In a COVID-19 economy, it’s your job to adapt or be left behind
To stay competitive, businesses must diversify revenue streams, manage risk, access financing, and do everything in their power to maximize productivity. It is vital for companies to retain existing customers – many of whom will have different expectations in a new-normal world.
As the UK opens up extensive daily data will be key. Investment banks and consultancies have increasingly been “nowcasting”, as opposed to forecasting, to obtain the most up to date information available.
HSBC is using OpenTable data on restaurant bookings and Google searches for Airbnb. Visa and Barclaycard produce timely credit card reports.
Jefferies, the investment bank, has built a recovery tracker using TomTom road traffic data, flight activity from Vertical Knowledge, electricity consumption using National Grid figures, and personal movement data from both Moovit transport and Google mobility reports.
The latest figures from Jefferies suggest there are some green shoots appearing with UK Economic Activity rising by 2 points over the last week in June. Official data is published with a substantial lag but real-time data offers a more up-to-date insight into how the economy is faring.
Demand for property has surpassed its pre-Covid levels. The market is enjoying a release of pent-up demand since the lockdown was lifted and searches on property portal websites are 17 per cent above their pre-crisis levels. Property businesses need to know such vital information ASAP so they can react and optimise the opportunity.
Using yesterday’s data can be costly
“The longer a decision-maker has to wait for the statistics, the less useful they are likely to be,” Charlie Bean, the former deputy governor of the Bank of England, said in 2016. That principle has never been more pertinent than in today’s ever changing markets.
The Office for National Statistics publishes monthly GDP figures alongside data for trade, services, production and construction providing a gauge on the UK economy.
For many businesses the figures will be irrelevant. Life is changing so fast that six-week old data is of little use.
It is the “nowcasting” datasets that matter now, not GDP. Once it has caught up, the tried and tested GDP data for the same period can be used to correlate the “nowcasting” data and hone it into a more reliable economic indicator for businesses going forward.
Existing client retention
McKinsey suggests brands should focus on customer engagement through enhancing customer experience. In times of social distancing companies need to utilise digital marketing and market technology to reach their customers effectively.
According to Forbes, the acquisition cost of a new customer can be five times more than retaining an existing customer. Recent research by Bain & Company found that a five percent increase in customer retention can increase profits by as much as 95 percent.
There are a number of tried and tested ways to boost customer retention:
1. Discount and free offers
Although seeming counter intuitive to some, this is an essential tool and is kind of obvious. Research by Entrepreneur.com indicates that for discounts 30 percent is the magic number, offering the best blend of attracting customers whilst maintaining revenues.
Zoom is a great example of how free offers can be transformative for a company. Pre-crisis Zoom was targeted at business users only. As the pandemic hit and lockdowns followed, Zoom decided to extend their service to everyone as a freemium product. Their customer base increased from 10 million to over 200 million almost overnight.
2. Enhance customer offering through collaboration
The crisis might lead to opportunities with like-minded companies. Every business has strengths and weaknesses. In challenging markets, it is essential companies recognise their core competence as well as areas where they are lacking. This might be the perfect time to collaborate with other companies to help to build a new product, service or offering to your customers.
Change brings opportunity
Over the next two years it is highly likely we will see several Unicorn Startups that utilise technology to solve problems created by the coronavirus. These companies could become market leaders for the next twenty years on the back of their breakthrough product or service that we had not thought of before. In the same way that Amazon was spawned at the start of the millennium during the infamous dot com bubble and Uber, Instagram, Dropbox, Whatsapp, Airbnb brought innovation following the global financial crisis of 2008.
Customer reaction and appetite can surprise and businesses need to be ahead of the curve whenever possible. At the end of the Second World War, while everyone was braced for the ensuing economic recession, car manufacturers and property developers seized the opportunity to allow customers to dream of a new car or new home of their own. It’s hard to know whether they met the changing aspirations of customers or their advertising led the change, either way both automotive and real-estate sectors thrived as the post war economy bounced back strongly.
An effective post-pandemic business may find it needs to reinvent itself more than once. Enterprises need to be able to absorb changes whilst recognising new risks and then adopt the required adjustment to their operating model quickly.
To maintain a competitive edge in a fast changing market, companies need to know of developments in customer behaviour and appetite at the earliest opportunity. “Nowcasting” provides extensive daily-data, how companies use this information might become key to their success.
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COVID—19: Implications for Business – McKinsey & Co 02 July 2020
What business in a post pandemic economy looks like – Forbes 19 June 2020
Real-time data points to recovery gaining momentum – The Times 03 July 2020
Get real if you think GDP Data puts you in the picture – The Times 02 June 2020