The latest figures in the U.S. show that inflation is now slowing down to 4 percent, yet the International Monetary Fund has also stated that the world economy faces “feeble and uneven” growth for the rest of the decade.
So, how should businesses adapt? When spending increases, growth is easy. Businesses get to focus on acquisition and celebrate natural growth. However, when spending slows down, businesses tend to become more cost-focused and have to do more with less. The C-suite shifts focus to holding onto customers to ensure that the organization still has market share on the other side of the downturn.
However, necessity is the mother of reinvention and some of the best business success stories come out of difficult economic times. While some businesses become more prudent with their spending, others seek to grow their organization’s adaptive capacity and build more fruitful customer relationships.
Time to Transform
In fact, the Winter 2023 Fortune/Deloitte CEO Survey highlights that CEOs are continuing to pursue longer-term strategic goals by investing in business transformation as well as new product and market innovation, while not sacrificing focus on the short term.
It’s important to remove friction and improve engagement in all channels because customers are more likely to shop around for the best value. Businesses need to gather insight into how customers are behaving across all of their channels while ensuring that physical and digital experiences are integrated and convenient.
Businesses can achieve these priorities by consolidating their customer data and orchestrating personalized campaigns across every channel. An economic downturn is a time to rethink, but it doesn’t mean that businesses have to shrink, despite the fact that many are having to work with reduced resources. Those teams that are able to lean into automation to help with repetitive and manual tasks — especially those that have gathered rich data sets that are well structured and accessible to all teams — are in the best position to do more with less, identifying the most effective channels and optimizing efforts as a result.
Surfacing New Opportunities
Although businesses may use a downturn to consolidate, it’s important that they don’t put their eggs into one basket. Diverse customer bases, sales channels and media touchpoints make businesses stable. If the sales and marketing ecosystem is diverse, the impact of disruptions will be lower.
By consolidating all sources of customer data into one single view, businesses can find patterns in consumer behavior that they didn’t know existed and create tailored marketing campaigns for different customer cohorts. For example, a business might discover that its e-commerce customers that make infrequent in-store purchases are actually their biggest spenders and have the highest customer lifetime value. It can then create tailored campaigns to invite those customers into a store for an early view of the season's range while also targeting similar audiences to acquire other customers like them.
Using customer data to identify outliers and opportunities can then help the business to expand and diversify, rather than contract throughout the downturn. It’s not just about targeting more customers; it’s about targeting the right ones. Improvements in digital capabilities can bring a new level of precision in spending and new business growth opportunities.
Empowering Customer Service
It’s important for organizations to build and foster customer relationships during any recession or crisis. When businesses can show that they're in tune with their customers' challenges and needs, they're more likely to maintain positive relationships and retain them.
The opportunity to more effectively use customer data spans well beyond marketing. Empowering customer service teams to understand how customers' priorities, preferences and behaviors are changing during a downturn creates powerful improvements to customer engagement.
For example, businesses can build dynamic customer segments and surface these in support channels to provide more personalized support interactions. They can also use their customer data to create highly personalized one-to-one campaigns that proactively engage customers who are at risk of churning.
By fluidly tailoring every customer interaction, retailers can create more positive experiences while increasing customer satisfaction and retention.
Enhancing the In-Store Experience
Engaging digital experiences are becoming table stakes, however, the in-store experience today is largely devoid of personalization with every customer receiving the same sales experience.
The need to improve the in-store experience during a downturn is paramount as retailers are locked into leases and must cover their investment in rent, wages and inventory.
Digital channels benefit from easy tracking and data collection; physical channels, on the other hand, are largely devoid of measurement with the exception of the final transaction. With retail conversion rates ranging from 10 percent to 30 percent, the majority of customer interactions go unmeasured.
Innovative retailers that have a structured single view of their customers are looking to "clienteling" solutions to help extend the use of this data into their in-store customer interactions. These tablet-based solutions enable sales associates to better understand the customer they're serving, provide a more relevant sales interaction, and collect valuable customer and engagement data.
Short- and Long-Term Needs Don’t Have to Be at Odds
Businesses often have to make difficult decisions during a downturn in order to survive. However, consolidating data can save money in the short and long term. Organizations can surface unseen insights, leverage them to stay ahead of the curve, and respond to changes in the market quickly. Therefore, even when resources may be under more pressure, with many being asked to do more with less, teams that are able to harness data insights can also gain greater visibility into which elements of spending are most effective as well as illuminate new opportunities to expand and diversify their customer base.
David Chinn is the CEO and co-founder of Lexer, a customer data platform for retailers.
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David Chinn is the CEO & Co-founder of Lexer. He has spent his career leading data and technology businesses in APAC and the USA. Joining Lexer in 2015 he has helped scale the business across three geographies successfully supporting hundreds of the most trusted retail brands. Prior to Lexer, David was the GM of Experian's Consumer Insights & Targeting division.