In the next few weeks, as Ireland emerges from the second lockdown towards a potential vaccine in early 2021, there is a temptation to presume that we will revert to a new normal and operate per 2019. This is unlikely. In fact, during the past few months we have been writing a new future.
Our prolonged periods at home have created new habits, rituals and ways of working, according to MCCP’s research into the Irish consumer. This has important implications for organisations trying to build lasting relationships with customers - new and current - and society at large. Given the unprecedented nature of the pandemic and the profound changes it is causing, we believe that harnessing understanding and imagination may be just as critical. Organisations will need to think hard—and differently—about what customers in the next normal will think, feel, say, and do.
We have observed three potentially important changes in mindset and behaviour. Some of them are meaningful accelerations of existing trends, some are only emerging now. What follows are suggestions for how organisations and brands can begin to respond to them. We think their implications for leaders in organisations warrant careful consideration and thoughtful action.
1. Home is Where the Customer Spending is, and You Need to be There
Given this context of ongoing COVID restrictions and economic uncertainty, including Brexit, how will this affect customer spending? We are seeing customer spending returning to the home as the centre of people’s lives and, understandably, away from the out of home (OOH) experience economy. Bank of Ireland did an analysis of bank accounts and debit card spending, and found amongst other things:
Nearly four in five (78.3%) consumers aged 18-34 said that they would put some or all additional money available to them towards savings, possibly towards a house deposit. All other age groups had home improvements and furnishings as the most popular way of spending additional money
Home (47.2%) and garden (34.9%) improvements are at the top of the list for spending, while nearly half (26.3%) plan on spending towards a future holiday.
Naturally, during the lockdown months home entertainment services saw an accelerated rate of adoption as people scrambled to find things to do to keep themselves and their families entertained. This saw a huge increase in subscriptions for Disney+ who brought their launch forward to capitalise on the lockdown demand.
MCCP’s own research indicates that people want variety as well as as ease in how they access new experiences and products in their home as well as their intention to support local products and series where they can. The new consumer in this context has higher expectations so getting it right will be essential.
- Mary Sheahan, Research & Insights Director, MCCP
The implication here is to treat different customers differently, there is no ‘one size fits all’ solution. Brands will need to work harder to position themselves as a first choice for customers in an increasingly crowded digital landscape. Distribution of product and distinctiveness will assume greater relevance in an accelerated digital world.
2. Digital Acceleration: It’s Not Just About Shopping, it’s Everything
In past years, we have seen varying degrees of e-service adoption. Banking has had relatively higher penetration, along with media and entertainment. Other services have been behind for reasons that range from limited options to poor customer experience. During COVID-19, people are not only increasingly buying online; they expect to perform other tasks and access services as well.
Telemedicine visits have rapidly increased, with, for example, those going to Teladoc Health, the multinational for-profit virtual healthcare company, reaching 1.7 million in the US in Q1 2020, twice as high as in Q3 2019. In the UK, 38 percent of telemedicine users surveyed have started using the online service during the COVID-19 pandemic.
For organisations, particularly those that serve this increasing customer confidence in the use of e-services, this suggests a potential surge in demand and an opportunity to create new connections with people. One area of particular focus should be on developing partner ecosystems—both public and private. As services proliferate, it will be important for organisations to think through the role of their brands in interconnected service ‘platforms’. For example, food brands can partner with e-health platforms or online fitness companies to cross-promote the benefits of each to a wider audience. Business owners and leaders need to be thinking - what are the needs of new on-liners, and how they can drive more off-liners online. We know that customer expectations online are growing, so the key question is this: is your customer experience online meeting these expectations? This is an area where a lot of clients are coming to us to help them to transition to become truly customer-first.
3. Home is the Focus for Customers, So this Opens up New Opportunities
Working from Home (WFH) has been one of the most radical changes that people and businesses have had to make during COVID-19. Although there have been some teething problems, employees seem to have generally enjoyed the flexibility that WFH has provided to the point where a hybrid model has been adopted, with some work in the office and some at home. The impact that WFH will bring will have implications that go beyond productivity and employee-employer trust. As the COVID WFH experiment has shown that it can work – the conversation will now shift to the practicalities of making it a permanent reality.
This has also brought about a fundamental shift in demand and spend for a host of at-home products and services. We have seen a massive increase in interest and purchase of goods and services related to the home and home improvement; home décor, DIY, gardening and all the products associated with repurposing the home into a true hub, where we live, socialise, work and learn. Brands need to be at the heart of this fundamental change in behaviour as many customer habits established during this period will remain a fixed part of customers’ mindsets.
Home delivery in all its forms has grown significantly. Whereas customers used to go ‘to’ retail outlets, now retailers, restaurants, entertainment experiences and services ‘come’ to them. There is a whole new ecosystem, with the home at its centre being created for and by customers. Companies and brands need to figure out how best to capitalise on these exciting opportunities to serve customers, in products, services and marketing messages, or risk irrelevance as a substantial proportion of customers adopt the new at-home lifestyle.
- Mark Byrne, Strategy Director at MCCP
Understand Clearly Before You Act
In the wake of the past nine months, having a clear understanding of the rapidly evolving customer and employee context is even more essential for businesses. The shift in how customers are buying and how they expect to engage with brands is evolving almost daily. It is the remit of everyone in the organisation to put the customer at the centre of what they do.
Accelerated by COVID, customers have migrated en masse to digital platforms that would previously have been niche channels. Companies need to figure out how to navigate this new customer journey and best serve customer needs in this new landscape.
Brexit has accelerated the urgent need to diversify markets to Europe and beyond. Companies need to understand the ability of the brand to stretch across diverse markets and messaging communications; what messages will resonate with key customers in markets.
Finally, sustainability has come to the fore as a core reason for customers switching. Brands need to build sustainability into the heart of the brand and value proposition to retain market share and attract new customers.