While e-commerce has been on a steep upward trend for years now, recent lockdowns have led to a massive increase in online shopping that has accelerated some consumer trends while also creating new ones – almost all enabled by digital technology.
As businesses sought to protect their bottom lines from the pandemic, marketing budgets were among the first to be cut. However, the Gartner CMO Spend Survey 2020-2021 found that marketing technology and digital channels have largely been immune to recent budget cuts – with spending in these areas even predicted to increase in 2021.
And with the world hoping to resume some semblance of normal service in the months ahead, businesses are eager to fire up the customer acquisition machine once more. According to a study by MarTech firm Iterable – 2021 Marketing Trends: Dissecting the Unexpected – increased customer acquisition is THE top priority for 65% of marketers.
Boom time for online marketers, right? Well, yes and no. While e-commerce has taken a big leap forward in 2020, the digital shift has impacted consumer behaviours and expectations in other ways. And that means the big marketing challenge for 2021 may not be customer acquisition after all.
According to Ewan McIntyre of Gartner, “The COVID-19 crisis has shifted CMOs’ focus from customer acquisition to customer retention and growth”. Similarly, Forrester predicts that “spend on loyalty and retention marketing will increase by 30% as CMOs assert control over the full customer lifecycle.”
Brand loyalty has always been far more fragile than many marketers like to admit. We talk about loyal customers as if it matters to them which logo is over the door or on the box, when most products and services are largely commoditised.
In reality, brand loyalty is often driven by little more than price and convenience. If a cheaper or more convenient option turns up, you bet customers will make the switch.
Cue the global pandemic disrupting just about everything we do – from the way we shop to the things we value. What might have been a convenient or trusted customer experience (CX) in 2019 may be anything but in 2021.
According to McKinsey, consumers around the world have been far more willing to switch brands and/or retailers in 2020 – largely because of the need to adopt more digital or convenient shopping experiences.
As a result, some brands moved quickly to develop lockdown-friendly customer experiences. For example, the closure of most retail outlets during lockdown drove many consumer brands to quickly launch direct-to-consumer (DTC) strategies for the first time; including Lindt, Heinz and PepsiCo.
In the UK, Beavertown Brewery risked losing 85% of its sales following the closure of all pubs, clubs and restaurants for weeks on end. Rather than lay off staff, the business shifted production from kegs to cans and switched its marketing focus to the website. By reaching out to customers directly, the brewery increased its online sales 1,000%. As a result, Beavertown’s marketing is focused on building a community of like-minded people around the brand, with physical and virtual events such as music performances, art classes and beer yoga (yes, you read that right).
Yes, customer acquisition is still important, particularly for smaller or newer businesses – but it doesn’t come cheap. Even before the pandemic, customer acquisition costs (CAC) were rising steadily. According to ProfitWell, in the five years to 2018, customer acquisition costs increased by nearly 50%.
Meanwhile, existing customers are not only easier to reach but are also more likely to buy again if the experience with the brand was a positive one. You’ve already invested in acquiring them. You may have also captured useful sales and activity data to better understand what else customers might expect from your brand – or what might cause them to go elsewhere next time.
Using this intelligence to improve your CX could be the true driver of growth in 2021.
PwC research into CX found that 43% of consumers would pay more for greater convenience, while 42% would pay more for a friendly, welcoming experience. Even more strikingly, 65% of U.S. consumers said that a positive experience with a brand was more influential than great advertising.
A positive experience also has an impact on consumer trust, even when it comes to handing over personal information. 43% of U.S. consumers would rather withhold personal data from a company – even if the data would allow for a more personalised experience. Yet 63% of those consumers said they would be more open to sharing their data for a service they truly valued!
And the benefits don’t end there. The same PwC report concludes that, “When U.S. customers feel appreciated, they are more likely to recommend or endorse a brand on social media, subscribe to a brand’s newsletter or sign up for promotions and make repeat purchases. What’s more, customers say they are more likely to try additional services or products from brands that provide superior customer experience.”
So how can brands develop services and experiences that consumers will truly value? By offering more than just another product.
Forrester’s recently published 2021 Predictions encourages marketers to be creatively brave, while avoiding some of the more cynical acquisition tactics of the past. “Consumers will give brands permission to become more creative, entertaining, and immersive than they’ve ever found palatable before. CMOs will need to create consciously and sincerely; if manipulative tactics destroy trust among this emotionally vulnerable population, consumers won’t give your brand a second chance.”
Forget what your brand is trying to sell. The heart of your CX should focus on what the customer wants to do, to solve, to experience. And then consider how your brand can help them to achieve their goal better than anyone else. For Beavertown Brewery, the product may be beer but the experience they’ve created is all about social interaction, creativity and community.
As author, speaker and content creator Jay Acunzo says, “Figure out what would make a difference in the lives of the audience you hope to serve”.
Read more: Nurturing Your Existing Users Is More Important Than Acquisition