Brad Bennett, the executive strategy director at CX agency, MercerBell.
As sentiment numbers start to turn around and we move from a feeling of chaos to calm, most Australian brands are now looking into the future to plan their recovery.
Some briefs we’re seeing are from brands looking for creative ways to remind people: We’re still here! We’re open! (Or worse) we’re in this together!
Savvier brands are looking at their paths to purchase and wondering what minor updates need to be made now that customers don’t like crowded spaces, or may be working from home.
This is all well and good, but these incremental activities will not help most brands reach new levels of growth. They underestimate the level of change we’re going through and will continue to go through. It is not enough to make small updates to your pre-COVID strategy.
Simply, Australians are changing in fundamental ways.
On an individual level, we are being disrupted and many of our habits are being broken. Richard Shotton, author of The Choice Factory, recently described how the end of lockdown is “akin to a major life- event”. This is important to marketers because “for all product categories… the probability of trying new brands increased by at least 75% after a life event”, even in unrelated categories. In other words, this shutdown is as disruptive to our buying habits as it would be having a baby, getting married or moving house.
High-growth brands will leverage the behavioural insights underlying these disruptive life events. Shotton explains, “when we undergo a life-event we give ourselves license to step away from our past selves”. The opportunity exists to have your brand chosen by a whole new group of consumers as we collectively establish new habits for our new selves.
And we must be conscious that our new consumer habits will be shaped by our new environment. For better or worse, this pandemic will accelerate the “retail reckoning”. Analysing an American data set that mirrors Australia, author Derek Thompson notes that the pandemic will mean “big companies will get bigger, many mom-and-pop dreams will burst, chains will proliferate and flatten the idiosyncrasies of many neighborhoods, more economic activity will flow into e-commerce”.
In the US, some call this the ‘Age of Amazon’. Here we might call it the ‘Age of Bunnings’ – assuming the retailer launches what it says will be a fully transactional website in the coming months.
Bunnings or not, this doesn’t simply mean we’ll see more .com line items on our credit card statements.
Changes will ripple across the consumer environment. For example, Thompson notes that this immediately will drive “a quantum leap in autonomous vehicles and drone technology or a significantincrease in delivery workers”.
Amongst all this change, the point is this: the opportunity exists for brands to find wholly new ways of engaging customers as this pandemic destabilises our consumer environment and shapes our new habits.
Finally, we must consider the recession. Many of us in the marketing industry remember the challenges of working through the GFC, especially if we were overseas at the time. Some of us older folks even remember the dot com bust.
Through both of those global crises, Australia slowed but never tipped into a recession. This time, however, we won’t be so lucky.
While it is very difficult right now to predict the details, we know that this recession will cause tectonic shifts in many parts of the Australian economic life – changes to the types of jobs we work, where we work, household debt, category spend, etc.
The brands that historically win market share during a recession are those that maintain their market presence, invest for long-term brand equity, and take advantage of the tectonic shifts as they happen.
So, what to do?
When working on challenges this large, we’d usually advise clients to start by interrogating their data.
What predictions can we make with your first-party data? What second and third-party data could we use to find new pockets of consumers?
While still a great place to start, we need to take any analysis of existing transactional, preference or behavioural data with a grain of salt. Most existing data sets won’t yet reflect the substantial changes we’re seeing in the market. (Fun game: go ask a quant trader how their equity models performed after the GFC).
Any data analysis must be qualified by deep behavioural insights into our new consumer habits and environment. These insights must then drive radical changes in how we engage customers.
This is a great time for many brands to consider starting or enhancing their loyalty programs not only to retain their customers, but to incentivise new data capture to fuel new insights.
Whilst you still have customers, do whatever you can to sustain your marketing investments and grow your long-term brand equity.
In other words, this isn’t about stabilising the ship or quickly finding a new normal. This is about understanding and exploiting large changes in Australian consumer habits.
The brands that achieve new levels of growth will be those that don’t underestimate how much we’ve changed.