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Planning for Impermanence: How Marketing Leaders are Preparing for the Post-COVID Consumer
“Nothing is forever, except change.” - The Buddha
More than a month into the coronavirus pandemic, marketing executives are emerging from a period of profound introspection about their businesses and beginning to settle into something that looks like a plan. In the weeks leading up to the middle of March we met with teams at the largest casino, cruise line, retail, financial services, and insurance companies in the world. While their competitive landscape differed, all were united in their quest to find new customers and generate incremental sales.
They believed, as they still do, that using data to develop personalized customer experiences and brand touch points was the key to a profitable and lasting relationship with their customers. There was honest acknowledgment that there was still work to do, but all were generally optimistic about their prospects. Sales were good. They had time to figure things out.
What a difference a day makes.
On March 15 Governor Gavin Newsome asked all Californians to stay home, ushering in the beginning of the Post-COVID Era. Almost immediately, “non-essential business” like brick and mortar retailers, casinos, and cruise ships all closed up shop.
As the CMO of a global apparel company described, “leadership teams are faced with a triple threat. Supply chain disruptions have made product availability unreliable at best. Distribution through brick and mortar retailers is shut down, and massive budget allocations to sponsorships and sporting events are totally non-productive.”
On top of this, social distancing has created dramatic changes to business operations causing sleepless nights among many managers as they fret about the fitness of their business continuity plans and digital infrastructure. “I spent over a week working with IT to get laptops for my team,” said an embattled casino marketing executive, a telltale sign of just how unprepared many organizations were for the change.
In the weeks that followed, teams retreated to their home offices to begin grieving the loss of their annual plans via web conference. Disbelief about the scope of the pandemic gave way to frustration as teams scrambled to organize virtually. Time was the elusive and central consideration in discussions on how to respond to the crisis. Optimists were convinced that the crisis would be short and shallow, consumers would rebound quickly, and everyone would be back to business as usual in no time.
The Post-COVID Consumer
As the impacts and duration of the virus became clear so did the realization that this situation is anything but temporary. Consumer behavior has already changed significantly. The adoption of e-commerce and digitally enabled services has become essential for daily living. All the while there are more existential discussions happening at home about the people and things that are really important to us, how we’ll live differently once the crisis has passed, and, perhaps most inevitably, what we’ll do when there’s another pandemic.
The impact of the pandemic is very personal and the psychological response will be uneven and difficult to predict. Brands are acknowledging these new realities and organizing in a way that is flexible and responsive to the changing needs of their customers. To navigate this successfully, marketers must be one-part strategist and one-part Zen master and embrace the impermanent, and sometimes contradictory ways, consumers behave as they internalize and adapt to this experience.
Embracing impermanence will require Marketers to let go of old assumptions and ways of doing business and resist the urge to focus too intently on making predictions about an uncertain future. As a result, budget and planning cycles are being shortened. Teams are adopting, sometimes without even knowing it, agile tactics, working in shorter work sprints, in order to gather feedback and iterate quickly. This means organizing resources in a way that gives Marketers the ability to respond to demand from new, and unexpected, consumer segments and market events.
Compounding the problem are the organizational changes that will continue over the coming months. Every company we spoke with either enacted staff reductions and furloughs or were planning to do so within the next 2-weeks. Cautious optimism lingered that the changes would be short and temporary, but, as one marketing executive put it, “our 90-day furlough plan could easily turn into a 120-day plan”, leaving those left behind with the task of figuring out how to navigate the new world order with fewer resources.
In the meantime, craft stores, anointed with essential status, are appealing to entirely new and affluent segment of parents who are responsible for educating and entertaining their children. Gender roles are changing as families working from home redefine household responsibilities and who is making purchases. This explains the urgency that executives are feeling around the ability of their organizations to act on changing conditions, citing “executional readiness and agility” as a top concern.
Hard hit industries like travel and hospitality must manage both demand and supply side conditions. Re-opening will be geographically dependent, subject to occupancy restrictions, and vary based on state and local policies. As a result, no one is expecting much from 2020. “We’re playing for 2021,” says a Marketing VP from a luxury cruise line. Moody’s Analytics predicts that the impact from coronavirus to the travel industry could be greater than the fallout from 9/11, or the 2003 SARS outbreak, due to the global nature of the crisis. Cruise lines are especially at risk given the widespread, negative press coverage of quarantined passengers stranded on ships.
At the same time, a recent article in the L.A. Times reports that loyal cruisers are booking itineraries in 2021 and 2022 and taking advantage of promotions by buying two or three trips at a time. This is a clear signal that these businesses cannot anchor to conventional thinking and must be flexible enough to capitalize on demand opportunities when they arise.
Large enterprises struggle with change on their best days. Leadership is now faced with a two-sided ordeal; reinventing their marketing plans and evolving their operations to meet the new requirements while accounting for organizational changes. Personalization is taking center stage in this conversation as marketers work to develop new strategies to communicate brand purpose and build trust, confidence, and loyalty.
Organizations that institutionalized agile marketing practices and prioritized digital transformation are having an easier time adjusting to the dislocation.
The Path to Enlightened Marketing
The reality is that many leadership teams have underinvested in the infrastructure required to respond to changing consumer and market conditions. This means operational heads are using this time to critically evaluate and address gaps in their functional capabilities by engaging in what one executive described as, “digital transformation, overnight”. It also means committing to a culture of experimentation, taking advantage of the suspension in business-as-usual to try new things as opposed to just paying lip service to innovation.
Presently, businesses are either “minimally operational” or “reaching new segments”. Those companies that are minimally operational must maintain an engaging dialogue and deepen relationships with consumers while they are closed or operating at reduced capacity. These businesses face content design and distribution challenges as they seek to create personalized content for their most loyal and valuable customers. For example, a global cruise line is driving customers to online experiences, featuring content based on their individual preferences and travel history, and allowing guests to “plan their dream vacation” in an effort to lock-in future reservations.
Consumers, through necessity or boredom are exploring new products and services giving businesses a chance to reach new segments. In order to build long-term customer relationships, businesses must identify, profile, and engage these new consumers by capturing and analyzing preferences and behaviors, and testing new content and customer journeys for different audiences. Retail and e-commerce businesses are refining customer models and testing personalized content and product recommendations that are distributed across multiple channels.
The extent to which an organization has deferred investments in digital infrastructure determines the actions leadership teams are taking to establish more flexible capabilities. Enterprises that have invested in Customer Data Platforms (CDPs) are better positioned to capture and analyze consumer behaviors and segment audiences based on those insights, but, according to Tealium, a leading CDP provider, less than 25% of organizations have these capabilities. Those with well-designed marketing automation capabilities are able to rapidly create and distribute personalized content to those consumers across channels.
How Organizations Are Getting Started
- Creating innovation teams- Organizing for flexibility, personalization, and automation is a cross-functional affair and will require buy-in from marketing strategy and execution teams.
- Re-defining content strategies and communication plans with a “data-first” approach- On average, marketing teams use less than 30% of their available contact data to personalize content. Customer preferences, purchase history, website behaviors, loyalty, and demographic data should all be used to target content to recipients based on their lifetime value and demographic and psychographic attributes.
- Starting small and testing quickly- Well-begun is half-done. Teams are identifying a limited scope of content and communications that can be easily repositioned using the customer attributes identified in Step 2 and developing a testing agenda to determine what contact data and combination of attributes create the greatest engagement.
- Developing a digital operating plan- Personalization creates added executional complexity that can only be mitigated through well-designed customer data and marketing automation capabilities. Leadership is sequencing the development of these capabilities to meet strategic objectives and prioritizing based on the state of their digital infrastructure as described in the table above.
Freedom From Convention
While priorities may differ, the prescription remains the same. In the months ahead the only thing we can rely on is impermanence. The success and well-being of our businesses will largely be determined by our ability to let go of old assumptions and habits, many of which have served us well, and create the dynamic conditions that allow us to speak to our customers in ways that are personal and important to them.
Embracing the realities of the chaos gives us the permission to be creative and solve challenges in entirely new ways, free from judgement or attachment to the past, and emerge as a more flexible and purposeful organization capable of creating and deepening relationships with its customers.