While some companies have faltered during the pandemic others have experienced Christmas-level sales on a daily basis. And the uncertainty of these past months will probably continue for the foreseeable future. Without government support, companies will collapse and jobs disappear. Regardless of the exact form, the uncertainty is resulting in clear changes in consumer behavior.
New habitsThe second quarter of this year saw retailers achieve a significantly higher turnover than in the same period last year. Total turnover rose by nearly six percent, with online turnover rising by a staggering 54.8 percent compared to 2019. Despite this growth, retailers are less optimistic about the future. There is a good chance that people will reduce spending in the coming months and take on new shopping habits. Consumers will visit stores less often and try to make all their purchases in a single shopping trip. At the same time, the shift to e-commerce and large platforms will continue, placing existing customer loyalty under more pressure. Big brands like Nike have really raised the bar in recent years: retailers who succeed in providing the same offline and online experience, including knowledge and advice, are definitively attracting reorienting customers.
ManeuverabilityConsumers meanwhile are embracing digital channels. Companies need to optimise their flexibility in order to move with their customers. To serve them wherever they wish to be served and ensure a negligible difference between the offline and online experience. Focus on developing a central customer profile; try to put yourself in their position, analyzing when someone is willing to make a purchase and via which channel. Customers who are looking around require different communication than those who have made a previous purchase. The same goes for delivery and pick-up options as you take into account different consumer expectations.
All this means that companies need to be more flexible and have the capacity to adapt. Think about issues such as the consequences of changing conditions in the supply chain. How do you cope with logistical bottlenecks that might arise due to a reduced predictability in supply and demand so that you do not end up with excessive stocks or shortages? The answer lies in continuously engaging in an (automated) dialogue with the customer. Understand what’s happening to ensure you can address the situation.
DialogueThis raises the question of how this flexibility should be shaped. In essence, it comes down to engaging in a dialogue, both offline and online. And doing so well. The challenge lies in being consequent in the messages you send, with the right content at the right time and place. The most important lesson is to start, get on with it, learn from your experiences and optimize.
More important than pushing information is responding to what consumers are saying. When someone clicks, buys or says something on social media, these are all potential (data) points for retailers to automatically change the customer profile and increase their relevance to the dialogue. And, although there are many ways this dialogue can take place, it is always data-driven. You can be implicit: share a message from an influencer that is aligned to a customer’s profile and measure the conversion, for instance. Or be explicit: ask customers for their feedback or address them by name.
Nespresso serves as a fine example. As soon as the company sells an espresso maker its attention automatically shifts to selling coffee cups, accessories and related advice. After all, customers who have an espresso maker will no longer be seduced to buy another. As logical as this sounds, such an approach is rarely properly realized in practice. The result is wasted energy and an irrelevant customer experience.
Another good example is Miles & More, Europe’s largest frequent flyer program, in which flexibility resulted in concrete company value. Whereas previously it took weeks to create email campaigns in ten languages, the company reduced the throughput time to no more than two days. The campaigns are composed with modular content blocks aligned to an individual’s profile, and if the automatically selected option doesn’t achieve sufficient results, a specific segment can be adapted without changing the entire campaign. The result: six times faster campaigns.
Technology as a growth accelerator
The trick of Miles & More is using the right technological basis to quickly convert behavior into business value. Whereas the program previously deployed a variety of different analytics tools and customer databases, these have now been centralized in Adobe Analytics with a data management platform. This prevents the existence of multiple ‘truths’ related to the same customer.
To follow this example retailers should treat data as an asset in the same way they do with their instore products. Step by step, data will lead to customer relevance via behavior analyses. First by collecting data and identifying consumers, and then by deciding which information matters when via Adobe Target. It is all about making choices in real-time. Someone may be looking for a great deal for cashing in their Air Miles, but offers that are only valid for one more day may be less relevant to show.
For a number of retailers, seeing data as an asset will require a shift in perspective. They can only make a difference by being flexible in conceptualization and actions, engaging in dialogue, collecting input and using the right technology. Because, no matter how you look at it, crises and changing consumer behavior are here to stay. As a retailer you will need insights to react. This will help your company survive the pandemic and increase your recovery capacity at the same time.
The Click: Accelerating the Pace of Change
Do you want to know more about pick up the pace and accelerating the pace of change? Download the second edition of The Click: Accelerating the Pace of Change. In this series, we focus on how digitalization can help propel retailers and CPGs to their desired position in the market. We explore the internal structure and composition of modern retailers and CPGs and address the pain points and roadblocks that can slow progress and competitive edge. The articles will address how retailers and CPGs need to examine their business model and value proposition and which technological changes they have te make to achieve the desired change in their organization to stay ahead in the industry.