As the pandemic progresses globally, consumer behaviour is shifting dramatically, and causing many to ask:
“Is this the new normal?”
These changes in consumer behavior are impacting multiple industries in various ways, and it is a company’s ability to adapt in the short- and long-term that will make the difference between success and failure. We have focused on the top 8 changes in consumer behaviour that we are seeing across our client partners, gauged the possibility of this shift being temporary or permanent, and then offered suggestions to how businesses can adapt to them.
Top 8 changes in consumer behaviour :
1. Shift to Online
With brick and mortar locations closed, operating under reduced hours, or offering “curbside” pick up, consumers and diners are embracing the online channel. The customer base for online has increased as people who have never used online before are now having to use it by design.
What should businesses do?
Companies who made considerable investments in their omnichannel strategy and online experience prior to the pandemic are the ones seeing a positive return on their investment. It is, however, not too late for businesses who have not invested; now is a good time for companies to strengthen their online channel presence, especially keeping mobile devices in mind.
2. Shift to ‘Essential’ and ‘Entertainment’
As consumer confidence is tested, there is a change in the types of products being consumed. The two main categories with the highest increase in sales are ‘Essential’ and ‘Entertainment.’ Essential – those required to satisfy basic human needs such as FMCG (fast-moving consumer goods), food, and health, and Entertainment – those that address creature comforts and help to distract such as streaming services and gaming. Across our retail clients, we are seeing an unprecedented increase in online conversion rates (between 7 to 14%) for essential equipment and clothing such as yoga mats and athleisure apparel.
What should businesses do?
It has always been the marketer’s goal to meet the audience where it is, and those channels have been clarified with the shift in consumer behaviour. Will in-game advertisements or ‘direct mailers as part of food delivery’ become the new sought-after marketing channels? We cannot declare that yet, but the shift in responses for marketing channels is real. According to eMarketer, the best use of ad spend right now is pay-per-click (PPC), followed by email and regional advertising.[1]
3. Social Media
Social media is more important than ever as consumers are using it to stay connected and be entertained. Both our content consumption, as well as content creation, has increased significantly. As data from Global Web Index shows – while around 45% of global consumers are devoting more time to social media – over 10% are also creating and uploading videos themselves.[1]
What should businesses do?
More data than ever is being generated. Now is a good time to think about setting up ‘social media listening’ functions and embracing user-generated content wherever possible. Listening can help understand consumer sentiment specific to your brand. Analytic techniques such as text, voice, and video analytics will enable businesses to offer more personalized experiences and understand consumer sentiment better, leading to improved customer satisfaction. Regardless of whether the content is company- or user-generated, the higher the content quality is, the higher the engagement will be. In our experience, we have even seen 3X conversion rates for higher quality photo and video assets. For videos, specifically, one of our technology clients saw a 34% increase in the share of voice for social videos on YouTube without additional investment and a 37% increase in views just by having better quality video content.
4. Regional Targeting
As countries have closed borders and consumers are less mobile, companies have heavily leveraged regional/localized marketing. This is a form of personalized marketing that meets the audience where they are. For industries such as Travel, this will be a temporary shift, but for retail, this is likely to be the new norm.
What should businesses do?
Hyper-targeting with a geo-focus will see higher engagement. This is also a great opportunity to strengthen your base customer demographic data. Consider an example of a food delivery service: Businesses now have access to more accurate information about their consumer base – how many people are in a residence, relative ages, food preferences, etc. Marketers can overlay what they know about these demographic groups with relevant messaging.
5. Not the time for ‘big purchases’
Most consumers are pausing their ‘big’ purchases such as cars, travel bookings, etc. This creates a situation where consumers are inclined to ‘shop for the future.’
What should businesses do?
The first thing is to understand if these patterns are true for your industry. For the travel industry, this resonates as companies are already starting to work out their ‘Q+1’ strategy (Planning for the Quarter after – Q3 Focus July-Sep). Strategies such as ‘focus on advance bookings’ and ‘offers to reduce cancellations’ are in place to enable delayed revenue. Robust forecasting combined with business rules that makes use of available data to understand and predict the impact of potential scenarios will help stabilize demand as we get back to normal.
6. ‘Fewer people in the market’
Despite the shift to online, businesses are seeing a decrease in sales and online visits. This could be caused by a decrease in consumer confidence, but it could also be due to a poor digital experience.
What should businesses do?
In spite of the reduced traffic, focus on conversion optimization by analyzing and strengthening key customer journeys, and implement strategies to reduce fall-outs at each stage. Customer journey optimization across devices, starting with creating and monitoring baseline KPIs, and then shifting focus to optimization using techniques such as MVT (multivariate testing), is essential.
7. Support Channels
COVID has had two impacts compounding each other in the Customer Support function. The number of customer inquiries related to COVID has gone up, while the number of servicing staff has gone down due to government restrictions, especially in countries such as India and the Philippines.
What should businesses do?
This offers an opportunity to introduce more automation such as chatbots, proactive communication, and effective digital assets as a way to supplement staff. One of our large media clients began receiving a high number of queries into their India call center, but due to the country’s lockdown, it was difficult to meet the demand. The client diverted all traffic to its Chatbot, and, although the Chatbot was in a trial phase, there was no decline in quality of service and the client’s NPS (Net Promoter Score) remained level.
In addition, a shift to lower-cost channels such as email is also an opportunity. Implementation of these investments may result in a permanent shift in the way companies have been supporting customers.
8. Focus on Online Security
Consumers have always been concerned about online security, but with a drastic increase in time spent online and a wider range of the population embracing the internet, security and privacy are vital to maintaining confidence.
What should businesses do?
Every business needs to review their InfoSec policies and communicate to its customers its commitment to safety and security.
It is difficult to know what the new normal is until we look back on this time and the time before COVID. What we do know now is that the pandemic has resulted in a steep change in consumer behaviour – across products, channels, and services. Apart from increased awareness and trust in digital, we are also seeing new behavioural customer segments emerge (Panic Buyers vs. ‘Keep Calm’), and potential high-impact marketing channels (PPC, in-game advertising, etc.) as consumers react to COVID. Companies who recognize these opportunities and embrace the change will benefit tremendously in the “new normal.”
Our next blog post will examine how to leverage search as digital traffic increases.
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