Brands should invest in digital transformation and improved customer experience to meet rising expectations post-pandemic.
Some of the businesses that were worst hit due to the COVID-19 pandemic were local businesses. While bigger brands had the technology and logistics to pivot online almost overnight, local businesses struggled to make this shift. Many of them were even forced to shut shop permanently. According to a PNAS surveyOpens a new window , about 43% of small businesses closed temporarily during March and April 2020, and almost all of these closures were due to the pandemic. Local businesses also took a massive hit in terms of revenues and employment.
Fortunately, for many local businesses, consumers came to the rescue. While “online†became the central theme of 2020, the demand and support for products from local and small businesses still grew.
Freshworks, in partnership with Dynata, recently surveyed 10,500 consumers worldwide to identify how the consumer-brand relationship has changed over a year. One of the major findings of the studyOpens a new window is that 41% of the respondents tried shopping from local businesses during the pandemic, and 94% intend to continue doing so post pandemic. However, local businesses will have to continue meeting customer expectations to maintain trust after economy reopens.
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The following are the key findings in detail.
1. Consumer Standards Shift as Pandemic Wears On
While some businesses could not survive the pandemic, others benefited as many consumers became patient with them. About 31% of the consumers said they are more forgiving of brands if things went wrong. About 32% of consumers were more patient with brands that offered slow customer service or fulfillments over the past year. About 49% also believed that brands were sincere with their pandemic messages. Having said that, 23% of consumers do not trust pandemic messages. The trust in pandemic messages is, however, wearing on depending on the country the customer lives in. Europeans took a more cynical view and think that companies were saying whatever they could to survive the pandemic.
Trust of pandemic messages according to geography
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Consumer expectations will rise post pandemic
While consumers were patient during the height of the pandemic, their expectations and standards have also increased. They have started demanding brands to fix things when something goes wrong. About 38% expect brands to fix the problem once and for all and the same percentage of consumers expect a refund or discount. About 37% expect a speedy resolution with minimal hold time, and 31% expect an apology. About 50% of the respondents said that while they were patient during the pandemic, they would not tolerate poor service once the economy reopens.
What consumers want to forgive brands
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Consumers will not accept pandemic excuses
While the pandemic led to improved customer service for some companies who were struggling earlier, good service got worse for some companies, according to some customers. Many customers felt that about 32% of companies with good customer service before the pandemic got worse over the year. Further, consumers are not willing to accept the pandemic excuse for poor service. About 27% said they are weary of the pandemic excuse for bad customer service.
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Even consumers used the pandemic excuse
Interestingly enough, like brands, consumers, too, gave pandemic excuses. About 29% of consumers admitted to telling a lie when dealing with a brand. Among these, the pandemic-related lies were the most popular. About 11% of respondents blamed pandemic-induced restrictions and lockdowns. This exceeded other lies, such as the product being missing/not delivered (6%), the product being damaged on arrival (8%), and bad weather (6%).
More interestingly, age mattered when it came to stretching the truth. The younger generation (18-24) was more likely to stretch the truth than the older generation (57-75). In fact, 5.5x as many Gen Z consumers as Boomers admitted to lying to brands over the past year.
Most common customer lies last year
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2. Local Businesses Win Consumer Hearts
As the pandemic took a toll on local businesses, a significant number of consumers looked to shop with local businesses to help them stay afloat. In fact, about 41% of the consumers tried to shop from local businesses during the pandemic. About 18% spent more than they would normally do during the past year to help struggling workers and businesses. About 16% also gave larger and frequent tips during the pandemic.
Interestingly, 94% of the people who shopped with local businesses will continue for some or most of the time once the pandemic ends. About 34% would shop with local businesses where they have a personal connection, and 32% would shop with companies that maintained excellent customer service.
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Digitization and customer service drive consumers to local businesses
The pandemic prompted many SMBs to enhance service offerings and reach customers digitally. About 50% of consumers said small businesses became better at customer service during the pandemic. So, how did these businesses improve customer service? About 52% started offering online ordering, and the same percentage provided delivery service. About 47% have a more personal level of service overall.
On the contrary, consumers had a mixed response about the customer service experience with larger brands. About 33% think larger brands became better at customer service, while 33% felt they had become worse. Further, personalized service kept older customers loyal, while digitization and delivery gained appreciation from the younger customers.
3. Consumers Prioritize Digital, In-Person Interactions, and Social Consciousness Post PandemicÂ
Digital and remote service offerings still matter. About 47% said they would continue interacting with brands digitally or remotely after the pandemic. In fact, more than 1 in 10 say they are never going back to in-person interactions. To recoup this lost revenue, businesses need to double down on their digital presence. Simultaneously, about a whopping 89% planned on returning to in-person interactions after the pandemic. About 38% of Boomers prefer in-person interactions, while only 27% of Gen Z prefer it.
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Consumers want to spend but are also mindful of saving
Many consumers are eager to spend once the pandemic subsides. But the pandemic has also influenced many to save money. About 84% have new post-pandemic spending plans, and leisure is on top of their minds. About 41% of respondents plan to spend on domestic and international travel, and 31% like to spend on restaurants and bars. About 30% prefer to spend on shopping. Interestingly, the younger generations are more likely to say they intend to save while Boomers are the least likely to plan to save.
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Consumers expect corporates to give back to the society
It is not just the expectations around customer service experience that have changed for consumers. Consumer expectations for corporate behavior, too, have changed. A majority (71%) feel that companies that performed well during the pandemic should now give back to the customers or society. This applies to both smaller and larger businesses. In fact, larger businesses must work harder and be part of the community.
So, how can companies give back? About 30% of consumers expect discounts and sales, while 29% expect lower prices. About 25% expect better products and services.
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The Takeaway
The pandemic affected local and small businesses massively. Fortunately, consumers came to their rescue. What also worked in favor of these businesses was increased digitization and improved customer service. However, as the economy recovers, consumers will expect brands to continue these improvements. Further, brands will also have to prepare to meet consumers where they are, both in-person and digitally. Brands that have not yet invested in digital transformation and customer experience have a short window to do so or risk losing opportunities when the economy bounces back.
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