Recently in an article, we discussed the value proposition and its role in a business…
Consumer Confidence: The KPI Your Business Should Optimize For In This Pandemic
With the novel coronavirus pandemic still raging on, nearly 4 billion people are on lockdown worldwide. These lockdowns may range from strict nationwide stay at home orders as seen in New Zealand to partial lockdowns of hot zones in countries like Nigeria.
Economies around the world are feeling the effect of the lockdowns, which is necessary to prevent the spread of the SARS-CoV-2 virus. Fitch Ratings forecasts a deep global recession this year with a 1.9% decline in global economic activity. The GDPs of the US, Eurozone and the UK will contract by 3.3%, 4.2% and 3.9% respectively, while China’s annual economic growth will stay below 2% this year.
A global recession is imminent. Industries like tourism, airlines, non-food retail, automotive and global shipping are already experiencing the economic crunch as travel restrictions remain in place. The ripple effect of the recession will be felt in other industries as the year progresses.
Luckily, the situation is not all doom and gloom. The IMF expects the global economy to recover in 2021 if the virus is contained and patients treated by strong healthcare systems. While it is reassuring to know that there is a light at the end of the Covid-19 tunnel, let’s explore what this current crisis means for your business.
What Does The Coronavirus Pandemic Mean For Your Business?
With lockdowns and looming recession, your business will experience a loss of revenue. In the beginning of the lockdown, businesses in the ecommerce sector experienced a boom as consumers in lockdown bought necessities like groceries, medical supplies and more online. Other businesses in the tourism industry suffered a loss of revenue because of mass cancelations and refunds. Customers with travel plans had to cancel and stay at home to curb the spread of the SARS-CoV-2 virus.
As the lockdown extends, job losses which were limited to the tourism and hospitality industries will spread to other industries. Forbes reports that Canadian airline, Transat AT, laid off 70% of its workforce while Cirque du Soleil will lay off 95% of its employees. Ride sharing platform, Bird, laid off 30% of its workforce in a video conference call. Layoffs will become more common in the coming months as companies struggle to keep costs down and survive the recession.
This will translate to less economic power as people have less money and become more cautious in their spending. Industries, who saw a boom at the beginning of the lockdown, will notice a drop in revenue as consumers hold on to their money and scrutinize every purchase more stringently. For tourism and allied industries already in bad shape, it will get infinitely worse. Trips customers moved to third and fourth quarter of the year may end up being canceled with more requests for refunds as money becomes tight for households.
Since both the global pandemic and recession are occurring at the same time, it will get worse before it gets better.
Ecommerce Trends Spotted Before, During and Post Lockdown: The Seven Stages of The Coronavirus Pandemic [Part 2]
Preparing for Recession: What Can Your Business Do?
Before a recession, the most common preparation approach is to cut down costs and increase revenue. But this scramble for more revenue isn’t the best way to prepare and survive a recession. More revenue shouldn’t be the KPI your business is focusing on right now.
The KPI that your business should optimize for is one that truly matters and will help you survive the oncoming onslaught – consumer confidence. With customers holding onto their money more tightly than ever, how do you show them that spending their money with your company is worth it?
How do you give your customers this confidence?
Number 1 is to address the concerns of your customers. If you run an ecommerce store, be upfront about extended delivery times due to the prioritization of essential supplies. Let them know how you are helping and doing your bit. Reduce the anxiety that your staff might be working while infectious. Just be up front and clear.
Here is how you can apply this to your business:
1. Position Your Content For Empathy
Given the current crisis, this isn’t the best time to be pushing your products and services. Your content shouldn’t focus on getting more revenue right now. This is because your customers are experiencing upheavals in their life because of lockdowns, reduced hours or job loss, stress from homeschooling their kids, worry about the current pandemic, etc.
Does this mean you should pause all marketing?
No. It is time to approach your marketing and content with empathy for what your customers are facing.
Change your messaging. All messages and content from your business should be relevant, helpful and show empathy.
Knowing how the current situation is wreaking havoc on the lives of consumers, the number one thing on your mind should be “how can I help my customers through this?” This should guide all your content efforts: articles, emails, website copy, etc.
For example, a company in the tourism industry should pause pushing deals for vacation days 3-4 months away. Instead, the focus should be on now as the world is a little too uncertain for many customers. Recreating the benefits people get from travel now should be a priority for any travel company that empathizes with its customers. You can push content about virtual tours to museums, galleries, beaches, cathedrals, etc. While people may not visit these places in person, you can provide the experience that they have.
Use Google Trends to see what customers are searching for and provide them with content that helps them fill that need. In a Google Insights report, interest in online escape rooms in Spain has increased since this pandemic started. The same goes for puzzles in Italy and cut hair yourself in Germany. A travel company with Spanish customers can fill this need for online escape rooms by providing the needed information and entertainment to people cooped up at home.
2. Optimize Your Website for Transparency
More customers will cancel subscriptions and services to save money and reduce uncertainty as the crisis goes on. This means that many of your website visitors will go to your cancelation and refund policy pages to get answers about how canceling their trips, service or subscription will affect them.
Normally, you will optimize and A/B test the pricing, services, home pages, etc. It is time to shift the optimization focus to pages that customers will spend a lot of time on. If you’re in the ecommerce business, you can ease worries with banners telling people their “order is corona safe”. These pages are important. If they do not provide the information your customers are looking for, your customer support team will suffer as customers will inundate them with calls and emails.
It is time to make your website as transparent as possible to help your customers. Talk to your CRO team or expert to move the focus to transparency in refund and cancelation pages. This transparency should also extend to your pricing pages. If you have a gated pricing page and have people contact your team for more information, consider removing that friction to make it easier for them to access your service and give your sales/support team some respite. If you run an ecommerce website, be transparent with customers about delivery times and any other issues you may be facing in fulfilling their orders.
If you don’t know where to start, take advantage of expert help via the #CovidCRAP initiative during this time. Or try out a tool like Convert Experiences to see how you can optimize for conversions, even during challenging times.
3. Spread Positive News
Confidence is the key to recovering from a recession. Giving your customers that confidence will not be easy. The human brain has a negativity bias.
In the present climate, it has become an important task to share positive news. Positive news will counter our inherent biases and boost confidence. Share positive news about the current pandemic and how people are helping each other get through it.
Any news about potential economic recovery will not only make people feel safe but will give them hope for the future. This article from the Good News Network is a great example of sharing the positives to boost confidence and combat our negative bias.
4. Build Trust in Your Brand
Trust is an essential part of any relationship. During a crisis, it is more important than ever for your customers to trust your business.
Many companies are doing good deeds in their local communities to help handle this crisis. Diageo, for example, is donating 96% strength ethyl alcohol to several countries so they can produce over 8 million hand sanitizers for healthcare workers. Stepping up during a crisis is a great way to build trust in your brand.
Another way to build trust is by taking care of your staff. The first thing many businesses do during a recession is to lay off workers to reduce spending. But aggressively laying off people doesn’t guarantee your company will survive the recession. A Harvard Business Review Study on surviving recession found that companies who aggressively cut costs via layoffs are only 21% more likely to beat their competitors after the recession ends. While companies that took a progressive approach by not cutting staff, increasing operational efficiency, investing in marketing, R&D and new assets came out on top with a 37% chance of beating the competition in a post-recession world.
Aggressively cutting staff means your business may not operate at the same efficiency level from before the recession. This will in turn affect how customers perceive your brand.
Your company should have a plan that takes into consideration the different scenarios this recession may follow. Planning for a V- and U-shaped recession recovery will enable your company to invest wisely in marketing and new assets while cutting costs in a way that doesn’t jeopardize operational efficiency.
Additionally, take steps to keep your workers safe, especially if they are working outside their home during this pandemic. Better paid sick leave policy, social distancing in your stores and warehouses, frequent breaks to wash hands, protective equipment like masks and gloves are all measures you can put in place to take care of your workers. This reassures your customers and increases their trust in your brand.
Businesses that hope to survive the coming recession must optimize for consumer confidence. Be proactive in showing customers empathy, removing friction when they deal with your business and providing them ways to cope during this pandemic. This will build trust and confidence in your brand that will outlast the current crisis.
WE HAVE AN OPPORTUNITY TO BECOME MORE CARING, MORE GENEROUS, AND MORE CREATIVE.
Not every small business has been able to stay open, but if you are open and you can sell, you need to do it. Do not feel guilty about doing business. We need as many small businesses to stay open as possible. Whether you’re a small business owner or a consumer, YOU are a critical part of getting our economy back on line. We need money flowing.
Yes, work is about income, but it’s also about so much more. It’s about dignity, agency, contribution, creativity, connection. That’s why, if it is safe for you to do business — if it’s possible for you to do business — we need you to do business.
This crisis forces us to reconsider who we want to be in the face of this thing. I believe this is going to help us discover better versions of ourselves. We can become more caring, more generous, and more creative. We all have a part to play in helping our society heal.