A Rare Window of Opportunity: How Winners of the COVID Crisis Can Act Now to Sustain Their Business Growth
Written by Anja Zschoernig & Ben Ashwell
May 20, 2020 | Reading Time: 12 Minutes
The coronavirus has had a catastrophic impact on a wide variety of industries, as well as contracting the global economy. However, for others it has presented an opportunity for growth. How can the companies in such “winner” industries ensure continuation of this growth? At a time when the customer experience is so important, should extra focus be applied to strategies for customer retention, reactivation and possibly even customer acquisition to ensure this newly obtained market sector is truly captured?
The unprecedented impact of COVID-19 is being felt across the world. Health, safety, and control measures to limit spread, have forced consumers to explore new habits to retain normality. At the same time rules, regulations and ultimately the anticipated duration of the pandemic are constantly changing, leading to high levels of uncertainty.
In most cases, business have been negatively impacted by the economic consequences of COVID-19. In the loyalty industry, benchmarks are often set by the impact to the travel and retail sector. Airlines and hotels have seen large declines in occupancy rates, and there seems to be little visibility into when we will once again travel with the fluidity seen in recent years. The impact on retail is most noticeable in what has been declared ‘non-essential’ (which seems to implicate small businesses), and those with a dependency on in-store sales.
However, optimism can be found from companies who have pivoted their offering to appeal in a COVID-restricted world, with tools like advance payments and collection experiences, and by pushing online ordering and alternative fulfilment processes like curbside collection. These companies have largely had to find ways to service this new operating model with fewer staff and additional challenges such as legal restrictions, while working hard to ensure a good customer experience as well as a positive cash-flow to survive through the uncertain duration of this pandemic.
The COVID Beneficiaries
There are also companies and industries who have unquestionably benefitted from the coronavirus.
In recent years, companies have been constantly challenged to adapt their sales practices to ensure any friction to purchase is eliminated. Delivering a positive multi-channel customer experience has been the credo of a successful market strategy. Omnipresence in the lives of customers was and is the top priority. The goal to be front and center of the human decision process is an industry-spanning battle.
However, for many companies, marketing strategies that have worked well are suddenly unsuccessful with COVID-19, as customer needs have changed abruptly. In their fight to retain normality, consumers are seeking safe, alternative practices to sustain their living patterns.
As an example: While grocery stores have remained open, the practices within them have changed dramatically. Shopping is less frequent, with significantly higher basket sizes (in the US grocer basket sizes are up 62% on the same period in 2019). At the same time home shopping services like Shipt, Ocado and Instacart are booming and the ecommerce volume has increased significantly in various industries.
The Winners of the COVID Crisis
While many businesses are impacted negatively by the pandemic, the winners stand tall. These winners include:
- business whose original business model serve the changed customer needs exceptionally well
- business who have adapted smartly & quickly to serve changed customer needs in the best possible way
So, who are these? A few examples are listed below:
1. Providers of essentials
both in the B2C space and B2B space (e.g. manufacturers): Groceries, Pharmaceuticals, Hygiene
2. B2C: Providers who do a great job enabling shopping from the safety of the home
essentials or products that serve heightened customer needs: e.g. Ecommerce/ Grocery Delivery or Food Delivery Services
3. B2C: Providers who serve the need of being entertained (and entertaining kids) at home
- Home entertainment: e.g. Netflix, Amazon Prime and other streaming providers
- Home exercising: providers like Asana Rebel, Freeletics, Fitbit, Peloton
- Home meditation/ mindfulness practices: providers like Calm or Headspace
- Entertaining kids at home: e.g. app providers like Tinybob, ABCmouse
- Distant learning such as Udemy
- Cooking-instruction providers such as Delish, Tasty.co or Chefkoch.de in Germany
- (Urban) Gardening providers
- Providers of board games, jigsaw puzzles etc. (such as Ravensburger)
4. B2C & B2B: Providers who serve the need of staying connected in a time of physical social distancing
Video calling/ VOIP & home office and webinar/ online class technology (e.g. Zoom)
5. B2C & B2B: Players who have smartly & quickly adapted their offering to best serve changed customer needs
- E.g. in many European countries it is now mandatory to wear face masks in public transport, shops etc.
- Fashion ecommerce player About You has smartly made use of this opportunity and launched a face mask sub-shop in record-time, which successfully lures in new customers (About You is also using this as a successful brand image campaign as it sells the masks at a self-cost price to play their part in supporting its customers in this crisis)
- Also German home accessories player Junique has quickly expanded its product portfolio to include printed face masks
- Another nice example of responding fast to changed customer needs: food delivery provider Lieferando, Shipt, UberEats introduced contactless delivery to ensure safety for customers & delivery employees in record-time.
These companies will be relishing the increased business volumes, and in many cases are benefitting from the single greatest customer acquisition campaign they could have ever imagined. And the best part is, that it has been entirely funded by the media and word of mouth. Shipt for example has doubled the number of shoppers in the US, with their shopper community doubling in April 2020 alone.
Right now, these companies are working tirelessly to ensure a smooth customer experience despite the sudden volume increase. However, their time should also carve out the importance of ensuring these customers are retained in a post-COVID world.
The 4-Month Opportunity
It is widely believed that it takes around 60 days to form a habit. Changing a habit takes roughly twice this, i.e. around 120 days. The practice of going to the grocery store or spending one’s free time are activities consumers have firmly established into their habitual repertoire. To change these habits sustainably, consumers will therefore take around 4 months.
The “good” news for the COVID-winners: It is very likely, that the impact of the pandemic will continue to be actively felt (at least partially) for a minimum of 4 months. The new practices of consumers, which the Corona-Winners are serving, thus have a good chance of being cemented as new habits. This opens up an invaluable window of opportunity, in which companies can develop an exceptionally high volume of new customers into a loyal customer base. While a window of opportunity is in place to cement new practices, it is on the cusp of natural adoption, and some stimulus should be put in place by these companies to ensure longevity.
A supporting factor is already available for this. The drive to online and ecommerce sales provides a unique difference to the in-store experience: non-anonymity. Consumers are required to (accurately) share their details to secure sought-after delivery slots, receive shipping updates or arrange their pickup. This personal information will be essential to companies in the next phase of this unusual chapter, where customer retention and customer reactivation will be essential.
Customer Retention and Acquisition via Referrals
Customer retention is often attributed to 5 key factors outside of the core product and its value:
- The quality of service.
- An excellent end-to-end customer experience that leads to high customer satisfaction.
- Customer engagement through communication and the active collection of customer feedback.
- The rewarding of customer loyalty and the active demonstration of appreciation e.g. through additional benefits for loyal customers.
- An inspiring brand personality, with a strong “why” and brand values that customers connect to emotionally (brand affinity).
Satisfaction and quality of service are paramount for the current phase of the crisis as customers will decide if they see value in the product and a fulfilment of the promise it offered.
During this time, customers will also be more willing than average to tell their friends and acquaintances when a new service or product helps them to cope with the crisis a little better. Companies usually invest large marketing budgets to actively promote such recommendation mechanisms. Right now, they take place naturally to a large extent.
However, satisfaction with the new product or service will in many cases not be sufficient to actually retain the large volume of new customers in the long term. Further mechanisms will be necessary to convince customers to form a new habit with the new product/service.
This is where the other key factors for customer loyalty come into play, which also aim to establish a sustainable emotional connection with customers:
- Regular, relevant and personalized communication: Companies should maintain proactive contact with their customers and regularly remind them of the benefits they gain from using their product/service. Ideally, companies should also convey their brand identity in an impactful manner. A buyer who identifies with what a company stands for has great potential to become a loyal customer and brand ambassador.
- Conversation: In addition, it is worthwhile to make customer communication a two-way street. Companies should actively seek customer feedback, as “being heard” is an important loyalty factor. This will also give companies access to valuable insights into what can and should be optimized in their products and services.
- Rewarding customers and customer loyalty: Last but not least, customers are more likely to stay with a brand if they are rewarded for their loyalty. The provision of loyalty bonuses, surprise & delight elements and other relevant benefits – in the best case via a strategically designed customer loyalty program – can provide the pivotal “wow” effect and the key reason why a customer decides to remain a loyal customer in the long term.
Of course, it will not be possible to keep all consumers active on these new services. Some are anxious to return to previous practices and many people miss their trip to the grocery store every 2 days.
The time for companies to act is now: within a loyalty program backed by insight technology for example, a propensity to churn can easily be identified. Appropriate measures to counteract churn, such as reactivation campaigns/ promotions or other incentives, can then be initiated at the right time.
However, even before customer churn is imminent, companies should strive for appropriate customer engagement measures. Segmentation can, for example, identify customers who have only made one transaction to date, or those who are suitable for a cross sell or upsell. These customers can then be targeted with a personalized offer.
A customer loyalty program can offer companies numerous advantages. By registering for the program, customers will provide their contact details and their consent to data usage for marketing purposes (particularly relevant in Europe/ DSGVO). In addition, customer loyalty programs, when motorized by the right technology, allow data-driven segmentation and personalization, as well as effective incentive tools, promotion types and marketing automation capabilities for customer activation and reactivation.
These tools do not need to distract companies from their current focus of customer satisfaction and high service quality that should remain the immediate priority.
A technology partner who is equipped to manage transaction tracking can start the consumer loyalty journey in alignment with their new shopping habits, followed by the provision of the rewards that provide value and a key reason to stay loyal.
With these in place, the first steps towards a compelling retention strategy backed by a safety net of reactivation campaigns will provide the best foundations for continued growth, once the ‘old normal’ finally returns.
- Crisis & grocery stores: https://www.supermarketnews.com/center-store/how-coronavirus-crisis-changing-grocery-shopping
- About You: https://www.aboutyou.de/s/masken-fur-alle-4491?is_s=none&is_h=manual&term=masken
- Junique: https://www.juniqe.de/wohnaccessoires/mund-und-nasenmasken
- brand personality/ “why”: https://medium.com/leadership-motivation-and-impact/the-power-of-starting-with-why-f8e491392ef8
- loyalty programs make customers more likely to continue doing business with brands: https://cdn2.hubspot.net/hubfs/352767/TLR%202019/Bond_US%20TLR19%20Exec%20Summary%20Launch%20Edition.pdf
About The authors
Head of Marketing | Loyalty Prime
With her 10+ years of experience in the loyalty industry as well as in digital product management and marketing, there is no question for Anja: excellently set-up customer loyalty programs, motorized by the right tech stack, make the heart of every data-driven marketer sing! As Loyalty Prime’s Head of Marketing, she loves to inform and inspire about the great possibilities of powerful customer loyalty programs and Loyalty Prime’s award-winning technology!
Managing Director Loyalty Prime North America | Loyalty Prime
Ben is a true pioneer and long-standing expert in the loyalty industry: he has led successful loyalty programs in the travel, financial services and retail sectors, initiated loyalty industry events and campaigns across the globe and built up companies in the field of customer loyalty. Today, as Loyalty Prime’s Managing Director North America, Ben heads our business in the US and Canada, where he supports our customers and prospects in all aspects of building successful loyalty programs.