COVID-19: Last Chance to Digitize Customer Experience?
How to adapt to mass consumption in digital channels during the contingency
Salvador Muñoz is one of the more fortunate executives regarding the impact of COVID-19 on his business. He is CEO of Beerhouse.mx, Grupo Modelo’s online store, and saw sales increase fifteenfold owing to the contingency. In the fashion industry, one market leader enjoyed a 50% growth in online sales.
Other companies were not quite as lucky. With ultra-connected consumers, the pandemic could be the last chance to modernize your customer relations and get your online sales off the ground.
Time and need: ideal conditions for digital transformation
Beyond panic buying, consumer behavior is undergoing an even more profound change: the accelerated adoption and mass consumption of digital channels. As a result of restrictions to outdoor activities because of the contingency, purchases through mobile applications reached a record 23.4 billion dollars in the first quarter of 2020.
Videoconferencing has become indispensable for work and communication. In fact, Microsoft Teams platform usage surged 1,000% in March. Moreover, many physical stores have been replaced by online shops. Keeping in touch through websites, email, WhatsApp, chats or SMS has become even more critical to reassure consumers.
Daily visits to various supermarket chain’s website doubled between March and April. Companies are adapting in order to capture these new digital consumers. In the footwear sector, Flexi is offering everyone free delivery and the sports shop Martí launched the initiative “Cuarentrena” (meaning ‘quarantrain’) for at-home workouts. In the eyewear market, retailers Ópticas Lux and MásVisión began selling their products via WhatsApp on April 9.
Use data to migrate customers and grow digital marketing returns
Nowadays, digitizing customers leads to savings in future acquisition costs. Google uses an auction-type model for buying keywords, as follows: the higher the number of companies that want the word, the more it will cost. Businesses that had the opportunity to digitize their physical customers before the crisis are now capitalizing their existing bases to promote their online sales channels.
Muñoz recommends investing in digital marketing that focuses solely on conversion: “The market has been battered; we need to weigh each peso. If the consumer is looking for Stella beer, I have to make sure I come up first in the Google search results.” On Facebook, the manager recommends demonstrating the benefits of digital shopping, which in this case could be summed up as "stay home and receive your beer."
By the time customers visit the site, their purchase intent is already high. Several retailers saw their conversion rate (sales per site visit) double or triple as a result of the contingency. The challenge lies in assuring the availability of the product consumers are looking for. One leading electronics retailer offers 18,000 products online, 70% more than a physical store, and its online sales are currently equivalent to those of eight physical stores.
Remove luxury, customers will understand
The unexpected increase in online sales has produced some logistical difficulties, leading many companies to simplify their supply. “What will let me live for another month and what is unnecessary?” For example, in the case of Beerhouse.mx, the ‘glass + beer’ combos have been stopped, an essential decision to avoid increasing lead times that have already been affected by the crisis.
Another "luxury" is same- or next-day delivery. "Right now, this is a promise that’s impossible to keep," said Muñoz. At checkout, his site updated delivery time to up to seven days and thanked customers for their patience if orders are delayed. "Customers understand that this is an exceptional situation and are more tolerant," he added.
Better safe than sorry: contactless operations and change in indicators
There is a prevailing rule for operations: better safe than sorry. Contactless delivery and drivers wearing facemasks or having their temperature taken are essential. Packaging operations are divided into three sealed shifts: the composition of employees never changes. Therefore, any employee who becomes ill will never have come into contact with staff of the other two shifts.
Each part of the value chain poses a risk. Constant communication with partners and suppliers is a way to ensure visibility regarding product availability. When products that used to be sold in one month are now sold in two days, it is time to adapt processes and indicators. Bring inventory in from physical stores? Hire drivers? Switch providers? Several solutions emerge to face these challenges.
As the chemist Antoine Lavoisier said, “nothing is lost, nothing is created, everything is transformed." While many companies are cutting their employees' salaries, Amazon announced in March that it would be hiring 100,000 warehouse workers and increasing wages by 13% to consolidate its operations. Accelerating digital operations will enable companies to remain relevant during this contingency.
