as well as exploring winback strategies and reconsidering customer segments. In fact if you’re considering this it’s worth a read of our two part report on the effect of Covid on email marketing.
Ultimately the changes we will see in retail could well bring about a more people first approach across both online and offline experiences, the more personalised a shopping experience the more valued a customer will feel. Retailers will have to consider how their customers situations have been affected and how they can remain valuable as customers become more discerning.