Published: 18 November 2020
Analyst(s): Marketing Research Team
Ninety percent of marketers agree they must be more adaptive to shifts in customer needs to meet their companies’ strategic goals. To do this, loyalty and customer relationship leaders refine their listening and planning capabilities to address only the most long-lasting changes in consumer demand.
In an age of constant disruption, what customers want today may not be the same as tomorrow. Marketers struggle to keep up — 67% of them said as much in a June poll — and they expect the shifts to become more common over the next two years (see Figure 1). Complicating the matter further, all changes in behavior are not created equal: Some may be responses to temporary environmental circumstances while others will endure.
While 90% of marketing leaders agree they have to do more to address fluctuations in customer needs to meet strategic business goals, they don’t agree on what that means or how to achieve it. Failing to adjust to shifts in consumer demands — a phenomenon that is both rapid and unpredictable in the COVID-19 era — may mean lost sales, diminished market share, high rates of churn and possibly permanent defection of formerly loyal patrons. The trick is in knowing which changes to respond to, as it’s not possible, practical or valuable to make constant overhauls to messaging and planning. Leading organizations decide which ones matter by using adaptive marketing techniques that distinguish between temporary changes and those that will last.
We define adaptive marketing as the ability of organizations to meet the demands of changing customer needs by deliberately modifying current capabilities in pursuit of strategic loyalty objectives. Rather than simply reacting to new circumstances, adaptive marketing organizations leverage their short-term responses to create new long-term opportunities for their businesses.
They do this by altering their company’s customer listening and planning to best identify and addresslasting changes in demands and behavior. That was one of the major takeaways from a study involving more than 50 in-depth interviews with marketing leaders from a variety of sectors and a survey of nearly 350 B2B and B2C marketing executives about their responses to the COVID-19 crisis.
Progressive marketing organizations recognize that addressing lasting shifts in behavior is most cost-efficient. They use these two listening strategies to separate long-term customer changes from temporary ones:
Incorporate analysis of consumer values into existing models.While some companies rely on sophisticated analytical models that use past customer behavior to predict future trends, environmental changes may render these models less accurate. More adaptable companies include shifts in underlying consumer values in any analysis of their actions to help explain the “why” as opposed to simply the “what” of the change. Value changes happen gradually, but when they do occur, they tend to last.
Leading organizations use these two techniques to address lasting shifts in what customers want:
Continuously resegment your customers based on the effects of disruption.To prevent messages and offerings from coming off as irrelevant or insensitive when facing new circumstances, incorporate the impact of disruption in the planning processes, resegmenting customers as necessary. Based on the implications of the surprise event, look for opportunities to address the future challenges of consumers facing the most severe impact.
Leverage scenario planning to identify capability gaps. If organizations conduct scenario planning, it’s usually limited to exploring best and worst case operational outcomes (for example, how much revenue they expect, retention and acquisition levels). The most progressive companies go a step further. They use their scenario planning process to analyze how their customer demands will change under different outcomes. Then they look for the activities they can do in the short run to help the company best serve what patrons want in the long run for each situation they assess.
Soon after the onset of COVID-19, executives at CHEP Europe — a U.K.-based company that provides businesses with reusable transportation pallets — realized the type of support clients required was rapidly and dramatically changing. To make sure the company’s messaging would remain relevant, the marketing team zeroed in on lasting customer needs and aligned emerging client challenges with CHEP’s areas of logistics and supply chain expertise.
The team used third-party research, existing client knowledge and newly gathered voice-of-customer insight, such as interviews, to build hypotheses about how its clientele would respond to new conditions. The team used the assessment questions inTable 1 to determine which changes were likely to last.
For example, in response to product shortages, CHEP surmised companies would want to increase their supply chain resilience — potentially by diversifying their suppliers or increasing stocked inventory. The marketing team deemed this a lasting change because it was a response to a previously underappreciated risk that businesses would want to protect themselves against in the future.
After assessing emerging client behaviors for durability, CHEP’s marketing team compiled a small set of significant behaviors it expects to remain relevant for at least the next year. They prioritized addressing the ones that most affect customers and the brand (for example, supply chain resilience).
The team then incorporated the prioritized developments (for example, supply chain resilience) into its message planning cycle by:
Resegmenting — CHEP first groupedtogether customers experiencing comparable effects from the change and who were responding in similar ways. For example, the team pools businesses with the same levels of preexisting supply chain resiliency and then differentiates between those strengthening their supply chain by diversifying suppliers from those increasing stocked inventory.
Repositioning — The team interviewed severely impacted clients to uncover their biggest near-term challenges. CHEP then adjusted messaging to support areas the brand can credibly speak to, such as “on-shelf availability” challenges for companies with complex international supply chains (for example, retail).
Reassessing — Lastly, the team evaluatedexternal conditions for environmental shifts that would affect what customers want. For example, the team expected organizations would respond differently to a deepening recession than they did to the COVID-19 pandemic by prioritizing cost-cutting over building supply chain resilience.
The whole process works as a virtuous cycle. Once an environmental shift is detected, the team restarts its customer insight gathering activities to uncover and test hypotheses on responses to new conditions. Clients are resegmented again and messaging is repositioned to align with long-term shifts. CHEP Europe continues to use this method on an ongoing basis as new circumstances arise.
The team has seen this strategy pay off, increasing sales opportunity volume 60% compared to the previous 12-month period, despite the heightened uncertainty of COVID-19.
Investing capital in a new experience, or adjusting your company’s offerings in response to a new demand only to find it was temporary is a poor use of resources. Altering customer listening and message planning techniques to home in on the most durable changes to preferences and behavior lets the enterprise commit resources to activities that will have the greatest long-term impact on both its business and customers.
by Stuart Strome and Janine Kanters
Contact Stuart with any questions or comments.
This article is from the .
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This data was gathered from a June 2020 survey of 348 senior marketing leaders from a variety of sectors across B2B and B2C companies in the U.S., Canada and the U.K. We surveyed only leaders who were involved in decisions responding to changing customer needs for organizations that were at least moderately impacted by the COVID-19 crisis. The exact survey statement was, “Our marketing function will have to be more adaptive to shifts in customer needs for us to meet our company’s long-term strategic goals.” Ninety percent of respondents somewhat agreed, agreed or strongly agreed with this statement, 3% somewhat disagreed, disagreed or strongly disagreed, while 4% neither agreed nor disagreed.
Our analysis shows a marketing team’s adaptability correlates strongly with positive customer satisfaction outcomes for that company. According to the 2020 Gartner study “How Marketing Can Become More Adaptable in a Rapidly Changing Environment,” 57% of the least adaptable marketers saw flat or decreased CSAT soon after the onset of COVID. However, only 13% of the most adaptable marketers (that is, those in the top quartile of adaptability) witnessed a similar trend. Fifty-seven percent of marketers that performed in the bottom quartile of our survey saw flat or decreased customer satisfaction soon after the COVID crisis, as opposed to only 13% of marketers in the top quartile of adaptability. Furthermore, satisfaction outcomes are correlated with repurchase and retention. B2B customers are 2.3 times as likely to repurchase with an incumbent supplier than other customers, according to the 2019 Gartner Elevating Marketing’s Role in B2B Account Growth Survey. Moreover, the relationship between customer retention and customer satisfaction is well-documented in academic research. See Bolton, Ruth N. (1998), “A Dynamic Model of the Duration of the Customer’s Relationship with a Continuous Service Provider: The Role of Satisfaction,” Marketing Science, 17 (Winter), 45-65. Bolton, Ruth N. and Katherine N. Lemon (1999), “A Dynamic Model of Customers’ Usage of Services: Usage as an Antecedent and Consequence of Satisfaction,” Journal of Marketing Research, 36 (May), 171-186. Boulding, William, Ajay; Mittal, Vikas and Wagner Kamakura (2001), “Satisfaction, Repurchase Intent, and Repurchase Behavior: Investigating the Moderating Effects of Customer Characteristics,” Journal of Marketing Research, 38 (February), 131-142.
This study analyzed the drivers of an adaptable response to a shift in customer needs caused by the COVID-19 crisis. To measure the adaptability of a marketing organization’s response to the COVID-19 crisis, we asked them the following questions. “Thinking about your marketing function’s response to COVID-19, please rate your level of agreement with each of the following statements on a seven-point scale, where 1 is ‘strongly disagree’ and 7 is ‘strongly agree’: Our response to COVID-19 created new strategic opportunities for our business; our response to COVID-19 accelerated progress toward our previously identified long-term strategic goals; as part of our response to COVID-19 we greatly accelerated the development of certain internal capabilities; if faced with a similar magnitude change in customer needs in the future, we would execute our response in exactly the same way.” We also asked the following question: “On a scale of 1 (very unsuccessful) to 5 (very successful), to the best of your knowledge, how successful did the senior executives in your company (for example, CEO, CFO) consider the marketing function’s response to COVID-19?” We then used responses to those questions to create an adaptability index. Respondents who most strongly agreed with these statements and whose senior executives considered the response more successful had a higher score, while those who disagreed and whose senior executives considered the response less successful had a lower score.
To identify which factors had the greatest impact on adaptability, we asked respondents a variety of questions about their marketing organization’s response to the COVID-19 crisis. We then used factor analysis to identify a small group of key potential drivers of marketing adaptability. Finally, we conducted regression analysis to identify the effects of those potential drivers on adaptability.
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