Much has been written about the impact of COVID-19 on the world, both at an economic and personal level. As more and more countries move out of lockdowns and take tentative steps into the new normal, now is a good time to look at the long-term impact of the crisis on consumer behavior. What has changed for good and what trends are likely to prove temporary?
1 Accelerating the rise of digital channels
Amidst all the disruption and suffering, one thing is clear – locked-down people switched to online channels. Our own research with 5,000 global consumers found that respondents spent over 34% more time on a range of online activities, from streaming entertainment to buying food. There’s a full breakdown of the results in this blog.
The new online consumers
Drilling down into the data, you can see two groups when it comes to behavior. Some consumers who had previously shied away from using digital channels were forced online as they couldn’t leave their homes and wanted to access products and services safely. Many of these were digital hold-outs with different needs and expectations to the existing online population – and want these to be met by brands.
Experienced digital consumers become more adventurous
The second group is made up of people trying new things online, again due to having more time on their hands or not being able to go out. We’ve all seen the extraordinary rise in usage of services such as Zoom as enormous numbers of people worked from home rather than travel into their offices. This same trend of adopting new services can also be seen in the growth of telemedicine and online learning. Again, in our survey 18% said they were accessing medical consultations online more than in the past, while 32% were taking online classes of some sort. This rose to 27% for telemedicine and 34% for e-learning in the US. While the majority of these consumers are likely to be digitally-experienced, they are widening their use of online channels, giving those brands that engage effectively with them the chance to expand rapidly.
2 The long-term impact on digital behavior
Clearly, the question is how much of this accelerated digital take-up will remain for the long-term. Will consumers just return to their old ways or will there be a lasting impact in terms of behavior and culture? The answer seems to be that many consumers will remain online, no matter what their demographic profile is. In Italy, which had one of the longest and most comprehensive lockdowns, our research shows a real cultural shift. 28% said they’d carry on using digital channels in the future – just 9% said they’d return to doing activities such as solely shopping offline. This wasn’t just a focus for the young – 26% of those aged 55+ said they now saw the advantages of digital and would continue to use digital services.
3 What does this mean for brands, particularly when it comes to digital strategy?
The crisis has clearly accelerated digitization – Deloitte says that it has moved forward the numbers of people homeworking by five years, while Walmart saw e-commerce sales rise by 74% in its latest quarter, with the retailer confident that many people will retain their new habits. At the same time we face a global recession due to the virus and the damage it has caused to people’s jobs and incomes.
This faster switch to digital and economic uncertainty impacts brands in four ways:
1. Online competition will increase
As digital becomes even more important, a greater number of brands will invest heavily in delivering the right products, services and experience online. This will increase competition and raise the bar for success, particularly given the global economic downturn caused by COVID-19. Only those brands that provide the personalized, tailored experience that meets rising customer expectations will thrive – others will fall by the wayside. Companies will need to continually experiment and test to improve and innovate in order to stay in front of their rivals.
2. The range of groups online will widen
We’ve seen that lockdowns have introduced many new consumers to buying and transacting online. Brands will need to meet their particular needs if they are to keep their custom and to avoid them moving to rivals or back to offline channels. However, at the same time companies will still have to deliver the experience that more experienced digital natives have come to expect. To cover the needs of all of these groups, companies will have to focus on providing a personalized, individual experience to each and every website visitor, based on their real-time behavior.
3. Consumers will embrace new services
As well as people trying existing services such as e-commerce and online banking for the first time, there’s been an enormous increase in the use of newer offerings such as e-learning and telemedicine. While these may have existed in the past, they are now moving into the mass-market, and providers need to understand their customers, and deliver the experience that best suits their needs. Those that achieve this will be able to build a strong brand and customer base very quickly – just look at the success of Zoom.
4. Need for compliance
The acceleration of digital services hasn’t decreased the need to protect consumer data and privacy. Indeed, as consumers use services such as telemedicine that shares even more personal information, the requirement for treating data sensitively and in line with regulations will only increase. This is another reason to focus personalization on anonymous, hot, behavioral data as it protects privacy while still enabling brands to deliver the tailored, individual experience that consumers are looking for.
4 Personalization and experimentation – the key elements of future digital success
As we leave lockdowns, there’s a lot of confusion about what will happen next, both globally and within individual countries. The economic impact of the pandemic is likely to hit hard, but I believe that the accelerated switch to digital will remain. It is therefore up to brands to embrace personalization and experimentation if they want to thrive in the new normal by delivering the experience that consumers require, whatever industry they are in.
Find out more on the impact of COVID-19 on consumer behavior and access best practice advice on how to adapt your digital strategy on our microsite.