How customer behavior has changed in 2020 and what businesses can do to address it
In 2020, businesses moved 20-25 times faster than they thought possible: to optimize supply chains and remove redundancies in them, patch up the holes in the walls of their cybersecurity, and optimize operations for working remotely. Most of the executives who participated in the ‘20 October survey from McKinsey considered most of these changes long-lasting: at least, they’ve been investing to make sure they stick.
Customer behavior transformed, too: and their new demands will stay - just like changes in the way the business is done. These changes will impact both businesses and investments (they’re already doing so). Let’s talk about how.
In 2020, the red priority for customers has been safety, and that led to several big changes in how they shop, live, work, and feel. At least two-thirds of consumers in nine out of 13 countries surveyed by McKinsey in another research have tried a new kind of shopping that year - online. In all 13, 65% of customers wanted to keep doing so.
Most people searched for food, household and care products, and meds, - and they’ve been especially happy if there were online-based or contactless payment options and quick delivery. They weren’t especially loyal to brands, shopping where it’s most familiar, convenient, and/or quick. They also were disappointed if the online assortment has been lacking compared to the in-store.
Impact on businesses. In 2020, only 60% of companies said they’ve ready to use this eCommerce momentum; the others didn’t know how to do D2C sellings at all. Those who would like to meet customers where they are - online - and get them to like them will have to invest in the UX/UI of their website, shop platforms, marketing and analytic tools, and so on.
That, in turn, means that companies that develop software for marketing automation, supply chain optimization, inventory management, data analytics software, and channel management will have quite a lot of attention from the retail industry. As well as communication solutions, conversational AI, and delivery companies.
A big segment of customers is overworked, exhausted, and stressed, and we’re currently in a mental health epidemic. They refuse to be overwhelmed and won’t buy from annoying brands that bombard them with ads and generic, irrelevant offers. What they seek is comfort, stability, feeling of being cared for and comforted. They want to buy things they value while saving costs and time while doing so. They want their digital experiences simple, understandable, intuitively designed, and built for them. According to Deloitte, about 66% of consumers strongly agreed or agreed that the pandemic increased their appreciation for well-designed technologies and experiences.
Impact for businesses. To reach out to customers, brands need to cut off the noise and dive into what makes their audience tick. One size has never fit all, and right now customers have no patience for notifications-heavy turbulence. They want a calm, soothing, personalized shopping experience - without e-commerce clutter and annoying pop-ups.
Businesses (in retail, finance, travel, healthcare - in every business where there lots of movement, crowds, and noise in customer journeys) that create attentive, relaxing, simplistic spaces both offline - in-store, in-bank, you got it - and online will rule. IoT technology and AI-driven movement analytics, along with good old UX research will help with the former. Marketing analytics and research-based design - with the latter.
There’s a danger for businesses to get confused and decide that their solution is truly convenient, whereas it’s being used because there’s no other choice. In digital healthcare, everybody talked about skyrocketed telehealth adoption: but clinics reopened, and the number of telehealth visits started to drop. If businesses want to keep their customers online after the pandemic, they need to make sure the experience they’re offering is comparable to in-shop (or in-clinic, in the telehealth case) experience.
There’s a significant increase in people who don’t want to buy from global brands and corporations and shop locally - to keep money in their town, to support the community and local creators, or out of convenience. For instance, about 70% of Americans are doing so. Apart from that, this pandemic caused the growth of small, often one-person-led businesses that sell their goods or services on peer-to-peer marketplaces, and that’s something people from Gen Z and younger Millennials appreciate: they care about eco-friendliness, sustainability, and at-least-somewhat-conscious consumption. And cost, because the P2P purchases often cost less.
Impact on business. To sell products on local markets, businesses need to come up with a localized marketing strategy that’s almost not possible to create without hiring local employees. They’ll also need data analytic, marketing solutions, and contracts with in-place delivery services as well: according to WGSN, about 88% of shoppers willing to pay more for same-day delivery or faster. On the background of local retail growth, the developers of peer-to-peer platforms and online marketplace solutions will grow as well.
A large part of the younger generation remains optimistic about the future: they want to go all high-tech and they miss the fun so much. They, too, don’t like the noise: but they like when their shopping is cool and frictionless. They’re the ones who share the majority of feedback about brands in social media, constantly online; they’re the ones who want all the good stuff: AR to help them see if the dress looks good on them, AI to advise them, 3D imaging to help them come up with the interior design for their bedroom.
Impact on business. As you understand, the more this segment emerges in the digital space, the more cool new tech they’re adopting. That means, businesses will continue to integrate VR and AR technologies to meet them online and install smart mirrors in shops to help them decide quickly. AI-driven tech will keep settling on customers’ side, which means both various AI solutions and analytics software remain a hot investment area.
Deloitte says that millennials and Gen Z are most likely to support businesses that share their values. In 2020, governments and large businesses have lost a significant amount of citizens’ and customers’ trust: due to poor response to the pandemic, underfinancing of healthcare, police violence, racist justice systems, and oh that list is long. Fewer and fewer customers who have been indifferent or “apolitical” before want to buy things from businesses that are known to be racist, homophobic, transphobic, sexist, or ableist. There’s also less tolerance to a blatant demonstration of wealth and large spendings whereas lots of people are laid off, self-isolating, sick or recovering from sickness, or risking their lives as “essential workers.”
Impact on business. People like to feel good when they’re buying products or ordering services, and for this large customer segment, it’s impossible to feel good buying from a business that profits from oppression or is tolerating or promoting it. So they don't. It would do businesses lots of good to educate and raise awareness about the history of racism, women's rights, and the LGBTQIA+ movement, - especially if they try to use these narratives to sell something. It would do great good to deliver on their promises of equality and inclusion: while customer trust has sunk, lots of people still believe businesses can be a driving force that’ll lead countries out of the crisis. They would support impactful, truly helpful initiatives and brands. (Same works with investments, right?)
First: as retail is shifting online, the technology companies that are building MarTech, business automation software, solutions for supply chains, workforce communication, - and other things that are needed to sell online and understand customers better will become even more attractive for investors.
Second: in 2021, businesses will try to respond to customers’ demands more thoroughly: some say, there’ll be even more (sigh) uncertainty (sigh) than last year. So prepare for more yelling in the void, too. Then, invest in user research.
Third: as we’ve mentioned, it will be a time for businesses to find out if they’ve been great - or they’ve been chosen as an emergency option. There’s nothing bad in being an emergency option, though; a) there’s great value in that, b) there’s even greater value in that after you’re starting to deliver the experience that people choose because it’s good.