Two Years Later, It's Still About the Customer

What did the pandemic teach us? Understand your customer and be flexible. That way, you’re always ready for what’s next
By: 
Barry Cross
Chef recording live stream for cooking class online

On Friday, March 13, 2020, I taught an International Operations class, live. In front of real students, together in a room. There were no masks, students were snacking and drinking water or coffee, and Zoom was just a tech company with a stock price of US$107. That day, an email was sent out by the principal of the university where I teach, announcing that, as a result of increasingly challenging pandemic conditions, all classes would move to remote delivery effective immediately. On Monday, March 16, I met with the same students remotely, teaching the class by video.

Two years later, we have applied refined versions of that remote learning model in countless ways across almost every program at the university. While few people will say they enjoy the remote experience more than live, most appreciate its utility. Enrolment actually increased over the last two years; some students were able to attend because of the remote experience.

Some businesses, like Zoom or Amazon, seem like they were built for a pandemic. Zoom’s stock peaked in October 2020 at over US$550 (five times its price in March that year). Other organizations, like my university, executed an almost perfect pandemic pivot. The principal gushed that we never would have adapted to online learning so quickly if it hadn’t been for the pandemic. While there are certainly physical and mental challenges associated with online models—in addition to economic hurdles—business continued. 

My university was not alone in needing to adapt. Society’s operating environment changed so much during the pandemic that few organizations could continue without some level of disruption. When lockdowns and other restrictions were put in place, customer behaviour changed. Almost nothing stayed the same.

A large Canadian retailer I’ll refer to as Big Red realized about a month into the pandemic that its e-commerce capacity and capability were severely overwhelmed by the changing behaviour of its customers. Everyone was suddenly shopping online and Big Red’s system crashed just days into the shutdown.

Big Red’s leadership made the tough decision to take the system offline for a complete transformation. During the weeks that followed, customers had to phone the store to inquire about a product. An employee would physically check inventory, then take the customer’s payment information over the phone to make a purchase. I call this the “limp along” mode. It’s ugly, but it worked while the new system was brought online. Now for online purchases, you can have products shipped to your home, or you can see exact inventory in stores nearby.

For Big Red, the pandemic was the catalyst that forced it to improve operations as it adapted to changing consumer behaviour and imposed restrictions. Through 2020 and 2021, revenue and profit remained strong and, in fact, grew.

Another firm, a large retailer of men’s apparel in Canada, also entered the pandemic with no real online presence. You couldn’t buy anything on its website. There were just pictures, store locations and contact information. Through the early months of the pandemic, it did not evolve or adapt, and by August 2020 had filed for protection from creditors. Financially restructured, it finally launched a true e-commerce site in November 2021. That was 18 months after the start of the pandemic.

There are several lessons we can take away from what organizations have gone through over the past two years, but I will focus on two key elements of operations here. Both recommendations are based on understanding your customers, their behaviour and why they are interested in your organization in the first place.

Make it easy (for your customers)

I am currently going through some physiotherapy on my shoulder. The practice I am going to is relatively new and does a great job on the physio part. The problem? It only accepts cash, cheque or e-transfer for payment. No credit or debit.  This certainly lowers fees and simplifies the process for the business, but it makes things more complicated for clients. For many of you, it may not be a problem, but for an old guy like me (and a reasonable percentage of this practice’s clientele), mobile e-transfer is complicated, and writing cheques is tedious. The solution? Charge an extra couple of dollars and put in Square or a payment machine.

Local retailers and restaurants, services and other organizations have ramped up digital and other e-tools in the interest of simplifying transactions for customers. Ordering and payments are online; scheduling and calendars are visible (often by practitioner or technician); organizations are recognizing the hoops their customers have to jump through and are simplifying how business is done.

Top resorts in Mexico and the Caribbean are working with local labs to have COVID tests done on-site. The test is often included in the price of your stay. In the event of a positive COVID test, guests can stay at the resort without additional cost until they test negative and can return home. 

Flexibility is strength

We don’t know what “normal” will look like when the key pandemic restrictions are removed. It is important to appreciate that you and your organization have an opportunity to shape what that normal is in your particular space. For me, I have used some of the pre-recorded video content I developed for purely online courses in courses designed for live delivery. Those brief (15-minute) sessions may be in lieu of a reading and cover some of the core material on a particular topic, allowing me more time in class to get into more in-depth discussions. Should we have to shift back to asynchronous learning again, I have the content. In the meantime, students comment that they appreciate the hybrid model and love my avatar (the smarter and better-looking version of me that “teaches” the video).

Eric Rivera is the owner of Addo restaurant in Seattle, a popular local bistro featuring a fusion of Puerto Rican and American cuisine. When forced to close during the early days of the pandemic, Rivera began offering make-at-home kits of higher-end meals, along with videos (live and on YouTube) of how to properly prepare the food. He had a sommelier available with beer and wine recommendations, gave online classes and continued to engage his clientele. During the lockdown, people were clamouring for any activity or experience, and Addo was able to capitalize on that need. Rivera actually had to hire more staff to accommodate demand. While he joked that he may never go back to in-person dining, we can see how this could grow nicely into two business models.

Not knowing what the future holds leads to stress and anxiety, often delaying our decisions while we wait for things to “settle down” or return to normal. The more you understand your customer, however, and build flexibility into how you do business, the better prepared you are for what comes next. Essentially, you can let the customer choose, a key tactic in any innovation discussion.

It is important to note that customer loyalty is not necessarily the same as customer satisfaction; it may merely reflect a lack of a better alternative. There’s a well-known premium coffee chain, for example, that has 24 million members in its loyalty program. When was the last time, however, you had a truly exceptional experience when ordering that $5.00 latte? Not recently, I am sure. There has been a significant migration away from experiential service encounters towards something more convenient. Make it simple and easy for me, and I am “in”.

Appreciate that a third of your customers will walk away from a brand they love after just one bad experience (PWC research). At the core of what customers want today are elements of speed, convenience and a friendly and knowledgeable experience. Make it easy for the customer, flex according to their needs and environmental circumstances, give the customer control over the experience, and you’ll do well.

Many businesses are better as a result of the pandemic. They adapted, learned and grew. Their customers today are different than two years ago. It is important to appreciate, however, that the pandemic is just the latest disruption in our environment. Technology, public sentiment, climate change and geopolitics will continue to have a massive impact long after the pandemic’s influence is over.

Sure, we are managing in a crisis now, but if you take the perspective that there will always be a crisis, your organization will be in a better position to not only survive but adapt and grow stronger. Don’t try to wait things out.

 

Barry Cross is an assistant professor and Distinguished Faculty Fellow of Operations Strategy at Smith School of Business. He is the bestselling author of Simple: Killing Complexity for a Lean and Agile Organization.

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