Blog 9 | Digital transformation as a vaccine to cope with the ‘new normal’

By News, Retail

Corona causes dramatic changes in consumer behaviour, forcing retailers to respond with unprecedented agility, at the highest pace. Impact varies across sectors, but even within sectors responses vary widely. Many retailers struggle and seem to get stuck whilst others smoothly ride the new waves and successfully launch new propositions. Why is that?  

In the ‘new normal’ one thing is certain: there is a lot of uncertainty – at least in the nearby future. In many cases, coping with this uncertainty requires an instant and flexible response, to adjust capacity, shift direction and realign offerings. Responses easily take too long, and agility can make the difference. For example, online food retailer Picnic, who shortly after the corona outbreak faced tripled demand. At short notice, they increased delivery capacity in cities, through extending the number of morning delivery timeslots and hiring 500 additional employees. On a different scale, Instacart has nearly doubled their workforce from 200K to 350K employees to offer greater flexibility and their delivery options and allowing customers to place orders two weeks ahead instead of one.

However, agility alone is not enough. Many corona responses need to include innovation, an area which retailers historically do not excel in. Shelves typically have been the same for many years. A lot of retailers are stuck in the paradigm of inefficient and manual processes, inflexible systems, complex governance structures and limited data insights to substantiate innovation. In contrast to pure e-commerce players, who have innovation in their DNA. Digital natives who combine technology and data with a setup of trial and error. It enables them to manoeuvre more quickly. Like traffic application Flitsmeister launching the new service ‘Pickup’ in response to the corona-driven capacity challenges and delays at parcel delivery companies. With Pickup, they call on their 1,7 million application users to help retailers delivering packages. Within 24 hours, ten-thousands of application users registered as potential deliverer and 250 stores showed their interest.

Many factors are in play for to create a setup that accommodates successful and swift innovations. Next to agility, it is also about availability of resources and organizational entrepreneurship to name a few. However, companies like Instacart, Picnic and Flitsmeister illustrate how technology and data can make the difference. Technology as an innovation enabler instead of a constraint and data as the fuel to get it right. For more traditional players who lag these capabilities, now is the time to embark on an accelerated digital transformation journey. We will further elaborate on three key ingredients: technology, data, and agility.

Ingredient 1 – Technology to enable swift innovations


For many retailers, technology is characterized by complex legacy that has been built up over many years. Typically, most attention is geared towards ‘keeping the lights on’. Shifting gears towards innovation requires technology to be more flexible than everCloud and high-performance platforms can help increase time to market in a cost-effective way. 

The current market volatility requires high speed, relevant innovations. Since technology is increasingly wide available, unique and differentiated innovations are crucial to outperform peers. An integrated and seamless customer journey becomes a hygiene factor with personalized offers as a qualifier rather than a differentiator. These developments can only be realised through IT and the integration between IT systems. However, most retailers rely on outdated IT systems and have a fixed IT spend that is not aligned to their operationsUp to 80 percent of retailers’ IT spend is needed for daytoday operations. This leaves only 20% for investments to differentiate or innovate, which should be around 50%To make step change, many retailers face three challengesFirst reducing costs for daytoday operations in a sustainable manner, secondly make the IT landscape resilient for abrupt demand changes and third accommodate agility and fast time to market for differentiated propositions. New technologies are evolving quickly and getting more maturehence opening up new possibilities.  

Many companies still choose on premise solutions. Meanwhile, cloud platforms are creating great possibilities to seamless integrate standard plug-and-play solutions in existing IT landscapes. By using cloud platforms, you create the ability to easily scale up and down, to align IT spend with business volumes through pay-per-use fees. In areas requiring differentiation, flexibility and fast time to market, we observe a vast increase of low-code platforms. Annual market growth of low-code is between 30% and 50%. It can reduce development time with a factor 3 to 6 compared with traditional software development. The philosophy in the program language is to click small, modular building blocks into each other, hence preventing traditional heavy coding. These building blocks then can be tailored to specific needs. Moreover, maintenance cost savings can add up to 50% (complex integrations). Gartner predicts that 65% of all software development will include low-code by 2024. An interesting example is Lidl, who has built an ecommerce platform that is only available at special times of the year, such as during holidays when people are prepared to eat more luxuriously. Low-code in specific made this business case viable. This way, technology becomes an enabler of high pace iterative developments (launch and learn) of innovations.

Ingredient 2 – Data as the fuel to get it right

Already since a long time, data has become the cornerstone for understanding consumer behaviour and making the right decisions to fuel growth ambitions. However, with corona this is becoming more complex since historic data is no longer a reliable start to predict the future. Yet, accurate forecasting has gained importance due to changing behaviour and volatility in demand.   

A data science capability (including predictive analytics) has proven to be a key asset for quite some time now. Both through personalizing offerings to meet demand and through adjusting supply accordingly. One of the most well-known examples is the American supermarket Target. With data, they once predicted a high school girl’s pregnancy based on her spending habits, before her father did. On the demand side, a data science capability is more important than ever due to corona. Demand is erratic and customer loyalty can only be achieved through an extensive understanding of a changing customer journey. Surprising your customer is not easy and competition is fierce. A company like Cool Blue shows how to create fans, with their tagline ‘Everything for a smile’. On the supply side, the pandemic has shown the vulnerability of supply chains and the importance of reliable forecasts. Patterns in replenishment and promotional sales have completely turned around, requiring a different approach to forecasting and often work-arounds to manage supply adequately. A large Dutch do-it-yourself retailer for example, established a manual loophole to process orders, because of limitations in their existing systems.

Unlocking, structuring and enriching data is one thing, but translating it into (actionable) business insights to enhance integral decision making, is another. This hinges upon the data science capability to be seamlessly linked to the business. Carefully selected dataset should be easily and instantly available at different organizational levels. For example, a company CCO is interested in performance across stores, whereas a store manager rather needs commercial insights on how to improve on NPS, conversion and basket size in one specific store. Having the right data available enables determining specific actions per channel, region or customer segment, whilst making substantiated cost/benefit trade-offs. An example comes from Picnic, who uses data analytics to optimize the fill rate of their crates. Data showed them their minimal order amount of 25 euro mostly resulted in the need of a second crate that was often minimally filled. By increasing the minimal order amount to 35 euro, this second crate is well-filled. Most customers already ordered over 25 euros, so this increased threshold did not jeopardize customer satisfaction. A simple example of how data can be translated into actionable insights that create value.

Ingredient 3 – Agility and organizational resilience to keep up with the pace

Digital transformation is not just about data and technology. A company’s culture often is the number one barrier. This includes leadership, way of working and employees’ skillset & mindset. Embedding agility in a company’s culture is key – but not easy. Starting point can be a ‘lab’ set up where data and technology are combined with an agile way of working to accelerate innovations and hence organically change from within. 

Culture evolves and strengthens over time, making it often a barrier to transform. Successful innovation requires an entrepreneurial mindset to be embedded across the organization. Leadership must be able to delegate responsibilities and give guidance based on output rather than throughput. Giving employees ‘trust to act’ is key. For many retailers, this has proven to be a positive side-effect from corona, where employees had to work from home in a more independent setup. Sustaining this when the working situation is ‘back to normal’ will be challenging though, unless it is structurally embedded in your setup. Booking.com does this by authorizing any employee to launch and experiment on millions of customers, without management approval. To strengthen innovation culture, the best companies use culture hacking. Referring to costless small actions, possible to start instantly, leaving big impact on company culture. Google, for example, has the Courageous Penguin award for people who dare to take a risk without knowing the outcome, just like the first Penguin to jump from the iceberg. To encourage new ideas, Ben & Jerry’s introduced the Flavour Graveyard of unsuccessful flavours. Motivating employees to have the courage to look forward and to become ambassadors of innovation is needed to accelerate change.

Agility can only be embedded in the organization when facilitated by the way of working. Short cycles facilitating continuous improvement iterations is needed to speed up the pace of innovation. Again, a great example comes from Booking.com, running more than 1,000 experiments simultaneously. On estimate, they run over 25,000 test each year, to truly understand customer behaviour and respond accordingly whilst most retailers do not go beyond a few dozen per year.

But how do you become agile? A good starting point can be to initiate innovations in an isolated lab set-up first. In this lab, a dedicated team focusses on innovations. Working in sprints of 2 to 3 weeks, prioritizing their activities from a backlog full of innovative ideas and working to a minimal viable product each sprint. It facilitates alignment between all ingredients to increase adaptiveness and guarantee progress, to make the digital transformation really stick.

Conclusion
Any successful digital transformation hinges upon advanced analytics, flexible technology and organizational agility. It is the combination that can drive swift innovations effectively. A comprehensive and urgent agenda in case you lag but embracing and embedding all ingredients is key to make digital transformation work!

Contact
Bram Gilliam

Director at IG&H
E: bram.gilliam@igh.com
T: +31622564054
 

Maarten Vaessen
Partner at IG&H 
E: maarten.vaessen@igh.com T: +31653571666

Author: Myrthe van Hoek (myrthe.vanhoek@igh.com) 

Blog 7 | CEO’s about their response to the new normal

By News, Retail

Through an exchange of letters, Marjon Kaper (CEO ANWB Reizen) and Erik-Jan Mares (CEO Zeeman) provide answers to four questions posed by Bram Gilliam and Jasper van Rijn (IG&H Retail), focusing on how they address and institutionalize the challenges and changes they are facing as a result of the corona crisis.

During one of his first press conferences on the corona crisis, Mark Rutte emphasized the measures introduced in our country were of unprecedent scale. All of a sudden, our main concern was focused on feeling safe, whether at work, in shopping streets or on holiday, something we never experienced before. Safety currently comes in the form of a 1.5-meter society. A society in which we always keep our distance and a travel ban applies to many countries. At the same time, the need for personal contact and interaction is bigger than ever, in order to motivate employees and retain customers. It feels like a contradiction and creates a challenge for organizations to add social value to their offerings. It does not only require adjustments in communication towards customers, on the shop floor and within the supply chain, but it also requires adjustments in the organization itself.

1.5-meter economy
Today, we are aware that the measures stabilizing the spread of the coronavirus will have a structural impact on our society. The Dutch government asked all branches to provide action plans on how to rebound business, while guaranteeing safety of customers and employees. A strict entry policy, clear store routing and high tolerance in rebooking of travel plans are examples of the rebound plans in your branches. Personally, it makes me wonder what the 1.5-meter economy does with the people behind these plans. I can imagine it takes various approaches and requires scaling up at different paces for every single business unit, from head office employees to front line staff and travel guides. This brings a high level of complexity.

What actions did you take to make your employees feel safe and secure?  

Erik-Jan Mares
This question takes me back to March 13th, the day that the coronavirus reached our country and things changed. Up to then, Zeeman only experienced some delayed inbound shipments from China, but from that point onward it became clear the virus was going to have a much bigger impact. To make things more complex, Zeeman is operating in seven different countries, all reacting differently.

The most important thing we did was communicate frequently to keep our teams informed and simply to show that we care. ‘We can imagine how you feel, that you are scared or uncertain and that you wonder why your store is open or not‘ – these are all examples of topics we wanted to talk about. We mostly worked with videos to get across a more personal message. Next to that, I personally visited 19 stores (1 in each of our Dutch regions) in the first three days of the lockdown to show our support and to really understand what was going on. An intensive, but very rewarding thing to do.

Afterwards, people felt a little more confident and at ease. In this crisis, safety and business continuity seem to be on opposing sides. This brings up a discussion which you can move away from or directly address and we tried to do the latter one.

Marjon Kaper
What a strange situation we are in, right? Who could have imagined that the entire organization (in our case over 300 colleagues) would work from home for more than two months? After Mark Rutte announced that we “should stay at home as much as possible”, we quickly arranged that all our colleagues, including the ANWB Reizen customer contact center, could work from home. In the first weeks, there was a lot of work to be done. As ANWB Reizen, we are active in tour operating, camping and leisure activities (a day out, walking and cycling in the Netherlands) and we run ANWB Golf. In a short time, we had to cancel all organized trips and activities, inform our customers and repatriate 2000 travelers from all over the world. All this was achieved from the attics, kitchen tables, or living rooms of our colleagues.

This experience made me realize that you do not have to be physically together to get things done, and that there are endless possibilities to work remote. I believe that leadership and creating trust are always important, but the physical distance created by this crisis poses the real challenge. In times like these it is more important than ever to be transparent and approachable. We try to create continuous insights into how we are doing as a company and emphasize that we are part of the larger ANWB, which is a healthy organization with healthy financial buffers. Also, we have continuous and open contact with the works council, having constructive discussions on a weekly basis. We regularly communicate to our people through vlogs and blogs and next week we will be meeting with senior management to catch up on the latest details. We have a great way to enable all levels of the organization to speak up on what is on their mind, through our internal social platform “ANWB talks”. The platform offers the opportunity to discuss and share all kinds of topics. This can be a specific group, in terms of interest, but also top down. We encourage colleagues to respond and interact here.  

Now, it seems that we can meet each other again soon, in person. We prepared a plan in which approximately half of the employees can come to the office, considering the 1.5-meter distance. We aim to maintain the efficiency that working from home has brought us, reducing travel time and traffic jams as much as possible. The office is increasingly becoming a place where you want to be, every now and then, especially to meet your colleagues, but not a place where you must be present every day to sit behind your desk at 8.30.


Leadership
Managing and supporting employees has become top priority in organizations due to the corona crisis. Organization leaders are called upon to lead organizations through the crisis. This requires a delicate balance between masculine (a directive and decisive approach) and feminine (focusing on connection and intuition) leadership styles. On the one hand, leaders must project calmness and control to remove uncertainty of employees. On the other hand, inspiration and trust must be projected to keep employees motivated and confident. We see examples of organizations doing their utmost best to inform and involve employees. For example, CEOs who take the time to share thoughts and developments with their organization through weekly of even daily video messages. Moreover, we see decisions being made fast and decisively, for example in expanding e-commerce capacity.

In your opinion, what are the key leadership traits you rely on in times of crisis?

Erik-Jan Mares
My preferred leadership style is to give trust and responsibility to the team. However, in times of crisis, I temporarily switch to a more directive and decisive style. The management team participated in a training last year, making the team well-prepared for this switch in style when the crisis hit our country. Still, we discussed as a team how to allow for fast decision-making and consciously decided that this would centre around very few persons only. I think the whole team appreciated this discussion, including myself.

One example is on the communication we discussed earlier. I had a clear view of how I wanted to bring that forward, in what tone of voice and with clear focus on empathy, which I guaranteed by personally staying on top this. Currently, the responsibility is fully back with the team. So, if you ask me, the most important leadership quality required during a crisis is decisiveness, hand in hand with keeping the human dimension (‘menselijke maat’)

Next to that, leading by example is a practice I strongly believe in. You do not know what goes on in the minds of others, if you have not experienced it yourself. Creating visibility, showing that you care and starting a conversation. In this way the store visits I talked about earlier are very important for me as they provided a real opportunity to be in touch with so many people.

Marjon Kaper
In general, I do not think there is a big difference between leadership during a crisis or leadership during “ordinary” times. As a leader, I believe it is always important to indicate the direction in which the organization is going, that you make quick decisions and communicate them, as well as being approachable and accessible to your colleagues. The current situation does present additional challenges to the leaders of the organization. For example, communicating with the right tone or remaining visible and approachable, as mentioned above, are more challenging from a (physical) distance, when everyone is working remotely. As management, we write blogs and record weekly video messages for our colleagues. We also try to pay special attention to the social aspects of working, for example by organizing digital drinks. Fortunately, we are not unique in this and we see many organizations around us who do this.


Culture 
“Only a crisis produces real change”, economist Milton Friedman once said. Changes, which typically take years, are now gaining momentum. These changes become visible in many areas. There is an increasing demand in home delivery, children are following online classes and elderly know how to use digital channels. A similar movement is shaking up organizations. A digital working environment is slowly becoming the new normal, possibly bringing structural benefits. New partnerships arise, deeper as well as wider into the supply chain. These changes seem to be accelerated by employees showing a greater amount of decisiveness and focus. In my opinion, the challenge is to institutionalize the positive side of these changes to unlock a structural, more efficient way of working.

Could you describe how the Corona crisis changed the culture within your organization and how you attempt to institutionalize the positive aspects?

Erik-Jan Mares
The culture of Zeeman focuses on frugality (‘zuinig’), on genuine care of people, resources and society. We are a family business with a high level of involvement, acting differently and being a little bit headstrong (‘eigenzinnig’).

At the start of the crisis, the way of working at Zeeman changed drastically. It used to be slightly old-fashioned: for instance working from home was not done commonly. Currently – and I believe that this will continue after the crisis – attending a meeting at Zeeman is possible regardless of your workplace.

Next to a new way of working, the ability to focus on a few things only enormously increased. We have always been a very lean organisation with the ability to act quickly. However – now more than ever – our focus is on ‘getting things done’. We switched from thorough and deliberate decision making, to fast, less comprehensive, but still thoughtful decision making. Herein, the key is to focus. Prioritize and focus on the three things that matter most. An example is the application we use to share the videos I referred to earlier. Within a week, we launched this application, an introduction which usually takes much more time. How to preserve these changes in the future is ‘the million-dollar question’, since the list of possible projects is already growing. Leadership can help in prioritizing and serving as an example. However, the main question is whether the organisation is ready and whether people are capable and willing to internalize this way of working.

Marjon Kaper
We definitely see acceleration in digitization. Some processes digitized at an accelerated pace during the past weeks and it is fantastic to see how skillful we have become with organizing digital meetings. A cultural change I observed, is that remote working has increased the need for trust that you must have in your people. I sincerely hope that the amount of traffic jams in the Netherlands will reduce, as a result of increased amount of trust and responsibility we give to our employees in deciding how, when and where to work. Now, the corona crisis reinforces that trust, even among managers who might have found this difficult in the past. I hope we can continue to assume that people are motivated to work to the best of their abilities. Ideally, we would only come to the office because we think it is valuable for certain activities or meetings, and not as a habit.

I also see positive changes in our way of working. We are in the middle of a transition of our internal organization and are merging a number of business components. Since January 1st, colleagues have taken up their new positions and we see that people are getting to know each other quicker and seek cooperation more easily since the crisis requires us to do so, for example in repatriating customers. The crisis is disastrous for our business, but it is an accelerator for our transition.

The big question remains, how do we hold on to these positive effects? Personally, I intend to never schedule a meeting again for which people require to be stuck in traffic; from now on I will always take that into account. I understand that this will be challenging, but in my opinion, this requires leading by example and persevere.


Social impact
While physical distance between people is greater than ever, social connection is intensifying. People look out after each other more. Spontaneous support initiatives for neighbors or local entrepreneurs arise and additional gratitude to healthcare staff is shown. Moreover, grocery shopping is no longer a daily activity, but a fulfillment of primary needs. The corona crisis puts society under a microscope, resulting in enlarged focus on the societal role of organizations. A study done by Nielsen, tracking changes in consumer behavior caused by corona, also indicates this. It shows consumers have an increased interest in the supply chain, demand increased transparency and prefer buying more local. Changes like this evoke reflection and ask organizations to think about what they truly want to represent. I am curious to what extent you reconsider your positioning in order to (re)connect to the changing world.

Does this crisis affect the role you want to fulfill in society and your company’s purpose? 

Erik-Jan Mares
Prior to the Corona crisis, Zeeman already had a clear vision of its purpose and role in society. Our way of working, with its human dimension, is who we are and what is being reinforced by the crisis. The paradox of balancing between people’s health/safety and business continuity is a topic we already discussed at Zeeman. When the government decided to keep the Dutch stores open, we felt the obligation to continue offering our products, while guaranteeing safety for employees and customers.

Another example is our CSR policy. We were already investigating how to reuse materials and increase local sourcing. From a CSR perspective, it makes no sense to circulate goods by sending them back to China to recycle. As a result, we need local facilities that can do this close by. The crisis confirms that the things we started are more valid than ever.

To be honest, the crisis is an opportunity for Zeeman to strengthen its position. We mainly focus on slow fashion, basic products that have a permanent rather than a seasonal profile and are offered at discount rates. The amount of people interested in slow fashion with great value for money might only rise as a result of the crisis.

All in all, I believe that our companies purpose together with the mentality of our people is going to make us emerge even stronger out of this crisis.

Marjon Kaper
The purpose and mission of ANWB is to let its members go out or get on the road, carefree and with great pleasure. By carefree, we mean for travelers, as well as with the least possible impact on the environment. For this reason, we compensate for CO2 emissions of all trips that members and customers make with us through ANWB Reizen. Obviously, this is not enough yet. We strive for further sustainability of the tourism sector. This was already our vision and it is strengthened by the current crisis. We do expect consumers to be more critical of travel organizations, airlines and hotel chains after the crisis, but we do not consider adjustments to our purpose necessary.

With special thanks to Marjon Kaper and Erik-Jan Mares,

Bram Gilliam
Director at IG&H
E: bram.gilliam@igh.com T: 0622564054

Jasper van Rijn
Partner at IG&H
E: jasper.vanrijn@igh.com T: 0653376760

Authors:
Myrthe van Hoek (myrthe.vanhoek@igh.com); Marijn Reiff (marijn.reiff@igh.com)

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Blog 5 | How to create an intimate customer relationship whilst keeping a ‘social distance’

By News, Retail

The corona virus pandemic ushered in a new reality and it is increasingly becoming clear that these changes will persist for a prolonged time. Consumer behaviour has seen radical changes (e.g. hoarding of essentials) and people are finding new ways to meet their needs.

Customers are looking for a genuinely emphatic connection while having to come to terms with the 1,5-metre-economy. This poses a conundrum for Retailers. Having had to close their stores, they are missing out on valuable customer contact. Moreover, there is no historic data or experience with this unprecedented crisis. Understanding customer needs and behavior that has radically (and instantly) changed is not easy.

Historically, shopping in stores is the ultimate way to create an intimate and personal connection with customers. Due to corona, online is rapidly becoming the starting point for customer journeys, even in areas where this did not seem obvious before. New solutions need to be found to address the missing personal offline touch.

One success story of customer intimacy is Chinese department store Intime. They developed a new way to connect customers with their brands during the Corona lockdown by offering livestreams to provide personal advice and tutorials. Per livestream one representative was able to help more customers than they normally could in half a year. Now, Intime is planning to offer 100 livestreams per day as a permanent fixture.
In this blog we elaborate on 3 elements that we see as crucial for becoming a customer intimacy frontrunner:

  • Be creative in how to understand your (new) customers while they are still discovering their current needs
  • Translate insights into radical new and customer driven solutions
  • Last but not least, how to create a heartfelt connection with your customers

1) Be creative on how to understand your customers while they are still discovering their needs today
Radical times ask for new, explorative, ways of understanding people’s changing needs. Retailers are used to automated data-driven insights that enable optimization of the ‘ongoing’ business. Now is the time to use analytics as a means to get insight in how customer preferences and behavior have changed before the crisis and now. Widening your scope from ‘customers’ to ‘all humans’ is key in that.

To understand how people’s behavior changes, create real-time data that can be contrasted with historical (POS) data. Form a customer insights taskforce to stay on top of the latest developments and encourage them to seek new ways to get input from customers. Web scrape relevant news pages and opinions on social media. Create thousands of datapoints through simple and targeted surveys, polls, A/B testing or smiley terminals in stores. Determine which information is relevant for whom and make it easily accessible to act upon (via dashboards). This way, everyone stays on top of changing circumstances as the virus develops.

With the historical and real-time data you can investigate shifts in popular items and categories, price segments, how people shop online compared to offline, at what times. Segment customers not by traditional demographic characteristics (e.g. “the elderly”), but segment according to behavior and preference characteristics. Find out if, how and why your customer base has changed, or why it has not. Improve (where possible) analyses with predictive models reflecting new demand patterns.

Despite efforts as mentioned above, data will not give all the answers. Therefore, interpreting data and validating your hypothesis is more important than ever. Not only enrich your findings, but also discover new ones by entering in a real dialogue with your customers. Use underutilized sales or store personnel to call, chat or organize (digital) sessions. Understand why needs change, what choices customers make and see patterns emerge.

2) Translate insights into radical new and customer driven solutions
Identifying people’s altered needs enables retailers to take away pains in a way that maximizes value. A successful example is Nike. During Corona they invested heavily in promoting their digital fitness app; Chinese consumers eagerly made use of the digitally connected ‘expert training network’ while quarantined. As a result, Nike’s digital business in China grew by more than 30% during the first quarter and maintained momentum throughout this period.

Quickly developing new initiatives enables connecting with customers in a way that sticks. Faced with increased traffic at stores, Albert Heijn and Jumbo were quick to recognize concerns of their senior target audience, being a group at high risk for corona, by organizing an ‘elderly hour’ in the early morning.

Whereas the first retailer extending their return policy or instating a ‘elderly hour’ will stand out, the tenth retailer won’t be noticed. Furthermore, actively involving customers in developing new solutions to take away pains and address needs might lead to radically new ideas altogether.

Success doesn’t necessarily mean that an initiative must yield euros right away. Rather, if you have demonstrated genuine connection and intimacy it will stay in peoples mind.

3) Last but not least: how to create a heartfelt connection with your customers
There’s a thin line between really connecting with customers and giving them the idea you are taking advantage of the situation. What might start as a genuine promotion can easily backfire if your actions are not perceived as genuine. RUMAG, for instance, experienced this when they were exposed to profit from their collaboration with the Red Cross to raise funds for fighting the Corona-virus.

Sympathetic actions can deepen connections with customers. For example, one Albert Heijn entrepreneur released a touching advertisement encouraging customers to shop at local (competitor) bakeries and groceries to support them. Likewise, UberEats gave discounts on delivery from local eateries to support local businesses. What we learn from China is that local players have shown to be better positioned to come up with a sympathetic response than international players, further reflecting the need to enter in real dialogues with your customers.

One of the key elements to create a heartfelt connection is to be emphatic; speak early and directly with consumers, while sticking close to your brand identity. Make them feel you understand how they are coping with this crisis and care about their wellbeing. Customers are still keen on the value you create for them; telling them what innovations have arisen from dealing with the crisis and how you are serving them in new ways will make them curious. Finally, give customers means to stay connected and be accommodating to things that are out of the ordinary (e.g.: be reachable at non-typical moments, be less strict in policies)

If set-up well, creating customer intimacy enhances lifetime value after the corona crisis
Taking time now to understand changing needs can feel counterintuitive – because the building is on fire and it is important to assure that every euro is well spent. However, it will prove crucial when trying to maintain an intimate relationship over every channel even after the corona crisis, since customers will continue to switch between their online and offline journeys. Take the courage to pursue radically different initiatives and go the extra mile to create a heartfelt connection. Consumers will remember your genuine actions and will potentially be a fan for life.

Contact
Bram Gilliam
Director Retail at IG&H
E:  bram.gilliam@igh.com T: +31622564054

Maarten Vaessen
Partner Retail at IG&H
E: maarten.vaessen@igh.com T: +31653571666

Rinke Klein Entink
Manager Analytics at IG&H
E: rinke.kleinentink@igh.com T: +31645530833

Author: Evelien Kip (evelien.kip@igh.com) and Robert Briggeman (robert.briggeman@igh.com)

 

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