By Vijayasekar A/L Paramasivam, Senior Lecturer cum Programme Leader, School of Business
Undoubtedly, COVID-19 has rocked the economy. The International Monetary Fund’s (IMF) World Economic Outlook has predicted that the cumulative loss to the world’s GDP from 2020 to 2021 will be approximately $9 trillion. That’s more than the combined economies of Germany and Japan.
But the crisis has disrupted more than global markets; it has changed peoples’ lives, needs, priorities and spending behaviours. Approximately 40 per cent of Australians are feeling financially insecure, and as a result, professional services firm PricewaterhouseCoopers has predicted that household consumption will decline by $37.9 billion within the next year.
In harsh economic conditions, consumers have become more discerning about where and how they spend their money. This is not good news for businesses as it creates a new set of challenges.
Customer-centricity is a term that has been used since the 1960s, but it has never been more relevant than in today’s business landscape. In such extreme environments, customers have become more demanding. They want the best at the lowest price. They are now seeking dependability, confidence and trust in the brands that they choose to do business with.
The end goal for a customer-centric business is customer loyalty. A dedicated customer base is a key to surviving disruption, as they will continue to depend on your services even in challenging climates. But true customer-centricity is not a set-and-forget solution. Retaining loyalty is about adapting your offering depending on the changing needs of your customers, and in some instances, knowing what they want before they do. This is where the modern reality of customer-centricity starts to connect operations with experiences, thereby creating new dimensions of customer excellence.
So how are businesses expected to predict or adjust to evolving customers’ expectations? It begins with understanding how your company operates and what you need to change to keep your loyal customer base as close as possible.
Here are three ways businesses can adapt to changing customer relationships in light of COVID-19.
1. Let growth goals take a backseat
If growing your customers’ base is a priority for your business right now, take a moment to reflect on the long-term cost of that growth, both reputation-wise and financially, to determine whether it is a sustainable pathway.
Few businesses have been left untouched, if not unscathed, by COVID-19. Consequently, many companies have been forced to refocus their priorities, resources and goals to survive the crisis. If your business has not considered the immediate or future economic impact of the pandemic and how it could affect your organization, you need to start doing so now.
Part of evaluating this impact is looking at factors you can control, or at the very least maintain, to ensure you keep as close to ‘business as usual’ as possible. A central element of your survival strategy is maintaining your existing customer base.
Focusing on customer acquisition to the detriment of your existing ones can create a funnel effect, whereby a stream of new business comes in, while just as many customers go elsewhere. This can force companies into a spiral of giving more and more discounts to attract new consumers to their pool, which eventually runs dry along with their revenue streams.
Research by Forrester had shown that new customers can cost five times more to convert than existing customers, indicating that it is much easier to expand and build-on existing loyalty than it is to tap new client bases, especially during tough times.
Do not fear missing out on opportunities for growth; rather, consider this crisis as a chance to cement the fundamental processes and market share that make your business scalable.
Always remember; there is no point investing in your business’ continuity if you have no customers on the other side.
2. Focus on operational excellence, but keep it customer-centric
Historically, a continuous improvement mindset revolves around things such as standardized costs, stable operations and meeting compliance expectations. While these are all critical elements of running a business, somewhere along the way, these companies have lost their grip on the bigger picture and realized that their product is no longer relevant to the customer.
Operational excellence is important, but carrying out a process that is 10 per cent better than the previous year does not matter if you miss the mark with your customer base.
More recently, businesses have started tapping into a different mindset that has seen the customer experience being translated throughout an end-to-end process. For truly customer-centric organizations, every decision and ambition have a customer-focused outcome in mind, be that an improved experience or a lasting sentiment.
Continuous improvement no longer exists in an echo-chamber; the convergence of process excellence and customer experience is the new north star, and this mindset is embedded into the very structure of a business and its team.
3. Data-driven for precision
In a post-pandemic era, digital marketing and social communication channels are the names of the game, and when used correctly, can offer more specific insights into your customers’ behaviours.
Utilizing customer data can be as simple as surveying your existing customer base to gain actionable insights. The more data you have, the more accurate these insights will be.
Consider every digital touchpoint of your customers’ experiences as though they are leaving behind a fingerprint, containing a goldmine of DNA or data that helps you better understand their needs, expectations and concerns.
A comprehensive customer excellence picture helps to combine each touchpoint into what is known as journey maps; a high-level, intuitively readable diagram that enables you to view the user’s experiences from an outside-in perspective—across all your personas. The journey visualization will increasingly identify areas for persona-centric process improvement while empowering business mapping, change, and operational transformation.
Keeping your finger on the customers’ pulse means that you are at the forefront when it comes to evolving patterns of behaviour. Immediate access to data-driven insights can allow you to adapt your processes and keep your customers’ satisfied, even in rapidly changing environments, thereby boosting loyalty and retention rates.
By using these adaptations, businesses can emerge of this crisis with the right fundamentals in place, rather than a set of lowest common denominators that damage your brand in the long term.