Customer Recalibration Amidst An Economic Crisis
THE SIX CUSTOMER DATA QUESTIONS YOU SHOULD BE ASKING TODAY
BY MASON THELEN – CEO
The economic downturn caused by the COVID-19 event is affecting everyone: schools, hospitals, the Government, businesses, and especially customers. Whether your business is struggling, sustaining, or thriving, the world has fundamentally changed. Everything you knew or believed about your customers has likely been called into question. Business leaders can’t rely on just their instincts anymore, and historical data cannot be trusted to predict future customer behavior as it previously could. Yet in this environment, utilizing data to make decisions is more important than ever. As we prepare for a post-COVID-19 sense of normalcy to arrive (in whatever form that takes), business leaders should be spending as much time asking questions and collecting data as they are in reacting to and addressing the day-to-day challenges their businesses are facing.
Our decade of experience as trusted customer experts for some of the world’s most notable brands has enabled us to anticipate what is going to be most important in the weeks and months ahead as the world reacts and subsequently rebounds from this pandemic. Given the large number of unknowns related to the speed and extent to which recovery will happen, there are six critical customer related questions that leaders should be asking of their data right now:
- How are my core customer KPIs performing?
- What does my current customer portfolio look like, and how healthy is it?
- What external data should I be looking at?
- How should I rebalance the use of historical vs real-time data?
- How should I be measuring customer engagement today?
- How will I know when my customer portfolio is starting to stabilize?
An introductory overview of each of these topics is included below. Additionally, the Elicit Leadership Team will be releasing a series of follow-up articles that will explore each question in more detail, including specific metrics and practical examples to consider in our new economic environment.
1. HOW ARE MY CORE CUSTOMER KPIS PERFORMING?
The standard set of customer KPIs you have been tracking for years are still critically important. Yes, they’re probably volatile right now, which is why you should be giving them an even closer look. Consider where there are pockets of stability, where there are notable declines in performance, and where you see areas of growth. There is much to be learned by reflecting upon where your value proposition seems to be resilient and strong, what new customers seem to be attracted to, how and in what channels customers are engaging, and what things customers are leaving behind. For a more detailed look at question 1, click here.
2. WHAT DOES MY CURRENT CUSTOMER PORTFOLIO LOOK LIKE, AND HOW HEALTHY IS IT?
Most companies are facing dramatic declines in revenue and have probably already considered the drivers of those changes through product- and geo-based lenses. However, given that not all customers contribute equally to the bottom line (i.e., some spend more than others), a customer-focused view of business performance is imperative. What do you know about who is shopping and why? Which customer groups are important now, and which have stopped engaging? With finite resources to spend—including investments of money, time, and people—companies that make smarter, data-driven decisions about how to allocate those resources across their customer portfolio will realize a higher return.
3. WHAT EXTERNAL DATA SHOULD I BE LOOKING AT?
There’s no shortage of externally available data and analysis covering a wide variety of consumer, economic, and pandemic related topics. These data sources can be effective indicators of marketplace dynamics and likely trends, opportunities, and risk factors that should all be considered as you are planning your go-forward strategies and tactics. You’re probably already using geo-demographic, value-based, and other data overlays, and you should be asking yourself if it’s still relevant. Typically, under-utilized data sources include channel consumption, social listening, econometric data, and government policy data. Take another look at these types of data, as they may shed light on the external forces that will be influencing consumer behavior.
4. HOW SHOULD I REBALANCE THE USE OF HISTORICAL VS REAL-TIME DATA?
All of the historical customer related data at your disposal is likely a poor indicator of what is actually happening in your business right now. While some basic customer information will remain constant (like customer IDs and account information), much of it won’t in the new post-COVID-19 market. Nearly every customer’s behavior will be shifting based on adjusted life priorities and customer missions. Any previous patterns regarding marketing sensitivity, category preferences, channel engagement, and price sensitivity should now be thought of as pre-event, mid-event, and post-event, keeping in mind that the timing varies by customer and geography.
5. HOW SHOULD I BE MEASURING CUSTOMER ENGAGEMENT TODAY?
Most businesses have some measure of engagement that they’ve been tracking over time. These measures can be as simple as a customer satisfaction score or as complex as a scorecard that incorporates everything from channel engagement to purchase patterns to marketing responsiveness. Regardless of what has been done historically, it’s time to redefine what it means for a customer to be engaged. While some customers may not be in a position to purchase right now, you should be able to tell if they’re still consuming in the category, engaging with marketing, browsing and shopping digitally, and interested in your brand overall. This will enable you to maintain customer relationships during this period that will contribute to your ability to re-activate them as purchasing customers in the future.
6. HOW WILL I KNOW WHEN MY CUSTOMER PORTFOLIO IS STARTING TO STABILIZE?
Right now, in virtually every industry, customer behaviors are highly volatile, and businesses are asking when things will return to normal. But this is the wrong question. Few businesses will look exactly the same in the future as they did pre-COVID-19. What permits us to manage businesses effectively is stability and the predictability it affords. Businesses need to identify emerging customer patterns and determine at what point those patterns can be reliably applied to business decision making. Again, new real-time or episodic data should be captured and used to study the new reality, and to help determine whether that new reality is stabilizing or ephemeral. For example, even small changes in behaviors such as increases in browsing activity or full-price buying may indicate that buyers are returning. Understanding when to make short-term responses vs. adjust long-term plans depends upon knowing how to read the signals. The key is to avoid making assumptions and relying upon past heuristics until the data supports (or refutes) it.
The instability of the current economic environment is certainly intimidating, but the future of business is still bright. Since the entire global economy has been affected in some way or another, the economic impacts caused by COVID-19 will serve as the inflection point for businesses that can react and evolve, outpacing those that can’t. Leveraging your customer data has never been more important and those that do so will be the ones who will help establish the new standards for the future.