Covid-19 has caused supply chain disruptions, a slowdown in production and manufacturing, as well as shortages of raw materials.
A 3.5% decrease in total global Gross Domestic Product (GDP), coupled with other underwhelming trends, such as Foreign Direct Investment (FDI) dropping by 42% and inflation continuing to rise despite stagnating salaries, are strong indicators that demonstrate how fragile our economies are.
However, as governments eased off the lockdowns following the implementation of vaccination programs and consumers began catching up on their spending in an attempt to return to their pre-Covid habits, the global economy was unable to recover at a sustainable rate. As a result, we are witnessing global supply chain disruptions and an environment of scarcity.
As businesses try to bounce back and resume regular operations, they find themselves backed into a corner, unable to meet the demand for their goods and services, leading to disrupted customer experience.
With experts predicting uneven growth and ongoing disruptions, it is important to raise a question:
How can businesses sustain profitability in the current climate and continue offering a seamless customer experience (CX)?
In this article, we will delve deeper into the current global volatility, seeking to examine how businesses can develop resilience and rejuvenate the customer experience.
How are companies balancing fluctuating parameters to provide good CX?
The worldwide supply chain’s interconnectedness, a strength before the epidemic, is now an issue. However, as businesses attempt to continue in the ever-changing environment, their strategy, technology and people-related activities need to be reevaluated to avoid a crisis.
Challenges of service delivery
The global pandemic has resulted in a disruption of normal life, including the way businesses operate. While organisations may adopt temporary remedies, such as increasing their on-hand inventory levels or investing a lump sum of money in the supply chain or additional employees, delays in order fulfilment, delivery, and customer support are still unavoidable.
In the pre-Covid era, when brands competed based on the best pricing, product offering, marketing campaign, or the fastest delivery, the present climate demands a new approach.
What matters to buyers is changing
Longer delivery and waiting periods cause a lot of aggravation and concern in customers’ minds, mainly when the interruptions are widespread and companies are unable to cope with inbound demand.
As a matter of fact, a recent study indicates that 44% of shoppers are feeling stressed and anxious due to an inability to source the items they need, whilst 62% of consumers are worried that out-of-stock products will negatively affect their future plans.
On the international trade front, the indicators are underwhelming as well. For instance, due to the Covid wave in Vietnam, Apple has announced that they are facing longer delivery times. Similarly, the automotive industry is experiencing unprecedented chip shortages that are slowing down the production process.
In the beginning, shoppers were empathetic and shared the sentiment “we’re all in this together,” but they are continuously growing more irritated by the rising wait times and out-of-stock products.
Consequently, what matters most to buyers at this time is also shifting. In times of crisis, people have begun to value brands that maintain open and honest communications, truly understanding their concerns, showing empathy and bringing clarity regarding the product delivery.
Riding the market disruption with what is available
However, despite the shifting buyers’ priorities, businesses are desperately trying to alleviate the immediate problem by stepping in to offer lower- or higher-priced alternatives that are readily accessible. Such strategies, however, come at a cost.
On the one hand, offering a cheaper alternative might secure a sale, but also force the customer to accept a lower-value purchase, creating dissonance in his or her mind. Ultimately, people derive satisfaction from consuming a certain product. Therefore, an unsatisfying alternative may prompt your customers to move to your competitors.
Contrastingly, how will the perspective of the customer be affected if a company offers a more expensive alternative? Is your buyer going to feel like they’ve been tricked by upselling tactics?
Faced with the dilemma, can businesses somehow find a happy medium?
What can companies do to start innovating while in disruption?
The unsettling truth is – nobody knows how long the current circumstances are going to last, therefore, companies must find a way to thrive even during market disruptions. While some big companies can rely on their previous profitable successes or government support to sustain themselves during hard times, many SMEs struggle to stay competitive.
On the other end – we see consumers getting tired of changing conditions affecting their lifestyles. Now, companies have the role of managing customers’ expectations and driving a change in consumer behaviour for the benefit of both the customer and the company.
Change the game
In the previous years, companies used to incentivise consumers to have regular product upgrades or changes. The most obvious example are smartphones — brands would release operating system updates and make them available only for newer device models, leaving older models unsupported. This type of incentivisation promoted new product purchases, nudging consumers to change the product every few years. Other industries use the same tactics, whether we are talking about home appliances or car manufacturers.
Given our current circumstances, can companies continue to behave the same way? Not effectively. Because the uncertainty of the current situation increases the likelihood of experiencing supply chain delays and product shortages, which can leave brands vulnerable. On the one hand – the sales are restrained and unpredictable, and on the other hand – consumers are unsatisfied.
Think about SaaS
The SaaS (Software as a Service) model – initially thought of as a revolution for business model operations – has proved its validity and sustainability for decades. The idea behind the SaaS model – to provide software as a service – can be applied to many other industries. In essence, the service-based business model can be the key to continuous consumer satisfaction and company profitability during disruptive times.
Incentivise long-term product use
Nowadays, companies must consider long-term strategies that can bring sustainable revenue while also boosting the customer experience.
In some industries, brands can reduce supply chain friction by incentivising consumption of longer terms because the production will be under less strain. Additionally, they can rebuild their financial foundation by introducing subscription-based services that support the use of the product.
At the same time, more consumers will experience the product ownership accompanied by an empathetic customer experience, which, if executed strategically, can turn customers into loyal fans.
One of the options brands can utilise is to offer bonuses or discounts if consumers decide to purchase a product and keep it for more extended periods of time. In the case of the automotive industry, manufacturers can introduce a service that is a hybrid between car selling and car renting by reinventing the lease concept.
Consider introducing the following incentives:
- Better terms and richer service options for purchasing long-use products
- Gamification of the user journey for long-use products
- Redeemable points or vouchers after choosing a long-term product instead of a product with a steeper depreciation curve
- Increaseable discounts based on the longevity of the product use
- Subscription-based product ownership (e.g. personalised car leasing offers)
Experiment with service-based models
Being innovative in the CX arena is about redefining a product or a service in a way that completely alters consumer expectations. If you’re having difficulty satisfying particular product demand right now, it doesn’t imply you can’t reinvent to provide a service-based product use.
Small changes can go a long way toward retaining clients. Offering flexible payment options, increasing digital self-service, or creating customer loyalty programs are just a few examples of simple operational changes that can provide a positive customer experience.
During these challenging times, it is tough to manage the environment from the standpoint of a manufacturer or retailer. Still, service-based CX can ease these pressures and provide shoppers with engaging experiences.
Leaders are called to innovate to leave a lasting imprint on consumers’ minds. Luckily, today’s technology can support customer-centric initiatives, such as personalisation on the individual level. Here, at Behavioural Response, we help our clients meet any uncertainty by improving the customer experience with data-driven, omnichannel and iterative Behavioural Campaigns.
Connect with Behavioural Response to find out how they can be applied to your business for maximum benefits.
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