(LIVE) How to Meet Customers’ Needs in Uncertain Times How to Meet Customers’ Needs in Uncertain Times

How to Meet Customers’ Needs in Uncertain Times

Customers’ needs and preferences are changing at lightning speed. Simply tracking sales trends is no longer sufficient to serve customers and stay competitive. Businesses need real-time insights into the nuances of customer behavior.

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The pandemic has changed the game in marketing. The traditional methods for gaining insight—analyzing demographic data, conducting customer surveys, and holding focus groups—are rapidly becoming obsolete. Businesses that play by the old rules are sure to lose. Four trends are reshaping the future of marketing.

The Insight Imperative

Companies’ trustworthiness is increasingly relevant

Buyers are expecting personalized experiences

Customers are using Amazon as a yardstick

E-commerce is rapidly growing

Over an eight-week period in 2020, digital sales as a percentage of all retail sales increased by more than they had over the entire decade prior to the pandemic. They jumped from 16% to 27% in the US, and from 18% to 30% in the UK.

Tech giants have redrawn the customer buying journey and redefined how companies and consumers interact. Almost 70% of customers expect online retailers and traditional stores to offer an Amazon-like buying experience.

More and more brands are creating personalized experiences. Those that do are seeing their revenues increase two to three times faster than those that don’t—and often by at least 6%.

Customers want personalized offers, but they lose confidence in companies that mishandle data. The majority of customers—60%—see a “major need” for businesses to improve their trustworthiness.

Source

Given how quickly customer behavior is shifting—and the many changes set in motion by the pandemic—companies have no time to waste.

Since the beginning of the crisis, BCG has tracked consumer sentiment, spending, and behavior. A look at this data and consumers’ anticipated spending patterns reveals that the coronavirus has already created winners and losers.

Winners and Losers in the Pandemic Era

To capitalize on changing demand, companies must have a deeply nuanced understanding of customers’ new needs and behaviors. Here are six steps companies can take to uncover real-time insights that will help create business value and drive growth.

The Next Frontier

Invest in real-time demand forecasting

Leverage first-party data

Explore self-learning personalization

Measure the customer experience

Protect customer privacy

Track consumer sentiment

October 2021 How COVID-19 Changed the Consumer

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Trillions of dollars are at stake, yet many companies are still employing outdated techniques to understand and predict customer behavior. With rich customer insights, leaders can meet customers’ needs and surge ahead of competitors even in uncertain times.

Understanding Consumer Behavior to Gain Competitive Advantage

Turn customer insights into sustainable advantage

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Create a customer-centric marketing and sales organization

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Explore more topics in the How to by BCG series

How to Accelerate Digital

How to Prepare for the Future of Work

How to Transform Amid a Crisis

How to Lead in the New Reality

How to Accelerate Digital

Track consumer sentiment Despite the widespread reopening of businesses, schools, and public places, customer behavior is very different than it was before the pandemic. Track consumer sentiment and spending changes not only to understand whether customers are feeling cautious or confident but also to prepare for market volatility as the crisis waxes and wanes.

Invest in real-time demand forecasting Leading companies are investing in real-time demand forecasting. Analysts integrate real-time market data (including footfall data and credit card spending) with digital indicators (such as web traffic and online search trends) and pair this information with epidemiological models. In this way, companies can decide which markets to focus on and which customers they need to reach.

Leverage first-party data Develop a clear strategy for first-party data by identifying the data that is essential, calculating the costs and risks associated with using it, and developing an implementation roadmap. Companies that link all their first-party data sources can double the incremental revenue from a single ad placement, communication, or outreach.

Explore self-learning personalization Best-in-class companies are embracing self-learning personalization to constantly assess and quantify the efficacy of each message for each customer. This approach helps companies learn what works best: the best time of day, best channel, best content, and best incentive (if any). It also figures out—for each individual customer—when to keep quiet.

Measure the customer experience When measuring the customer experience, companies are accustomed to looking in the rear-view mirror—they rely on metrics from surveys conducted after the experience has happened. A smarter approach measures, in real time, every interaction the customer has with the company as well as with third parties, and it generates insights for developing real-time interventions.

Protect customer privacy Establish a data privacy policy that details when it is acceptable to ask customers for permission to use their data. The policy should also specify how the data will be managed once it is collected. Explain all safeguards to customers, inform them when oversights occur, and give them some level of control over how their data is used. This type of transparency is essential to maintaining customer trust.

How to Prepare for the Future of Work

How to Lead in the New Reality

How to Transform Amid a Crisis

Short-Term Winners +

Long-Term Winners +

Short-Term Losers +

Long-Term Losers +

How did the pandemic affect spending patterns?

Click on a business to the right to learn.

Short-Term Winners

one to three years

Lockdowns and restrictions triggered a pandemic spike—a temporary surge in consumer buying. These sectors and products will benefit over the shorter term.

Home Improvement As lockdowns persisted, consumers invested in their homes. Most—93%—expect to increase or maintain their current level of home improvement projects. Grocery The pandemic raised consumers’ consciousness around sustainability—28% anticipate spending more on environmentally sustainable groceries. Health Insurance Payers’ financial performance improved during the crisis because demand for elective procedures plummeted, but the outlook beyond 2021 is fraught with threats.

Long-Term Winners

Pet Supplies & Services The large number of pet owners drove up demand. Notably, 19% of consumers spent more on pet supplies and services, and 20% expect to spend more after the pandemic. In-Home Entertainment Many US consumers—52%—increased streaming video subscriptions, and it appears the bump is here to stay. Household Cleaning Concerned about their health, US consumers reported a 28% increase in spending on household cleaning products.

Short-Term Losers

Leisure Travel The crisis quickly brought the travel and tourism industry to a standstill, but 35% of consumers anticipate spending more on leisure travel after the pandemic. Restaurants Consumers had only 9% of their meals in restaurants, but they expect that will increase to 15% after the pandemic, close to their prepandemic norms. Fashion and Luxury New revenue models are emerging; 18% of consumers are interested in renting luxury items.

Long-Term Losers

Public Transportation Many city dwellers—60%—said they will be using public transit much less when lockdowns are lifted, preferring to walk, bike, or drive their own car. Business Travel Employees’ preference for flexibility and employers’ focus on cost and sustainability could drive a structural decline of as much as 20%. Movie Theaters Popular streaming services debuted several hit movies exclusively online; movie theaters could see a drawn-out recovery if the practice continues.

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one to three years

more than three years

More than three years

“Upshifts,” or periods of sustained growth, are likely to persist for these sectors and products over the longer term.

Sectors and products that depend on interpersonal interactions to drive sales will see “valleys,” or temporary declines, over the shorter term.

“Downshifts,” or an extended recovery, are likely to beset sectors where new consumer behaviors have emerged, some of which are likely to stick.

Leisure Travel

Short-Term Loser

The crisis quickly brought the travel and tourism industry to a standstill, but 35% of consumers anticipate spending more on leisure travel after the pandemic.

Fashion & Luxury

Short-Term Loser

New revenue models are emerging; 18% of consumers are interested in renting luxury items.

Restaurants

Short-Term Loser

Consumers had only 9% of their meals in restaurants, but they expect that will increase to 15% after the pandemic, close to their prepandemic norms.

Public Transportation

Long-Term Loser

Many city dwellers—60%—said they will be using public transit much less when lockdowns are lifted, preferring to walk, bike, or drive their own car.

Business Travel

Long-Term Loser

Employees’ preference for flexibility and employers’ focus on cost and sustainability could drive a structural decline of as much as 20%.

Movie Theaters

Long-Term Loser

Popular streaming services debuted several hit movies exclusively online; movie theaters could see a drawn-out recovery if the practice continues.

Pet Supplies & Services

Long-Term Winner

The large number of pet owners drove up demand. Notably, 19% of consumers spent more on pet supplies and services, and 20% expect to spend more after the pandemic.

In-Home Entertainment

Long-Term Winner

Many US consumers—52%—increased streaming video subscriptions, and it appears the bump is here to stay.

Household Cleaning

Long-Term Winner

Concerned about their health, US consumers reported a 28% increase in spending on household cleaning products.

Home Improvement

Short-Term Winner

As lockdowns persisted, consumers invested in their homes. Most—93%—expect to increase or maintain their current level of home improvement projects.

Grocery

Short-Term Winner

The pandemic raised consumers’ consciousness around sustainability—28% anticipate spending more on environmentally sustainable groceries.

Health Insurance

Short-Term Winner

Payers’ financial performance improved during the crisis because demand for elective procedures plummeted, but the outlook beyond 2021 is fraught with threats.

Source

More and more brands are creating personalized experiences. Those that do are seeing their revenues increase two to three times faster than those that don’t—and often by at least 6%.