The Shifting Buying Habits of Consumers
And how small to medium businesses can adjust
Analyzing customer behavior and setting a strategic approach is difficult enough when times are stable. In addition to reimagining business continuity while planning for post-pandemic operations, businesses should also not lose sight of a third track. The future of business across all industries must evolve with the world’s digital transformation to remain competitive.
In the first few months of the pandemic, global consulting firm EY identified four areas of shifting consumer behavior based on in-depth research:
- 35% of people were in “save and stockpile” mode, worried about loved ones and pessimistic about COVID-19’s long-term effects
- 27% immediately took a “cut deep” approach, reducing spending across all categories
- 26% had largely unchanged spending habits, categorized as “stay calm, carry on.”
- 11% with more time at home and flexible budgets were best positioned to cope, optimistic about the future, and spending more. These were tagged “hibernate and spend” consumers.
As COVID-19 dragged on much longer than any of us predicted, interesting data began to emerge.
Changes in retail spending
Online shopping was already on the rise at the beginning of 2020. The pandemic made that rise meteoric. While virtually all product categories expect to see increased online sales, it is what consumers are buying online and plan to keep purchasing post-COVID that is interesting.
According to marketing research firm McKinsey, groceries, over-the-counter medicine, household supplies and other essentials not only continue to be top purchases, but are expected to grow 35 percent over the next year, including post-pandemic projections.
If your company is not in one of these verticals, be prepared. Products that sold well online in 2019 may see sluggish growth. For example, online sales of apparel, which was a top product category, has seen far less sales activity. This and other former top categories have less projected growth post pandemic. If you are selling horizontally across many categories, reevaluate your product mix based on shifting trends- what worked before may need an update.
Another surprising trend is a rapid shift away from brand loyalty. Consumers are more value oriented and status labels are suffering. This is especially surprising since high income earners are one of the top groups driving online sales increases.
The other group driving e-commerce is Millennials, currently ages 24 to 38. This demographic was already comfortable with online purchases, but plan to continue more web purchases post pandemic. The main reason is convenience.
Make Meaningful Customer Connections
One thing that shouldn’t be lost in the next pivot is messaging embracing empathy and equality. Top brands, such as Nike, were able to adapt to a changing marketplace early in the pandemic with their “Play Inside, Play for the World” campaign. A more recent campaign shifted to strength, empowerment and inclusion in their “You Can’t Stop Us” ad.
Be in touch with what your customers are experiencing and see how you can apply that to your marketing. The desire for these deeper connections will not stop with a vaccine shot.
Social listening is one method businesses can use to monitor their brand’s social media channels for any customer feedback and direct mentions of their brand. Software can automate this task to monitor discussions regarding specific keywords, topics, competitors, or industries, followed by an analysis to gain insights and act on those opportunities.
Your connection to customers on a more personal level can be profitable. Customers are 62% more likely to buy products from companies they feel are doing good for society. Helping locally is beneficial, too—29% of consumers will pay extra for brands who give to the community.
Deliver fast, efficient decisions and communication
An important takeaway from COVID-19 is how quickly things can change. It is a business’s ability to be agile and adapt that will aid long-term survival.
At the beginning of 2020, companies were riding a wave of economic growth. In today’s market you will see restaurants turned caterers and food delivery services, perfume plants and distilleries making hand sanitizer and fashion brands sewing face masks.
Here are some recommendations you can do now to be better prepared and increase sales:
- Have an efficient way to communicate and follow-up with employees, customers and investors.
- Review and frequently update brand messaging on websites and social media.
- Review data for your industry and stay informed about trends.
- If new product development is not in your plan, consider how you can reimagine your product line, emphasize new areas, and bundle or unbundle products to address trends.
- Keep value and convenience top of mind.
- Consider new sales channels, with a heavy emphasis on digital brand awareness and sales.
- Shift commercial and PR messages to meet changing market demands and emotions.
Apply new and existing technology
Central to your business operation going forward is your online presence, starting with a well-functioning website. Data collected by PR Newswire indicates one-third of small businesses did not have a website in 2020. Note: Gartner defines small business as organizations bringing less than $50 million in revenue and with less than 100 employees. If your business falls into this category, prioritize building one in your business plan. Even if your sales come through other means, a website is your digital calling card. Customers search for relevant services or products online. A website increases the visibility and credibility of your business.
Here are a few strategies to improve your bottom line through technology that I recommend for my business clients.
Website review: Make sure your website is responsive, which means it resizes properly for different screen sizes. Often a mobile layout needs additional optimization. Today’s consumer has no patience for a poorly displayed website.
Employ multiple, strong calls to action—that can be as simple as a sign-up form or a pop-up message that collects customer contact data in exchange for something of value like a free report or coupon.
One effective tool to ask your IT support or ecommerce partner about is addressing shopping cart abandonment. Up to 75% of shopping carts are abandoned before finalizing a purchase. A special app can help you re-engage with customers to complete sales.
SEO (Search Engine Optimization) is another function of your website that is important to update and understand. SEO works by optimizing a website’s pages, conducting keyword research, and earning inbound links. The results, when done properly, means your information will appear higher in searches on the internet. However, the “rules” set by search engines for SEO change continually, so it is good to get professional advice on optimizing your site before starting any paid digital marketing campaign. At a minimum, you should ensure your site has accurate title tags, appropriate keywords, image tags, an internal link structure and backlinks.
Digital Marketing: The basics of digital marketing encompass strategies to improve how high up your business ranks in search engine results, paid social media ad campaigns and email marketing. There are also digital display ads where your business information can appear on other websites, in the sidebar of potential customer email and in their search results.
The best thing about digital marketing? Everything I mentioned is relatively affordable and returns great data to see results of money spent.
Consulting with a professional is a good way to start. However, if you have good computer savvy, Facebook and Google will both walk you through how to get started with digital ads and how to interpret data.
Social media: There is one truth to marketing that has not changed: people believe shared and newsworthy information more than ads. In social media, it is wise to keep 60 to 70 percent of your content relative to your business, but not directly promoting your business.
Along the same lines, social media is an excellent channel for PR to discuss your company’s contributions and involvement in the community.
Chatbots. It used to be that only large brands could deploy artificial intelligence (AI) in the form of an online virtual agent. With the expansion of software providers, small business can now add online chat or text to speech conversations to their website or automated phone system. Chatbots can answer basic questions, route customers, collect data and a host of other functions. If some basic customer service tasks can be handled by a bot instead of a human, there can be significant budget savings.
Virtual Reality. When people stopped walking into stores during lockdown, companies sought new ways to deliver services using digital technology. Retail can take advantage of augmented reality, virtual reality, and mixed reality to present products in a new way. From home accessories to makeup and apparel, apps like Try Before You Buy create a virtual interface, significantly increasing online purchase conversion.
Self-service kits with remote and online service. With limited in person contact, many companies quickly learned how to teach customers some basic self-install methods. With phone support or online tutorials, consumers are hooking up their own cable box or fixing an appliance. Self-service kiosks are also expanding beyond the airport and grocery store, to retail stores, hospitals, banks, restaurants, and even entire smart cities. This is a trend that will continue well past the pandemic, as people appreciate skipping long lines and getting immediate service.
Businesses are in a still-changing landscape. Rather than waiting it out and seeing where things land, set yourself apart by taking action now. People want value and convenience. Make your processes easy and friendly, and show that you care about their experience with your business and community. Remember that many of these changes are predicted to be with us long term. By reviewing your own company’s strengths and gaps, understanding your customers and working to give them what they want, your business will prosper.