Consumer Habits are Shifting...or Are They?
Science shows that it takes a bit more than 2 months to form a new habit, 66 days to be precise. With the multiple lockdowns during the pandemics, we all got more than that. So what happened to our habits, behaviors, attitudes, values, and needs? And how should companies approach customer data if everything is shifting?
My students at the Growth Academy have frequently asked me:
"So should I simply throw away all the CRM data and Customer Insights we've generated before 2020?" or "How can I rely on historical data if at all?" The question isn't straightforward but let's try to dive in together.
So What is Changing Exactly?
According to McKinsey (and to our own observations as well), "consumers have seen changes to every aspect of their lives": work, shopping & consumption, learning, life at home, communications and information, play and entertainment, health & wellbeing, travel & mobility.
Indeed, the lines are blurred between our work, family, social engagement time and ways. We have all suddenly migrated to the digital world regardless of age and location on the planet.
SwissRe suggests that there are five key trends in the behavioral changes emerging from the impact of COVID-19:
Increased digital adoption: people shifting to digital for day-to-day needs, faster adoption of digital among older users, etc.
Change in mobility patterns: less use of public transport, more remote working, etc.
Change in purchasing behavior: move to value-based purchasing and online shopping, etc.
Increased awareness of health: wearing masks, increased hygiene, healthy eating, etc.
Changes in interpersonal behavior: increased divorce, increased pet adoption, etc.
Some other emerging trends include: greater concern over people equality and social responsibility of brands and organizations, solidarity spending - support of local communities, more equality between gender roles, decrease in loyalty and increase in the discovery shopping, preference of rural areas over cities, local tourism, a rise of Direct-to-Consumer (D2C) brands, experiential digital shopping, contactless payments, the popularity of food delivery apps, etc.
We definitely all feel the disruption in our lives as well as the uncertainty surrounding the very reason for this disruption. This is true for both individuals and organizations.
Is This a Permanent Change?
No one can predict how long will this pandemic last. And therefore, it's obviously hard to predict how deeply ingrained and automatic these new behaviors will be: for how long will we have masks in our pockets and purses and for how long will we keep avoiding people in the supermarket's shopping aisles.
However, we need to remember that human beings have hardwired psychology. When it comes to personal values and deep needs, we all prefer freedom over control, safety over a threat, and social connection over isolation. In other words, the current situation will change some of our behaviors but it won't fundamentally change what drives us. With the high probability, people will prefer a physical experience over a digital one once they feel safe in such things as, for example, traveling or socializing. At the same time, adopted digital experiences, which proved to improve the quality of life - e.g. faster and more convenient grocery shopping - might well stay among the new habits.
Research from Dentsu conducted in 13 different countries found what the most important challenge for CMO’s in the next 6 – 12 months is. With 40%, the most mentioned challenge is to understand what consumer behavior is temporary vs permanent.
So How Shall Brands Approach Customer Data?
With the vast ocean of data collected by the organizations, it is easier to split it into "digestible chunks". For example, let's look into the following 4 categories:
1) Explicit data - everything that a customer willingly shares with a company (e.g. name, surname, email address, preferences, etc.)
2) Implicit data - everything that a company is collecting in line with its publicly available Privacy Policy (e.g. website behavior, email opens and clicks, purchase history, loyalty points accruals, etc.)
3) Calculated data - everything that is calculated, analyzed and compared in a company on a regular basis (e.g. various KPIs and internal reports, segmentation, NPS scores, etc.)
4) Context data - everything that happens externally and has a direct impact on the company's customers (e.g. pandemics, seasonality, legislation, big local events, etc.)
With all this in mind, let's take a look at how all the above can be useful during these times and with what kind of impact:
Your CRM data is your asset with or without the pandemic - it's your ability to convert leads into customers, and retain them long-term (should your offering is still relevant)
Your KPIs and Dashboards might surely show big differences in such indicators as the number of leads, CR, AOV, frequency of shopping, number of customer support cases, etc. This change will deliver some first understandings about customer behavior shifts for your industry and organization.
Ideally, companies will have done their homework long ago in terms of Customer Persona creation. This is where Context data is key: now that you read about the key behavioral changes above, apply them to your Personas and shift your offering accordingly. How can you bring more safety, stability, and clarity to your customers? Can your service give more peace of mind and enjoyment during this time? Can your brand take on a more active role in terms of equality, social responsibility, and inclusion? Can your company give a more meaningful experience or a sense of social connection? Are health and well-being a part of your offering? Take 5 key behavioral changes by SwissRe and cross-check them against your Personas. You might find exactly what they need right now, especially if you run some customer interviews.
In order to anticipate what the future holds, develop hypotheses based on the shifts, and apply them to your Personas. For example, if you operate in the travel industry and one of your largest customer segments (represented by a Persona) are Seniors, you might foresee that it will take them longer to recover their travel habits due to increased risk for health as well as due to changing mobility patterns.
Customer interviews will help you to verify your hypotheses, identify early shifts in customer attitudes (e.g. exploring nearby regions might appeal to them more than before and they are looking for 100% safety, absence of crowds and good level of comfort), and refine your offer for this customer segment accordingly. This would also be the perfect time for running various experiments backed up with data.
In conclusion, it is safe to say that companies will need to try harder to keep their customers: from introducing new delivery options to taking a stronger stand in a social arena. Relevance is key and your company can identify it with the help of customer data, context data, and customer interviews to potentially find new approaches or even revenue streams. In other words, customer-centricity is being flexible and following the customers also when their behavior is shifting. Even if it's temporary.