Knowing the customer is critical in a recession
During the recession, as retailers battle for consumers' ever-diminishing spending, customers have come to expact - and even demand - an even better shopping experience than before, according to Mike Amos, CEO and founder of Empathica.
"For retailers, emerging from the recession ahead of the competition will depend on delivering the right mix of elements to ensure the perfect customer experience, and understanding that mix depends on rapid and direct responses to customers," explained Amos.
There are very few signs suggesting that the retail and hospitality industries will see any improvements in the near future. While the high street may look busy to the casual observer, recent studies have revealed falls in consumer spending. While the young continue to spend, middle income families are now looking for greater value for money, and the over-60s are cutting right back wherever possible.
At the same time, the public hasn't given up going out completely, but Amos warned that they are looking for the best deals: "It's worth noting that a good deal doesn't necessarily mean the lowest price; consumers are looking for value for money in their deals, and value doesn't just mean price but also great customer service."
In other words, marketers who give their customers a positive experience while they shop and are more likely to see the same customers coming back repeatedly. Ensuring that kind of positive experience revolves mainly around customer service, assuming that other 'hygiene factors' (like stock availability and reasonable pricing) are in order. The key to improving customer service, Amos suggests, lies in soliciting, listening to, and acting on customer feedback.
While many consumers are seeing their income reaching a higher level than ever before, they are also seeing their discretionary income being squeezed, mainly due to a rise in the cost of non-discretionary items (such as food, fuel and utilities). Consumers are therefore responding to the downturn by simplifying their lives - a change that is directly affecting their shopping habits (toward, for example, mass discounters and 'dollar stores').
There has also been a significant increase in coupon usage, with recent figures revealing that there has been a 42% year-on-year increase in global usage. There has also been an increase in 'voucher veto' behaviour (whereby, if shoppers can't find an available voucher for a brand on the internet, they are likely to shop elsewhere).
With these shifts in shopping habits, marketers must be ready to engage with customers, understand what they are interested in, and build loyalty to their own brands.
Many businesses are taking the matter of customer experience very seriously, with 34% of businesses that had invested in Customer Experience Management (CEM) in 2008 planning to increase their spending on CEM in 2009, and 49% planning to at least maintain their level of investment.
Measuring and taking action on customer feedback will have a crucial impact on retailers' ability to survive the recession. With customer expectations continually shifting, marketers must therefore use customer insights to better understand how to meet their needs, which in turn will help to protect and grow their market share.