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COVID-19 is having a lasting, worldwide impact on consumer preferences and behaviors, according to a new report from KPMG International, “Responding to consumer trends in the new reality.” The report tracks the opinions of 75,000 consumers in 12 markets to examine the changes and how businesses need to think and act differently in response to these trends.

Since May 2020, research has seen four key trends that have impacted consumers and have ultimately changed their purchasing patterns and consumption. Consumers expect these changes to last longer than 12 months.

The trends across the globe are

• economic impact,
• erosion of trust,
• rise of digital and
• Home is the new hub.

These themes highlight the pressures consumers are under, their feelings towards brands, and their changing behaviors in the new reality. Retailers will need to better understand the needs of the customer groups — via segmentation driven by AI and psychometrics. Personalization not only of communications, but also of developed products, will be key to meeting the needs of the new consumer. Besides, consumers are gravitating toward brands that are empathetic and supportive of their values. Consumer Commerce is the future. Bricks and mortar will remain an important channel although we know channel agnostic and customer centric is key and the competition will be much broader than today’s retail.”

Nearly half, 45 percent, of respondents do not feel a strong financial impact, which could mean opportunities for businesses that are able to meet the new consumer’s expectations. All consumers predict they will spend less in the next 6-12 months and all are prioritizing savings. Perhaps not surprisingly, ‘value for money’ is ranked as the key purchase driver.

Key trends include:

• Two in five (43 percent) of consumers are worried about their financial security in 2021
• More than one-third (36 percent), are prioritizing savings over spending
• 37 percent are working from home more, and 60 percent plan to do so more in the future
• One in five (20 percent) want to stay at home as much as possible
• Confidence in public transportation has declined 37 percent compared to before COVID-19
• Net spend is expected to be 21 percent less over the next 6-12 months, versus pre-COVID-19
• Close to half (45 percent) predict digital channels will be their main connection to brands
• “Value for money” is ranked by 63 percent as the top purchase criteria

Consumer brand relationships are likely to permanently change as a result of COVID-19 and businesses need to reexamine how they build trust with their customers in this new reality. The brands that can demonstrate and articulate their value and adapt to rapidly changing customer demands as they spend more time at home and rely more on digital, are the ones that will be most successful.

IMPACT OF COVID-19 ON PAKISTANI CONSUMER PREFERENCES

According to the Survey, 62.3% of respondents confirmed that their overall spending had decreased; 19.4% were of the opinion that the lockdown had not made much difference and 13.3% that their spending had increased.

1. Groceries, Disinfectants and Sanitizers on the Rise

Although consumers may have been spending less or very little on non-essential items they used this amount to stock up on other items instead. These include groceries such as packaged food, fresh food, beverages (58.7%) – not surprising given that the lockdown led people to throng supermarkets and stores. Groceries most stocked upon on include daily essentials such as bread, flour, pulses, rice and sugar (53.4%), fruit and vegetables (44.7%), snacks (36.3%), meat/poultry (33.4%), and frozen foods (21.7%). Other items that consumers have been spending more on include personal protection products, such as sanitizers, gloves and masks (54.5%).

2. Dining Out On the Dive

Respondents stated that they are spending less on clothes (74.2%), fuel (75.3%), and recreational activities (69.3%). A category that has also been in the red is the food business (restaurants, eating out/ordering and takeaways), as 79% said that they are ordering in and dining out less due to the lockdown. Prior to the lockdown, 59.6% ordered food at least once a week or less from a restaurant, 25.3% ordered once or twice a week, 9.7% twice or thrice a week and more than 5% four or more times a week.

3. Online Shopping and Banking Booming?

Surprisingly, while the rest of the world saw a spike in online shopping during the lockdown (groceries mainly), in Pakistan 53.4% still purchased groceries from physical stores. Only 10.6% used an online channel to buy an item for the first time although 18.7% said they are ordering more online now; 16.8% said they regularly used e-commerce channels for their purchases even before the lockdown. Nearly 12% said they were willing to try online shopping for the first time but had not done it yet. (7.5% said they did not have the option to shop online in their respective cities or areas).

While the lockdown has seen a surge in internet banking globally, in Pakistan only 5.9% downloaded banking apps or used online banking services for the first time during the lockdown; 22.5% said they are not using online banking channels while 4.7% said they would like to try in the near future.

4. Brand Loyalty Compromised?

The last two months have seen a shift in consumer priority, with the focus moving towards availability, due to shortages as a result of panic buying, stores and supermarkets running out of stock (33.8% said that they have been unable to source their preferred brands). This demand and supply gap has led to consumers trying alternate brands (21%) while 8.8% purposely opted to buy cheaper brands in order to economise. Consumers who stayed loyal to their brands constituted 31.3% and 38.6% said they were not brand loyal.

Business exists for customers and the way you deal and respond to your customer will determine how productive is your business as well as its ultimate impact on customer retention. Ace Research proposes that the information you acquire from your customers, help you grow your business. The research method you will opt will depend upon the type of your business and the kind of information you need to acquire. And it can be done internally by assigning a task to some individuals or you may hire a consultant to conduct perhaps more transparent research for your organization.

5. Are Brands Communicating Effectively?

When asked if brands have created advertising/communication messages relevant to Covid-19, 35.8% stated yes; when asked to name these brands, the ones mentioned most frequently included soap and telecoms: Lifebuoy (12%), Dettol (4%), Safeguard (3%), Jazz (1%), Telenor (1%) and Ufone (1%). “Brands have molded their ads and product line-up according to the onset of Covid-19; telecoms have made recharging balances much easier.

The top three brands mentioned included Lifebuoy (5%), Dettol (2%), and Safeguard (1%). As to whether any brands stood out because of a CSR initiative, 24% named a brand – Jazz (3%) followed by Asim Jofa, EBM, Telenor, Engro and Unilever (1 to 2%). One respondent remarked “I read that many brands are actually donating money to the Prime Minister’s Ehsaas Emergency Cash program, which is good to see but more efforts need to be made by other brands as well.”

A good marketing strategy generates revenues from both new and existing customers. New customers provide the necessary injection of fresh blood for a healthy, growing company. However, it is the existing customers that provide a solid foundation.

Nearly all businesses have the opportunity for a continuing relationship with their customers and, over the years, the revenue generated becomes a “customer lifetime value (CLV)”.

The lifetime value of a customer depends very much on what is being sold. People do not move house often and so an estate agent could believe that the lifetime value of customers is low. However, the word-of-mouth associated with the move could be significant. In a completely different line of business, a baker sells a loaf for very little but repeated sales over 20 years could run to a cumulative value of many thousands of dollars from a single customer.

A focus on CLV is vital in order to increase satisfaction and instill loyalty. Good relationships developed with sales and technical teams are the strongest drivers of customer loyalty in business-to-business markets.

Lifetime value

Customers can be divided into three groups:

1. Those who stay loyal and are unlikely to shop anywhere else
2. Those who have moved on and will never come back
3. And those who regularly shop around and may well return in the future.

Our concern is particularly to keep the loyal customers loyal and to stop other customers defecting.

How Ace Research help you in assessing your Customer Loyalty?

Loyalty can be assessed by asking people how likely they are to recommend a company, using a scale from 0 to 10. It has been determined that there is a strong correlation between people giving a score of 9 or 10 out of 10 on this scale and their likelihood of becoming loyal customers. It is quite exceptional to have more than 30-40% of customers give a score of 9 or 10.

The problem for most companies is not the number of customers that give a low score of 6 or below but those who simply believe the company is satisfactory, scoring 7 or 8 out of 10. The group giving a “middling” score often makes up the bulk of the customer base. It is this group who award mediocre scores that are of greatest concern as their heads could easily be turned if some other supplier arrives on the scene with what seems like an attractive offer.

Ace Research offers specialies consumer surveys and research activities to assess the level of customer loyalty, across all industries.

How to build customer lifetime value (CLV)

Loyalty is hard earned. It does not come from a bunch of flowers or a nice smile, though this can help. It is earned in small servings, over time, and can so easily be lost by one false move.

True loyalty often arises when a company does something extra ordinary to get a customer out of trouble. There will be times when a customer requires an urgent delivery or a machine stops working and a supplier who solves the problem will be remembered.

Loyalty – How To Win Devotion from Your Customers

Everybody is talking about loyalty nowadays. It is not that customer satisfaction has fallen by the wayside; rather businesses recognize that, a satisfied customer isn’t necessarily a loyal one.

Why Customer Loyalty Is So Important

Let’s think about that for a minute. Why may a satisfied customer not be loyal?  There could be a number of reasons.  Firstly they may not be that satisfied.  Ace research measure satisfaction on scales and, on a scale from 1 to 10, most companies achieve a score of around 8.  This is right in the middle of what we call a “corridor of average satisfaction” which spans from 7 to 9.  In other words, 8 out of 10 might sound good, but it is only OK.  If you want your customers to stay loyal, you have to have scores of 9 out of 10 on the things that really matter.

The Zones of Customer Satisfaction:

We should also recognize that for some customers, it is not that difficult to switch suppliers.  A tempting offer from a competitor could easily turn the head of a non-committed customer. There may of course be shortfalls in your own supply that encourage people to seek another supplier.

How to inculcate Customer Loyalty?

Past history of our research assessment indicates that, customers defect for two primary reasons: their need for a product or service has ceased, or the product/service they are buying has failed to satisfy their needs in some way. And, when we say that the offering has failed in some way, it means that they were let down or their expectations were not met.  Being simply OK is good, but not good enough in this highly competitive world, when others are prepared to do anything to win and keep the business.

It is important to emphasize that one of the most important factors that builds loyalty is the high quality of the product and service that is being offered.  There is absolutely no substitute for this.  Any compromise on quality carries a huge risk.

Examples of Causal Models of Drivers and Customer Loyalty

Customer loyalty is driven by small things, the softer things that are harder to measure, and the little things which in isolation seem inconsequential.

Three important steps to achieving devotion from your customers

In conclusion, there are three steps to ensure loyalty from our customers:

Step 1 – Make Sure That the Basics Are Right

It is no good thinking that you can build customer loyalty if there are any failings at all in the basics of your offer.  The quality of your product and service in particular has to be unquestioned.  Deliveries must be on time, in full, every time.  The price of your offer must be good value but it is not necessary that it is the cheapest.  Indeed, we know that low prices do not engender loyalty because in general low prices mean low service and this in turn means low loyalty.

Step 2 – Work on the Softer Issues

Loyalty is based on the strength of the relationships that are built up with the sales and service teams.  It is the result of many little things that often go beyond the expectations of the customer.  It is the accumulation of these little things that create trust that will not be jeopardized by a move to a new supplier. Recognize that from time to time things will go wrong and when they do, fix them quickly and where possible, give something extra to make up for the failing.

Step 3 – Measure and Control

Finally, measure everything.  Measure customer churn, measure complaints, measure customer satisfaction, measure the frequency of introducing new suppliers, and measure the likelihood of recommending.  Through measurement will come an understanding of the degree of loyalty of your customers and the tools to ensure that it is driven to the highest possible levels.

Ace Research with years of experience and research insight has catered many projects involving customer retention and loyalty track. Consumer surveys, mystery shopping’s, churn rate assessment, etc. to name few are the research models we employ to identify, measure and propose areas for enhancing customer lifetime value.