Shifts in Buying Behavior and What It Means for Your Business

Back in March, the US economy all but shut down to help slow the rate of spread of COVID-19. At the time, people felt a shift in their needs and values, and brands were forced to rise to the challenge of meeting those needs almost immediately. Pivots were made to service the consumer with immediate gratification and convenience, and forecasts went out the window.

Even now, as regions begin to ease COVID-related restrictions on brick and mortar stores and the economy is starting to slowly pick up again, some changes in consumer behavior may never return to pre-pandemic norms.

So, how exactly are consumers behaving in this new COVID-19 world?

The (obvious) digital surge

Strict social distancing measures were put into place at the onset of the pandemic. This forced most non-essential stores to close, catapulting eCommerce into the spotlight. Consumers who hardly ever shopped online were forced to do so, some for the very first time. According to research by McKinsey, in a span of three months, we saw 10 years worth of growth in eCommerce penetration. Now that even more people are used to eCommerce, one in three US shoppers say they would be happy to avoid in-person shopping forever, according to a recent poll.

A focus on mindful spending

Few people were spared from all the financial consequences of COVID-19. Routines changed, as jobs, schools, restaurants, and much more were shut down. With health and wellbeing on the line, what people saw as valuable in their lives began to change. Quarantine brought on more spending on self-care and convenient grocery shopping, while larger purchases were put on the back burner. In the beauty industry for example, revenue from skin care products surged, as women were able to devote more time to their self-care routines. Conversely, makeup sales fell as many were laid off or working from home.

For marketers, the takeaway is that while consumers are still shopping, what is most important to them right now has changed. Messaging around value propositions should evolve in line with those changes to maintain the important brand connection.

Contactless is king

Buy-online-pickup-in-store (BOPIS) was already on the scene when the pandemic hit, but it was not nearly as widely used as it is today. Even as stores have largely reopened, many people are apprehensive about returning in-person, for fear of viral transmission. Handing over credit cards, punching buttons to pay, and pushing grocery carts are all a point of contention. In an effort to put consumer fears at bay, there’s rising availability of contactless payment. Touch-less alternative payments like Apple Pay have seen a huge boom in usage in recent months. Other creative contactless services includes Sephora, which now offers online tools like virtual makeovers and virtual artists, a substitution for the in-store treatments they’re known for.

A new-found appreciation for local stores

Once lockdowns began across the country, and everyone’s world got much smaller, the focus turned to supporting local community businesses, which brought a sense of comfort to people. Even when things return to some semblance of normalcy, 68% of consumers surveyed still plan to purchase from local businesses, so this trend may be here to stay.

Convenient solutions

At the start of the pandemic, there was an unprecedented uptick in the demand for household goods and cleaning supplies. Companies buckled under the unexpected increase, and shortages became commonplace. Brand positioning and that “household name” used to give big name brands an edge, but now it was the availability of products that became the competitive advantage for household essentials. This was true for cleaning products, hand soap, paper products, and even some categories of food.

Behemoths like Amazon were also affected when the demand put such a strain on their fulfillment centers. They were forced to release statements noting that even members of the Amazon Prime loyalty program would need to wait more than two days for many of their packages. This gave some smaller companies a leg up, since they were able to handle the increase in volume. Many who routinely ordered everything from Amazon began resorting to these other sellers because they could get their products faster that way. Convenience is always king.

Brand loyalty will also be put to the test as product availability and shipping timelines improve. Those once willing to pay premium prices for certain brands may have found that bargain brands work just as well. Premium brands should be prepared to reassert value propositions in order to stave this off.

What does this mean for your business?

While being customer centric will certainly move your business in the right direction, now more than ever companies should be focusing on customer lifetime value (LTV) and profitability. You can offer the best new products and the most seamless shopping experiences for customers, but you need to optimize your customer acquisition strategy based on what they will do for your bottom line, versus vanity metrics like traffic or cost of acquisition. By not factoring predicted LTV into your customer acquisition strategy, you’re either overpaying to acquire customers that will actually result in a net loss to your business, or not paying enough to acquire high LTV customers, effectively leaving not just dollars but profit on the table. Right now, your business can’t afford either mistake.

About the Authors

Katherine Anderson is a Demand Generation Manager and Charlotte Norman is a Content Marketing Manager
for WITHIN, the first-ever Performance Branding company.