9 ways CX can recession-proof your business
Did you know 59% of private sector economists believe the next recession will happen in 2020, shaking up the economy in a major way. Recessions tend to come hand-in-hand with disruption as they cause consumers to change their behavior, shift expectations, and switch to new brands as their finances come under pressure. That change isn’t temporary either — our research has found that the choices consumers make in hard times tend to stay long after the effects of recession have ended and permanently shift the playing field.
As we look ahead to the next recession, businesses must prepare now to understand their customers, products, brands, and employees better than ever before so when tough times hit, they can react quickly to capitalize on a changing market. Below are nine ways to recession-proof your business, so your brand can stand strong when it hits.
1. Manage the complete experience
Price is important to consumers, but standing on price alone won’t cut it during the next recession. Consumers will still expect the complete package, so companies must provide good products, engaged staff to deliver on customer expectations, and a brand they can trust.
Understanding every experience, how it contributes to ROI, and where you need to make improvements is essential to building a strategy that’s fit for the future and ready for tough times ahead. The most successful businesses over the next 12 to 24 months will be those who focus their strategies around experience management, bringing together the four core experiences of their business to drive value back to the bottom line.
2. Know your customers like never before
Knowing who your customers are, what drives their purchase decisions, and what they expect from the brands they deal with is essential in designing shopping and purchase experiences that delivers back to the bottom line in the tough times ahead. You need two types of data to fully understand your customers.
- Operational data (O-data)- Metrics of past activity like sales, revenue & profit.
- Experience data (X-data)- Tells you why people behave like they do.
While most brands only focus on the O-data, it’s the X-data that helps you look to the future by understanding the beliefs and sentiments behind your O-data.
3. Get predictive with customer behavior
One of the most effective ways to lay the foundations for a strong future is to use O-data and X-data to create predictive models that accurately forecast future customer behavior. Companies have a lot of data and can make accurate predictions at both a macro and a micro level. With predictive modeling, retailers can identify the warning signs of customer churn, and then step in to prevent that happening before it’s too late. To simplify this process, use Qualtrics Predict IQ, which learns on all your historic customer data to automatically identify what your customers will do next.
4. Focus your CX program on lifetime value
All successful CX programs must have an ROI mindset and deliver returns back to the business.
As a result of this ROI mindset, Customer Lifetime Value (CLV) has become the premier financial metric in customer experience. It takes into account a whole range of individual metrics from share of wallet and market penetration to cost of acquisition and retention to provide a robust metric of ROI.
5. Understand why your customers churn
During a recession, customers trade down and switch to using other brands. Unfortunately, they often switch for good. It comes down to 4 reasons:
- Service failures
- Competitive products
- Category retirement
- Structural barrier
Understanding each of these reasons and deciding whether you want to do anything about them is essential. We know some customers will defect, but it’s up to businesses to identify exactly which customers they want to keep — it’s usually a case of which ones continue to be profitable while saying goodbye to those who’ll cost more to retain than you’ll see in returns.
6. Start with the public face of your business — your employees
In any industry, employees are a critical point in the customer experience. They’re the public face of the brand, and the interactions customers have with your employees are central to driving satisfaction and spend.
It’s been shown before that companies with highly engaged employees outperform their competitors by an average of 147% in earnings per share. It makes sense too — happy, motivated employees that understand what customers expect are willing to go the extra mile to help customers, improving their satisfaction and encouraging them to spend more.
7. Managers are key to the employee experience
Many retail employees are at risk of churning and the manager is a significant part of their employee experience. The top key drivers of employee satisfaction and intent to stay with their employer for the foreseeable future are:
- Having a manager who helps resolve work-related issues
- Having a manager who acknowledges you for good work
- Confidence in the company’s senior leadership team
While many companies focus on improvements at the macro level, focusing on empowering individual managers will go much further to improve the experience for staff and subsequently for customers.
READ MORE: New employee engagement research by Industry
8. Look to your products to capitalize on a market shake-up
Understanding how your products meet the needs of your consumers — both now and as their needs change — and match up to what your competitors are doing is essential. If customers are going to trade down or switch brands during a recession, getting your products right is key; not only holding on to the customers you have, but attracting new ones as they become more predisposed to switching.
9. Get the experience right every time to delivery brand loyalty
While brand loyalty has traditionally been a large factor in consumers’ buying decisions, the times are changing. In our most recent study, 61 percent of consumers said brand relationships were not an important part of their buying process. This is largely due to younger generations bringing an experience-first mindset to the table. The margin of error is smaller than ever and brands must meet expectations and give an exceptional experience every single time to retain their customers.
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