How Retailers can Prepare for the Next Roaring ‘20s
The long-term outlook for consumer spending suggests we are entering a pleasure-focused, modern iteration of the Roaring ‘20s. As retailers compete to provide first-rate experiences, they need to understand what consumers really want.
Rising COVID-19 vaccination rates and reduced restrictions means consumers are ready to celebrate — and spend. The long-term outlook for consumer spending suggests we are entering a pleasure-focused, modern iteration of the Roaring ‘20s.
Consumers’ mindsets are quickly shifting, with discretionary spending top of mind. Despite concerns around the delta variant, personal consumption expenditure (PCE) is anticipated to increase by 7.6% in 2021 and by 3.9% in 2022 — a dramatic improvement from the 3.9% decrease in 2020.
Along with the increase in discretionary spending, expectations for a great customer experience (CX) are higher than ever. Businesses of all types have digitally transformed themselves — and the experiences they provide customers — over the past 18 months. As retailers compete to provide first-rate experiences for loyal customers, they need to understand what consumers really want.
Traditional data analysis can’t keep pace with modern demands
With e-commerce sales forecasted to grow nearly 20% in 2021, staying on top of consumer expectations has never been more important. You need data to fully understand consumer trends and provide your customers with top-rate experiences. But traditional data collection and analysis methods aren’t enough anymore. Here’s why:
Too slow — Manually sorting through data, like online reviews of a product, can take days, weeks or even months. By the time you identify and address a common theme (e.g., customer complaints about the lack of a curbside pickup service) some of those customers may have already switched to a competitor that better meets their needs.
Too limited — Traditional feedback collection methods don’t actually represent your customer base, and they’re often inaccurate. For example, chat features can be an excellent avenue to gather feedback, but agents are typically given a predefined list of high-level categories to label conversations with. This method is limiting — and again, manually analyzing text takes too long. Additionally, customer surveys, another popular way to gather feedback, are subject to self-selection bias. Survey feedback only represents 7% of your customers’ voices, and the data collected doesn’t always reflect the root problem.
When you’re working with unstructured data and outdated analytics strategies, it’s easy to overlook key customer insights. With shoppers ready to splurge, you need to stay on top of consumer expectations by leveraging (the right) data and modern technology.
How to win loyal customers in an era of discretionary spending
Manual processes paired with unstructured data and insufficient surveys are no longer enough to keep pace with today’s consumer expectations. Competition is hot as retailers vie for customers’ spending money, and finding the right data with the right strategy can help you win their loyalty.
Perfect your data collection. To understand what your customers really want, you need to know where to look. Chatbots, emails and surveys can provide a wealth of customer insights — but only with a strategy that prioritizes convenience for the customer. If you give a customer a 10-question survey about whether their experience with a chatbot went well, they may not even take the time to respond. Instead, try offering a brief survey after a curbside pickup order to better understand the customer’s experience.
Leverage technology to uncover actionable insights. Just because you have data doesn’t mean you’ve unlocked actionable insights. But with modern technologies like machine learning (ML) and artificial intelligence (AI), you can automate traditional analytics processes to expedite the time it takes to analyze data and unlock insights. Even if you have all the right data, without AI-powered analytics you’ll be unable to make use of unstructured customer feedback and miss out on the key insights needed to drive your CX. These technologies can also help you forecast emerging trends to stay on the cutting-edge.
Create the experience your customers want. With strong data and modern analytics, you’ll be able to make timely and meaningful changes to your CX. With consumer expectations constantly evolving — e.g., the increasingly high expectations for seamless omnichannel experiences — you can’t afford to take weeks to analyze customer feedback.
To improve your CX and win loyal customers, you need to keep your customers' preferences at the center of your strategy — and the right technology can help. After months of being unable to shop, dine out or see movies in person, consumers are ready to spend with their favorite brands. That makes a data-driven, customer-centric approach critical as we enter the next iteration of the Roaring ‘20s.
-Kurt Trauth, SVP of Customer Experience Strategy and Analytics at Stratify