Pedestrians wearing protective masks walk past a Lululemon store in San Francisco, California on Monday, March 29, 2021.
David Paul Morris | Bloomberg | Getty Images
Instead of jumping to a hasty conclusion about the post-Covid consumer, return to one that psychology studies taught us about long before the pandemic. People do not change their habits so easily, and what they could lose by changing their behavior weighs heavier on their minds than any possible gain.
“Habits are hard to break. It’s an uphill battle,” said Deborah Small, professor of marketing and psychology at Wharton, at the recent CNBC Small Business Playbook Summit.
The idea behind it is known in academia as risk perception and has been made more difficult by the pandemic. An unprecedented event that suddenly forced consumers to go against their nature and new behaviors, overcoming many of the previously taken for granted commercial interactions: bars, cafes and restaurants, personal fitness classes and personal training. Consumers have been researching alternatives in ways they seldom do, and it was on top of an ever-changing consumer landscape that has been mostly related to digital buying and selling in recent years.
“Many ways that people used before the pandemic are not going to return to that level,” Small said. “We have changed sustainably through various experiences that we have had over the last year.”
However, the Wharton professor also thinks it is unwise, for all we know about the consumer brain, to assume that the habits formed during the pandemic will become a permanent favored majority state. A recent Forrester survey found that 75% of adults in the US said the pandemic would bring about long-term behavior changes, but research also highlights that the consumer has always been in a state of change; it is just perhaps now more likely that change will be the “new normal” for consumers.
From Small’s perspective, there isn’t a single consumer to sell to – and thinking that way would be a fundamental mistake.
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Take as an example the peloton training and advancement from home before its momentum was taken away by what Wall Street calls the reopening trade. Meanwhile, Lululemon continues to sell a lot of yoga pants, but it has seen a steady increase in store traffic after selling sportswear direct to consumers was hugely popular during the height of Covid in the US start-up and peloton competitor Mirror.
Relying on more than one type of consumer – which began to emerge before the pandemic with the advent of digitization – is a smarter strategy than planning around a firm perception of the consumer that emerged from last year.
“Imagine someone who used to go to the gym and then couldn’t, started exercising from home. Maybe they really miss the old way and really want to go back, and couldn’t do it again at home, ”said Small. The pandemic can ultimately confirm that person’s original preference. On the other hand, she says, some consumers try new shapes and conclude that it’s comfortable for me and changes forever.
This way of thinking already has a name and a huge presence in retail: omnichannel. In other words, spread your stakes instead of concentrating them. Meet the consumer where they want to be met and understand that not every consumer is motivated by the same preferences. Small said it was the way of thinking that small business owners across the country – if they could survive the pandemic or are opportunistic enough to start a new business during that time – must act when the post-pandemic period begins.
She provided CNBC with some key ideas to address this difficult consumer landscape.
1. Learn the difference between risk and risk perception.
Lots of people want to put the consumer in the pre- and post-pandemic buckets, and Small said this is actually a reasonable starting point for making predictions. People tend to categorize the world in order to make sense of the world, it just becomes dangerous to categorize all consumers as similar.
“There is tremendous heterogeneity, disparity between consumers, in their views, risk preferences, political ideologies … all that affects the way change affects them,” she told CNBC.
Therefore, the difference between risk and risk perception should first be kept in mind.
“Risk perception is not a risk,” said Small. “Risk is reality, its truth. Perception of risk is psychology of what we feel and think.”
Risk perception is a function of the personality and culture we live in and the information we consume. And all of this can be varied individually and at the community level.
2. Accept that Covid-19 policy will continue to be a huge buying and selling factor.
The policy of the pandemic is an example of how this risk perception must be taken into account in consumer marketing in the future.
The information people in communities consume can be a function of local political ideology, and Small says it is made worse by the fact that social networks overlap, with individuals within a cluster talking to others.
In communities and regions where there are major concerns about Covid, consumers may remain risk averse even after the CDC guidelines on how to wear masks are relaxed. And there will be the exact opposite – “feelings of invulnerability and shades in between”.
“Companies need to measure and understand where their customers are from,” said the Wharton professor.
There may be areas where customers, even those who are fully vaccinated, continue to only enter stores where others are masked. This may be due to personal preferences, new habits, or politics, including a desire to be an ally of important workers who could still be at risk of contracting the virus. And there may be examples that go far in the opposite direction and encourage political polarization as part of the future of Main Street corporations. Think of the hat shop in Nashville, Tennessee, which made national headlines with yellow star lapels promoting non-vaccination status.
3. Don’t draw a pandemic line, maybe segment according to your preferences.
Vaccination efforts in the US have made great strides and the number of cases and mortality from the virus have fallen sharply, but there is a significant segment of the public who will need more time to familiarize themselves with Covid.
Small says it is wise to maintain a hygiene-centric attitude, but also to acknowledge that there may be those among your customer base who believe society has gone too far in responding to the risk of the virus, and the danger is there a backlash against companies that overestimate hygiene.
“This is a tricky balancing act,” said Small, one who is perhaps the hardest one for companies in “purple states” to find.
She strongly recommends considering whether there are any ways to segment consumers to meet the needs of those who continue to emphasize Covid hygiene and those who may feel different. The idea of segmentation goes back to the heterogeneity that underlies human risk perception. An example could be setting business hours for different customer segments. Some companies kept business hours reserved only for older customers during the Covid peak.
Small also said business owners shouldn’t lose focus on one forced change that has worked very well: doing business outdoors. Some of the best innovations she’s seen in the small businesses she lives in relate to finding more ways to do things outdoors. “It’s better for safety and less risk … so that’s great if possible. Why didn’t we think of it before?”
4. Ask your customers what they want.
The best way to find out what customers want? Ask her.
For large corporations, that can mean market research, a science that includes detailed tools for measuring concerns and preferences. And can get expensive.
Small said that there is no need for a small business to give up the hassle because it cannot afford proper market research. There are plenty of great alternatives out there, from doing it yourself analysis from Google Trends to creating surveys using free online tools or Instagram for a quick survey.
“Asking customer questions is the most important thing,” she said.
And it’s important because another side of human nature that often trips us up is overconfidence.
“We believe we know our customers well. Often our intuitions are wrong, ”she said. “So it’s really useful to ask them … not just accept. Ask them these questions.”
And she says people tend to tell the truth.
“As a general rule … when it’s your customers and you have a relationship … they want you to be safe, so it’s in their best interest to be honest,” said Small.
Right now, you probably have a lot of valuable information to share too.
“We’ve all had plenty of time to think and have opinions over the past year … listening to customers,” said the Wharton professor. “Don’t try intuition. Talk to customers, get feedback from them, and try to understand what is important to them.”
While assumptions are bad and intuition can be wrong, Small also stressed that business owners shouldn’t get overwhelmed by the challenges and should start to think about what they have learned from so many changes, the innovations they have come up with, and that The extent to which they were adaptable. “Trust yourself. If you have adjusted before, you can adjust again, and you can learn from the ways you adjusted before and apply them in the future.”