5 industry reference points for navigating ‘uncertain times’

Are we past the point where we can be forgiven for starting a blog post with “these are uncertain times?”  Well, forgive us: These are, in fact, uncertain times of unpredictable and generally uncomfortable uncertain uncertainty.

There are, however, studies, surveys, and statistics all around the web that have aimed to measure and track the impact of COVID -19. To a degree, they can help us make sense of the ongoing changes to eCommerce, its ramifications in the long term, and how you and your brand can adapt. 

We’ve been doing our best to keep up with it all. Here are five major takeaways from industry reports at large today.

1 – Marketing budgets are shrinking—time to work smarter.

Quoting numbers from Statista, Search Engine Watch claims that “digital media is hanging around 40% [decline], while the best estimates go to social media and paid search, with 33% and 30% decline, respectively.”

However, even though global ad spend is dwindling across all channels, search, social media, and email are considered to be “resilient channels” that marketers should prioritize.

Based on a study by Capgemini, CIO suggests that online interaction with customers is rising and that it’s a chance to get closer to customers. They also say that this rise in interaction is an opportunity for AI to help humanize and personalize engagement.

Velocidi clients will be looking to their machine-learning audiences to help keep their campaigns lean while maintaining performance. Focus retargeting on the “likely buyers” audiences, and trim down retention campaigns with “timely re-engagement” audiences using next purchase predictions.

2 – Consumer behavior is shifting.

As we (and countless others) have observed, our needs and priorities as consumers have been changing lately. 

McKinsey & Company reports in one of their latest surveys that between 25 and 63 percent of consumers globally expect their household income to continue to fall. 

However, what we are seeing is that although a generalized reduction in income for consumers is expected, a surge in certain eCommerce verticals can happen regardless. This is due to changes in behavior concerning brands that people usually buy, channels used during this period, and the shift in context.

The EY Future Consumer Index suggests that there are now four new consumer segments that have emerged during the pandemic: “Save and stockpile”, “Cut deep”, “Stay calm, carry on”, and “Hibernate and spend.” According to EY, soon, they may morph into “Back with a bang”, “Cautiously extravagant”, “Stay frugal”, “Get to normal”, and “Keep Cutting”.

3 – Not *all* eCommerce is doing well.

You might have noticed headlines talking about a surge in eCommerce. Attentive’s dynamic charts tracking consumer behavior show April e-commerce sales up 31.73% compared to March. 

However, one could argue that those numbers are coming customers switching from brick and mortar stores to eCommerce by necessity. So, especially for omnichannel businesses, this doesn’t necessarily mean net gains because of the losses coming from physical stores. They’re still paying rent on those stores, after all. 

Also, verticals are experiencing this pandemic very differently. Around the world, shoppers are spending more online with groceries, household supplies, personal care items, and home entertainment (send us your board game recommendations!). On the other hand, apparel, footwear, jewelry, accessories, travel, and out-of-home entertainment, are struggling. 

A study conducted by Bizrate Insights bluntly states that “health, food and beverage purchases made digitally are seeing an uptick. Apparel, not so much.”

4 – Everyone needs to catch up to digital transformation.

If you don’t have an online presence do you even exist? Covid-19 is catalyzing a true digital revolution for many businesses (even outside eCommerce). 

Multiple sources predict that some of the changes to consumer behavior are here to stay. Businesses will need to shift investments towards technology and start rethinking spending on physical stores. Among some of the changes coming out of this revolution, a recent study by IDC suggests that, among other things, “AI-enabled personalized marketing and content management will be in high demand.”

In an article for CIO, Brian Solis writes that “the digital customer journey is going to continue to skyrocket.” He refers to a Capgemini survey with more than 11,000 consumers indicating that not only have consumers stopped interacting with physical stores, many do not expect to go back to previous interaction levels in the next 6-9 months.

5 – Beware of broad discounting strategies

The crisis of 2008 wasn’t so long ago, and some shrewd industry voices are reminding us of where we went wrong at that time. To deal with inventory sitting unsold and to get shoppers back on the stores, many brands applied aggressive discounting strategies. What happened next was that customers kept on expecting discounts years after the crisis ended. It became the new normal.

As Serena Crivellaro, Managing Director, Strategy at KPMG US writes on her Pricing and discounting during COVID-19 article, brands need to “maintain discounting discipline to avoid the downward price spiral that happens when companies start chasing sales.” Her advice: “Know your customers. Prioritize (…) buyers who will reward you for it with long-term loyalty.”

Knowing your customers can become very difficult when all of sudden the behavior trends of the past year are no longer valid. Brands with access to real-time first-party behavior data and machine-learning tools to make dynamic predictions are at an advantage here.

Using predictive customer lifetime value, Velocidi clients have the ability to create dynamic audience segments, and also allocate channel spending appropriately based on built-in CLV attribution models.

General conclusion? There is one thing we, as a technology business, can be certain of. And that’s that we are going to do everything in our power to help our clients combat each of their unique challenges during these [deep inhale] ~ u n c e r t a i n  t i m e s ~. 

Here’s what we know for sure we can help with:

• Reducing ad spend while increasing performance
• Predicting customer Intent
• Predicting customer lifetime value
• CLV attribution 
• Nailing re-engagement campaigns by predicting the perfect timing for each customer.

If any of this sounds useful to you, let’s talk. 

In the meantime, we’ll leave you with this collection of recommended resources. 

Stay sane and healthy.