Five emerging customer strategy trends leaders should watch in Q3 and Q4
We’re in “a new normal.” What trends are emerging and what will endure as we shift into the back half of an unprecedented year?
By Jessica Lloyd and Mike Haas
The first half of 2020 has significantly altered not only how customers navigate categories, but also their communication and shopping preferences. Companies across multiple industries raced to respond to changing customer demands during the height of the pandemic. As states and cities begin to re-open, we are witnessing rapid adaption and an unprecedented acceleration of digital programs as companies shepherd their businesses through the COVID-19 era.
We’ve shared how customer behavior patterns rapidly unfolded in response to COVID-19. Now, as we move into the second half of 2020, here are five emerging trends that will influence customer experience into Q3/Q4.
Trend #1: Responsive retail environments are on the rise
The relationship between brick & mortar and e-commerce shopping has become more complex, as complementary online and offline options have become more widespread and normal — the rise of BOPIS, BISSTH and other blended options have brought together tangible and virtual shopping experiences.
During the second quarter of 2020, successful retailers rapidly rolled out responsive shopping options as demand for blended physical/digital shopping experiences increased.
Best Buy retained most of their year-to-year sales as a result of pre-pandemic bets made on curbside pick-up. Whole Foods established “dark stores” within their retail footprint to better serve online demands. As they prepare for the second half of the year, Starbucks has announced that they are reconfiguring operations to more seamlessly integrate touchless transaction and reduce physical interactions, which will include store closures, a shift to more mobile pick-up, and acceleration of digital transformation programs originally slated for roll-out between 2023 and 2025.
While accelerating future plans is one way to adjust to the new normal, brick & mortar stores need to assess evolving customer needs and comfort to become more responsive to changing preferences. Customer experience leaders can find new ways to blend physical and digital experiences to better satisfy customer demands.
A good place to start is by identifying the key moments that matter across the shopping journey — from point-of-discovery to point-of-fulfillment — when customers most need reassurance, are required to engage in new ways, or are adjusting to the impediments of masks and social distancing.
Trend #2: Consumers will continue to migrate spend across channels and categories
Consumer facing industries such as travel, hospitality, entertainment, and retail have traditionally been fiercely competitive. To stay relevant, leading companies have invested heavily in making their customer experiences easy, seamless, and convenient. They have also paid attention to learning customer behaviors and habits to draw key insights for decision-making. In turn, consumers reward them with a share of their wallet and loyalty.
The shut-down and social distancing measures have shocked some consumers into new behaviors in response to longer shipping times, out-of-stock products, or restrictions of movement. Consumers are rapidly changing their shopping habits especially in places like the grocery store. They are buying fitness equipment they haven’t needed at home before. They are considering alternatives for their summer vacation plans, such as a road trip in an RV. There has been a migration of consumer spending across channels and categories, and this should continue in the short term.
We expect some of this spending in new categories to continue, resulting in new preferences and brand loyalties. This reset of behaviors in the short term opens the door for companies to consider non-traditional segments, develop new offerings, and pursue novel growth opportunities.
Trend #3: Connectivity is the next revolution of experience consumption
“People seek experiences over products” is a well-established maxim that is especially borne by the experiences of the Millennial generation. Over the years, many of these experiences have become social currency as consumers broker their purchases on social media in exchange for connection with like-minded individuals.
During COVID, the definition of social media has broadened as people seek new digital platforms and services that help them meaningfully connect in the midst of months-long shutdowns. Zoom has enabled people to transcend social distancing guidelines and host multi-generational family gatherings. Cooking enthusiasts can join virtual classes with master chefs in digital environments that feel more eye-level and intimate. Even Animal Crossing has helped users feel more connected, through events like celebrating International Museum month and hosting wedding season.
As friends and family have defied geographic limitation and connected right in their living room, there seems to be a prevailing question — “Why haven’t we done this before?” With shut-down and social distancing measures in place during COVID, some people have found that “social media” just hasn’t been social enough. People of all ages are seeking new ways to connect through digital channels.
As friends and family have defied geographic limitation and connected right in their living room, there seems to be a prevailing question — “Why haven’t we done this before?”
These connection-seeking behaviors may signal a new era of experience consumption. Companies should consider how they will respond to rising customer demand for meaningful connection from their digital experiences. For example, retailers could introduce “group shopping” trips with breakout rooms on e-commerce sites, or video streaming services could further innovate simulcast technology that allow users to watch shows together, but remotely.
Trend #4: We’re witnessing the re-birth of video chat
Video chat has been on the rise for about a decade with advancements in smartphone technology, increases in handheld mobile bandwidth and the advent of enterprise platforms like WebEx as day-to-day collaboration tools. Despite the popularity and everyday-ness of Facetime, video chat has still struggled to unseat more preferred channels like texting, email or phone calls. This is most evident in the workplace where video conference participants would join — with their video camera off.
As many adjusted to working from home, the use of video chat spiked for both work and personal communication. At home, people are using popular apps like Zoom for happy hours and game nights. In fact, Zoom has rapidly become a household name while traditional power players have scrambled to deploy free video chat services and new features. Overall, people are more open to using video chat these days, even if it is out of necessity, and they are exploring new ways of using the technology.
Though video chat usage may decrease slightly as stay-at-home orders lift, we expect video chat to remain prominently part of consumers’ day-to-day lives. Large tech companies have already set some of this in motion with recent announcements for making work-from-home policies more permanent, which will no doubt bolster the use of video chat as part of work life. Companies should ideate use cases to scale video chat across the customer experience, particularly for more complex service interactions such as on-boarding, troubleshooting or discussing sensitive matters.
Trend #5: Supply chains will come into the orbit of the customer experience
A lot of what we consume and use every day is grown, manufactured, or built in places far away from our local communities. Consumers are rarely aware of the complex supply chains that exist to get a product in front of them.
In the last six months, shocks to supply chains driven by demand for certain products (like face shields and nasal swabs) have demonstrated a need for more decentralization and flexibility. Stories of the use of 3D printing to support the healthcare system by allowing the rapid scaling of manufacturing output is one example where the supply chain has not only become more localized, but also more visible to, and more participatory with, consumers.
There’s novel opportunity for companies to explore how they can make aspects of the supply chain more connected to customer experience. Decentralized, localized just-in-time (JIT) production can do for manufacturing what the farm-to-table movement did for food and restaurants. One place to start is consider a new role for 3D printing in fulfillment. Similar to the 1-hour photo model at the local drug store, customers could order a broken part for an appliance or toy for pick-up from their local 3D printer.
So what do we do next?
The very first step business leaders should take in exploring new engagement strategies is validating that their pre-pandemic customer insights still hold true. This is the time to deploy customer research in order to understand which trends will not only endure but also have staying power on business priorities.
One place to start is to consider how customers’ unmet needs may have changed and understand what this means for brand experiences. We’re seeing evidence that some shifts in customer priorities as a result of the coronavirus may be permanent.
For example, we may be witnessing the rise (at least temporarily) of multi-generational households as families keep elderly parents home instead of in nursing homes at the same time that college enrollment dips as students defer their 2020–2021 year. Simultaneously, we see that the Internet has become a basic need as public education shifted online, but there’s inequitable access to quality service. Each of these can bear weight on how companies prioritize technological innovation in service experiences.
We will continue watching these trends — as well as others that emerge over the second half of 2020 — and evaluate how these may further evolve or change direction. For more on Slalom’s latest COVID-19 insights and resources for our clients and communities, check out How to work now on slalom.com.
Jess Lloyd is a customer strategy consultant specializing in marketing, brand and communications strategy. She helps clients build laser-focused, customer-centric engagement strategies that build stronger customer relationships and maximize lifetime value. Reach her at jess.lloyd@slalom.com.
Mike Haas is a customer strategy consultant with expertise in the service and support space. He partners with CX leaders to build responsive strategies and action plans that help organizations better connect to customers and embrace change. Reach him at mike.haas@slalom.com.
Slalom Customer Insight is created by industry leaders and practitioners from Slalom, a modern consulting firm focused on strategy, technology, and business transformation.
