Customer behaviour has changed so it’s time your business learned something new

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27/10/2020

“Among large firms doing business during the past four downturns, 14% increased both sales growth rate and EBIT margin” according to an article in the Harvard Business Review this month. So, what is the difference between the businesses that sink and the ones that swim in the wake of a crisis? Experience tells our Fractional CMOs that consumer habits, and the ability to change with them, are key.

A study on habit formation suggests that the average time for a new habit to form is 66 days, with a minimum of 21 days. Suffice to say that this year has given whole markets around the world plenty of time to make and break new ways of spending their time and money. 

So, it stands to reason that companies hoping to move forward from the pandemic in a stronger position need to develop processes for identifying and understanding new customer habits. That also means recognising what those changed habits mean for the way you deliver and sell your products and services and translating them into action.

It’s a process of identification, strategy and implementation that Fractional CMOs work with companies to facilitate regularly. It might be to help a company move into new markets, crisis manage or simply grow and identify new customer pipelines.

What do Fractional CMOs look for in customer behaviour?

Identifying new opportunities for a business is about looking beyond the big and obvious changes and into the more subtle signals that they lead to. For example, we know that more people are now working from home. That has led to an increase in the need and use of home office spaces. That might then mean a growing market for refurbishment, new equipment, and a greater need for digital coordination between platforms. Perhaps there are collaborations that you can seek out for example? The airline industry has been devastated from the crisis and they are relooking at their business from start to finish to see how the experience can be transformed on the basis that COVID 19 is not going away anytime soon. COVID19 has also spurred the transition to a greener future as the need to create new economic opportunities and build back better will hasten the penetration of electric vehicles. Who will provide easy access to charging stations?

Of course, recognising opportunities in new customer habits is also about looking at areas of business that are likely to become less relevant. For example, the working from home trend may lead to a decrease in the need for commercial real estate. That could be a potential for cost saving and could mean relinquishing or converting certain rented or owned assets.

It’s not just about what is likely to become more or less relevant however. It’s also about the duration of those new trends. For example, a Fractional CMO will look at categorising new customer habits and behaviours into short term and long term trends, current or anticipated trends and whether their impact is temporary or fundamentally structural for the business. That might be the difference between renting out the commercial real estate that you own, repurposing it if you are in the UK under newly relaxed laws on planning permission, or selling it.

How to look at new trends to define your strategy

Data is king - this might be a worn out phrase, but it gets more relevant every single day.  Not least because data gets more informative, more sophisticated and more bespoke. Meanwhile, humans are significantly better at interpreting the data in order to make informed data-enabled decisions. Key to making decisions based on data is to take it to a granular level rather than looking at sweeping averages, as well as remaining regularly informed. Digitalisation is transforming every business

As with so many things, God is very much in the detail - this is where anomalies, sometimes very subtle ones, reside, waiting to be identified by someone who knows what they’re looking for. This level of understanding is the difference between not only looking at what has already happened with behaviours, but being able to predict what will happen. The Harvard Business Review cited an excellent example, saying:

“An analysis showed that the recent drop-off in cinema attendance occurred before theaters were shut down in the United States. This, combined with an existing trend of declining attendance, suggested that the shift was consumer-driven and perhaps likely to persist in the absence of innovation. Live sports attendance, in contrast, declined only when events were officially canceled, suggesting a stronger possibility of a behavioral rebound.”

In contrast to the importance of granularity, the other key to identifying behavioural change, and potential business opportunities, is the ability to tap into multiple perspectives. In the military they call it “eyes of the enemy”, where leaders look at what others might be doing to identify their own blind spots. This, of course, is a very difficult thing to do by yourself, which is why some choose to employ the services of a Fractional CMO or other marketing leadership expert in order to gain a truly independent perspective.

In short, one of the big things that sets businesses that lead and those that fall behind apart, is their ability to stay tuned into a changing market and to adapt with it. That often means being able to recognise where you need help identifying blind spots, marrying those with your experience and deep industry knowledge, and being able to turn that information into actionable strategy.

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Read more about changes in customer behaviours here