We cannot walk away from the fact that COVID-19 has moved consumer confidence and in turn, effected all businesses in some form. One of the single biggest risks I see with businesses coming out of this is assuming that everything will be the same tomorrow, albeit slightly slower, as it was yesterday.
The outcomes and fallouts from the COVID-19 pandemic have and will continue to be speculative. What we can say with a level of certainty is that, in some way, every business and household in the UK has been affected in some manner. That may sound like a sweeping statement, and generally, when such statements are made, there is a valid and just response to disprove it. With this statement, I am confident sweeping as it may be. It still holds true. As businesses slowly come out of hibernation and the economy begins to be given the first stages of a restart, my message to businesses is simple. To continue as you always have and expect these changes to only affect revenue is impossible. As business leaders we must start to plan for tomorrow, today.
Data found within this segment has come from an incredibly insightful piece of work by Ernst and Young on how COVID-19 is changing consumer behaviours. Whilst I feel I cover the salient points, there are further parts that may be of interest to you.
Based on the analysis conducted on their consumer surveys, EY have highlighted four clear and overriding consumer groups emerging due to COVID-19. These are segmented into
Whilst there are some emerging segments that show sign of positivity, the overwhelming majority are either saving, or cutting spending dramatically.
Luckily, post COVID-19 consumer confidence will, at this stage at the least, return to some sembelance of normality. With positive sentiment segments outweighing those that are, for the most part, demonstrating dampened appetite for spending. These segments are:
One of the biggest risks I see for businesses going forward, is to simply assume, post COVID-19, that everything is the same as it was before.
The reasoning to include the EY data within this, as it cannot clearly give a steer for every single industry and brand positioning, is to demonstrate the significant swings in consumer confidence and buying behaviour. People have touted for a long time, and not with too much data, given this type of assumption didn’t require it. That changes would be afoot. What we see here is just how different they may be.
As I have hinted at above though, these changes cannot simply be taken at very surface level, we must embrace the fact that there will be changes that fundamentally affect and require our businesses to adapt to them in alignment and process.
Market segmentation and alignment is intrinsic to the success of any business. Those that do it well, understand their customer segmentation and align their value proposition to each segment effectively. This makes buying from such businesses easy because they are meeting our demands clearly. Good businesses either stumble upon this segmentation and alignment through chance or make an engaged and meaningful approach to deliver their value proposition in such a way.
COVID-19 however, is likely to change what our customers buying behaviours are. I touched on this lightly in a post aimed primarily at smaller businesses. In this post I discussed how existing qualifiers and differentiators had changed through COVID-19. Now more than ever it is important to understand these buying decisions by segment and align closely to them.
Finding out a customer’s buying profiles always seems to baffle businesses. If you want to know what your customers want, it really is as simple as just asking them. Believe it or not, most of the time they will respond with a very truthful answer.
Adapting a business model, or go to market strategy for a segment may seem like a daunting task. There is of course, a proven process to business process redesign. After all, it in itself is simply another business process. What businesses are generally lacking is the knowledge or rationale to execute it. COVID-19 and its ramifications may just be the reason to put that project into place. Ensuring that your processes take into account the new set of buying decisions and segment requirements.
I hate to make any post sound like it is doom filled, or cliff edge stuff. It rarely is in business and I don’t truly believe that adapting your business model post COVID-19 is any different. If there is to be a revolution in buying behaviours, and one that affects businesses. It will not be instant. It is often best to describe it as an iteration and there will be iterations to business. Those that adapt quickly will benefit from the first mover advantage and this diversified approach will deliver gains to those willing to “fast prototype” their response.
Once a plan is in place of how the business needs to adapt, it can be communicated. People generally see communications needing to be either internal, or external. Generally, for some reason, there are very few that are excellent at both. Remember that these changes will affect people internally and externally. The findings may for example state that one customer segment will not be active for some time. You can align internal resources effectively to offset that, communicating the rationale and new process to that segment. Whilst increasing resource in another area that will, comparative to usual, be busier. This alignment will take time to deliver both internally and externally, but communicating it will allow for feedback, planning and open the opportunities it intended to.