Creative customer-centric strategies lead the way to post-pandemic recovery
It is perhaps no surprise that businesses and consumers have been negatively affected by the Covid-19 pandemic and subsequent lockdown, with around 50% of businesses considering themselves to be in a make-or-break situation between now and the end of the year.
“Economically, the pandemic has pushed many individuals and businesses into financial distress,” said Ask Afrika CEO Andrea Rademeyer, speaking at a recent JSE webinar in partnership with TransUnion that focused on how small businesses are facing an increasingly uncertain future after Covid-19.
From a consumer perspective, grocery expenditure has declined both in terms of day-to day shopping, which is down 36%, and weekly top-up shopping, which has declined 19%, she said. Declining household expenditure is having a knock-on effect on most businesses, including SMMEs, which have seen their incomes drop correspondingly. In order to survive, businesses are diversifying their product range (31%), implementing salary cuts or retrenching employees (21%), and cutting overhead costs (15%).
Ask Afrika has been conducting the weekly Covid-19 Tracker survey since the first week of April to better understand the socioeconomic impact the pandemic, the lockdown and the gradual reopening of the economy has on South Africans. To date, more than 9,000 interviews have been conducted. The research firm has been tracking consumer behaviour in SA for the past two decades through the “Target Group Index” (TGI) survey, which measures psychographics, service, products, media and brands.
Given that 90% of consumers are already defaulting on credit, the outlook for small and medium-sized businesses is far from positive, warned Rademeyer. In order to survive, they need to change the way they approach their customers. “Consumers want businesses to amend their product and pricing to meet changing customer needs. The irony, however, is that only 10% of companies have adjusted their prices to attract customers and only 13% have moved their businesses online. This is resulting in declining brand loyalty.”
There is no question that the pandemic has changed the consumer landscape. However, there are opportunities within this changed landscape, said Rademeyer. Quoting Tony Robbins, she advised SMMEs to “Expect change. Analyse the landscape. Take the opportunities. Stop being the chess piece; become the player. It’s your move.”
The opportunities, she said, are around attracting new customers, correctly segmenting new customers and implementing sound marketing strategies. “There is no question that new collaborative models between the government, business and NGOs can yield new markets, sustainable cash flow and real value to consumers and society,” she said.
Sustainable businesses will be those that take cognisance of new customer segments (women, consumers with a heightened sense of personal agency, and online consumers) and new financial models which incorporate both the formal and informal sectors and amend their communication messages accordingly. At the same time they need to respond to this changed consumer landscape with appropriate actions. “Businesses are going to be judged in the future by how they behaved and what they did during this period to provide value to their customers,” said Rademeyer. “In shrinking markets, challenger brands will be the winners.”
Predicting that the only large companies that will thrive post Covid-19 are those that are able to think like SMMEs, she said a new consumer segmentation and marketing strategy could potentially mitigate the effects of reduced consumer wallets on SMMEs.
The big take-out:
Sustainable businesses will be those that take cognisance of new customer segments and respond appropriately to a changed consumer landscape.
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