Covid-19 created a shift in the customer and economic-based reality unlike anything most of us have ever experienced. Customers have changed from routinised pre-pandemic shopping behaviours to frequently purchasing new brands and suppliers.
This has transformed the customer behaviour and purchasing habits most businesses rely upon. For example, Valeria Noguti, who resided in Brazil and in Australia during the pandemic, told me: “Given the use of masks, I stopped using skin products such as foundation and other makeup, or even facial sunscreen. At the same time, going out just when needed and not to socialise, the clothing and footwear I’ve been wearing are chosen to maximise comfort.” Drawing on her professional background as a consumer behaviour expert, Noguti also stated: “Customer behaviour has mostly changed because daily routines have changed. In general, situational influences are playing a large role in which products are now most relevant and which have to go.”
I personally began purchasing from new sets of vendors and plan on continually purchasing from many of these in future. One prominent example is I began to buy home-delivered meat and seafood from a local butcher shop (Lucas Meats) during the lockdown phase. I quickly realised the butcher shop’s quality of salmon, bacon and steaks were clearly superior to what I was previously purchasing from the grocery store. As a result, my family has now become devoted fanatics of their meat and seafood, and actively spread positive word of mouth about the shop to all our friends.
These qualitative insights are substantiated in empirical, large-scale quantitative studies. McKinsey & Company surveyed thousands of customers residing in 45 countries and found that more than 60 per cent had changed their shopping habits to try new brands or products (Arora et al. 2020). In a separate study, McKinsey & Company found about three-quarters of the nearly 2000 US customers it surveyed intended to continue purchasing these new brands or products (Charm et al. 2020). In yet another study, the consulting group analysed more than 500 million purchases by more than 100 million Chinese customers at 31,000 stores and found the majority of customers continued to shift their behaviours away from their traditional stores, brands and products months after re-openings occurred (Huang et al. 2020).
Consequently, customers have altered their long-standing norms on who, which, when, where, how and why they purchase. This has resulted in an unprecedented opportunity for firms to gain a new set of customers, enter new markets and attain growth by adapting to a new customer-based directional reality.
The key question is: How to do this? One way not to grow is the approach many firms are taking: Using quick, ad hoc improvisations that they hope will be successful. Ad hoc measures might succeed in the short-term but, as Andrew Hill wrote in the Financial Times, they are unlikely to work in the long-term and instead lead to ‘bad hoc’ practices, habits and policies (Hill 2020).
What firms need to employ is an approach rooted in fundamentals that allows for thought-out experimentation. Even before the pandemic, leading brands were more willing to plan and implement experiments to test what does and does not work with their customers (Removille and Gierak 2020). Leading firms also are more likely to empower their employees to take risks in implementing customer-centric growth strategies, since such firms can analyse the results of implementing these strategies with readily available data.
Hence, status quo thinking and lack of experimentation is thought of as ‘the kiss of death’ at firms such as Amazon, Salesforce, Starbucks and Tesla. All constantly describe learning from failure as a key method for their employees and businesses to grow. In addition, a policy of ‘fast fail’ experimentation is heavily enforced, analysing empirical results of though-out experiments as a way to innovate and grow, then quickly adopting (or dropping) those practices that performed well - or poorly (Mintz and Knight 2022).
Your Business Needs a Customer-Centric Strategy
Academic research and current customer and economic trends make it clearly evident a customer-centric strategy – a focus on customers as the key driver of a firm’s strategy – is more crucial than ever. In previous recessions, firms that maintained or accelerated their customer-centric efforts consistently outperformed those firms that did not.
For example, during the US Great Depression in the 1930s, Camel Cigarettes and Chevrolet Automobiles aggressively marketed their products to new segments of customers to capture and then maintain top market share positions (Srinivasan et al. 2005). During the 2002–2003 SARS outbreak in China, Alibaba launched its customer-centric online Taobao ecommerce platform that accommodated to customer preferences during a health scare, which helped make the firm become one of the leading ecommerce firms in the world (Huddleston Jr. 2020).
During the 2008–2009 Global Financial Crisis, Reckitt Benckiser, the British multinational consumer goods corporation, increased its customer-centric advertising expenditures by 25 per cent, while many of its competitors decreased their advertising expenditures. This customer-centric effort enabled Reckitt Benckiser to increase its profits by over 10 per cent at a time when many of its competitors lost money (Kumar and Pauwels 2020).
However, post-pandemic, firms must become even more customer-centric by researching and understanding their customers’ newly formed preferences and behaviours, then, structuring their firm’s offerings to best match these behaviours.
To navigate through the customer and economic new normal, firms must employ a customer-centric strategy that navigates them through how to adapt to a new post-pandemic directional reality. Firms that do not plan on being customer-centric are at major risk of being left behind by their customers who have shifted their behaviours from pre-pandemic norms.
Customer-Centric Growth Framework
To assist firms to adjust to a new post-pandemic directional reality, I propose a framework based on a customer-centric alternative to Ansoff’s (1965) growth strategy matrix (see Table). The proposed 2 x 2 matrix is categorised by whether firms should employ growth strategies focusing on (i) targeting current or new customer markets or (ii) keeping their current product offerings or offering new or modified products.
The first quadrant is a highly unadvised strategy: It is for firms that want to maintain their status quo or target their pre-pandemic customers with the same product offerings. The second quadrant recommends firms to expand to new customer markets with their existing products. The third quadrant recommends firms to modify or create new products but target their existing customers. The fourth quadrant recommends firms to diversify simultaneously by expanding to new customer markets and creating new or modified products.
This excerpt is from Ofer Mintz's new book, The Post-Pandemic Business Playbook: Customer-Centric Solutions to Help Your Firm Grow. The book details why and when firms should employ one of the four customer-centric growth strategies and provides examples from organisations around the world that have successfully employed those strategies.
https://link.springer.com/book/10.1007/978-981-16-5868-6
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