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Covid-19 is forcing companies to rethink customer loyalty

Quartz logo Quartz 5/5/2020 Marc Bain
a man taking a selfie in a store: An employee enters a closed Converse shoe store Monday, March 15, 2020, in Phoenix © Provided by Quartz An employee enters a closed Converse shoe store Monday, March 15, 2020, in Phoenix

When we talk about loyalty in commerce, what we’re really talking about is whether customers are loyal to specific companies. We gauge this customer loyalty with measures such as the share of their spending they dedicate to products from those companies.

The Covid-19 crisis has upended the normal flow of that relationship. In countries including the US and hard-hit parts of Europe and Asia, shoppers have slashed their spending on non-essential items such as clothing and sneakers, raising the question of how companies selling these goods maintain a connection with customers when they aren’t in a position to buy anything. Many are realizing that, if they want to sustain a relationship in the long-term, it’s companies that need to be loyal right now.

What that loyalty looks like varies from company to company, but the clearest examples go beyond generic condolences. It’s a time for companies to figure out how they can actually support their customers by doing more than just selling them stuff.

What shoppers want from companies now

Of all the activities Covid-19 has put on pause, marketing has not been one of them. Companies have sent a torrent of emails telling customers how they’re responding to the crisis, and airing formulaic television ads with piano soundtracks and messages of solidarity.

The VAB, a research group serving advertisers and agencies, says by the third week of April 326 companies had run television ads tied to the pandemic. At the start of the month, it also surveyed about 1,000 US consumers to gauge their feelings about ads related to Covid-19. It found 52% had a positive impression of the companies running such ads—not terrible, but also leaving 48% without a favorable impression.

On the other hand, 55% said they were more likely to actually purchase the product or service of a company lending its resources or helping communities in the crisis. While the survey didn’t get into the subject explicitly, it’s not hard to imagine consumers being more willing to patronize companies finding genuine ways to support them personally.

“I think what [customers] do want are things that actually help them though the crisis in some way or another,” says Kalinda Ukanwa, an assistant professor of marketing at the University of Southern California Marshall School of Business. “It becomes more tangible than, ‘Hey we’re thinking about you.'”

Companies aren’t taking these steps purely out of the goodness of their hearts. They’re businesses with financial motivations. But in a crowded marketplace of companies competing for attention, and the balance of power between companies and customers tilting toward the latter, supporting shoppers in ways beyond pushing product is good business.

There’s no one way for a company to achieve that aim, but it can help to leverage strengths. Nike is a company shoppers turn to for sports products and related services, such as its Nike Training Club app. The free version of the app provides training programs and a variety of different workouts, while the premium version, which normally costs $15 a month, has additional features such as on-demand workout classes and tips from Nike’s experts on topics such as training and nutrition.

When Covid-19 began spreading through the US, Nike started adding more workouts, including some designed for small spaces and others for families, to the apps and made the premium version temporarily free to all US users. The company also put workouts on YouTube, and used its social media to share relevant tips.

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⠀ ⠀ Could the foam roller get any better? Turns out yes thanks to Nike Master Trainer @coachbriannunez’s five creative moves that strengthen multiple muscles. ⠀ ⠀ You’ll need a full-size foam roller (typically 36 inches long) without ridges, knobs, or grooves. ⠀ ⠀ 1. Plank Roll-Out 2. Uneven Push-Up with Rotation 3. Plank with Knee Tuck 4. Pike 5. Decline Leg Lift A post shared by Nike Training Club (@niketraining) on Apr 30, 2020 at 10:07am PDT

“Our ultimate goal is to build unbreakable relationships,” says Heidi O’Neill, president of Nike’s direct-to-consumer business. “Providing consumers experiences and services beyond a transaction, it becomes essential.”

O’Neill says the idea came from Nike’s previous experience with the new coronavirus in China. It doesn’t have a premium version of the app there, but it saw how popular its free version became after Nike employees in the country began sharing it with friends, family, and on social media channels such as WeChat. With most of its stores closed, Nike leaned into that momentum, adding new workouts and features such as livestreaming. By the end of March, weekly active users in China were up 80% across all its activity apps, which also include Nike Run Club, versus the beginning of the quarter. It has used the experience as a playbook for navigating the crisis as it’s spread to other regions.

Food companies have similarly released recipes so consumers can make some of their items at home. Car insurance companies are refunding premiums to customers as they stay off the roads. Utility providers and phone and internet companies are offering free service and waiving fees.

But the support a company extends to its customers doesn’t have to relate directly to its core business.

Levi’s may make its money selling jeans, but it has also built connections in music as part of its marketing aimed at positioning itself at the center of culture. So in March, it launched a concert series using those connections to entertain those stuck at home while also aiding charities. The 5:01 Live series features live performances at artists’ homes every weekday at 5:01pm PST. Artists such as Questlove, Snoop Dogg, Doja Cat, and more have taken part.

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5:01 LIVE with @dojacat. Tune in at 4:30pm PST for a quick Q&A with @dojacat and our CMO @jenseysf before Doja Cat’s set at 5:01. Comment below what songs you want to hear her perform. Stay home, stay connected. #UseYourVoice A post shared by Levi's (@levis) on Apr 9, 2020 at 11:57am PDT

“It’s not directly related to what Levi’s provides, but it’s providing entertainment, which is in high demand right now because people don’t know what to do with themselves at home,” Ukanwa says. “Again, it is something that goes beyond, ‘We’re thinking about you.'”

In the same vein, several of luxury fashion’s top names have been hosting online chats, live performances, and other programming with celebrities and creatives.

Immediate responses with long-term returns

Before the pandemic, Nike had been working to increase the services it offers, in stores and through its ecosystem of apps. Nike’s O’Neill says the most important measure of their success isn’t necessarily revenue; it’s engagement. But she adds consumers who work out with Nike and shop with Nike do become more valuable customers over time. “There’s definitely a business play in services and experiences,” she says.

By supporting their customers now, companies can strengthen those relationships. If shoppers get into the habit of using a service in this moment, they may continue using it even after life returns to normal.

“It starts with the relationship,” O’Neill says. “What we know is that if you’re building a relationship and you’re building it for the long run, consumers will transact with us. But they need more.”

Whatever companies decide to do, the most important thing is that they do something. “People will look back,” Ukanwa says. “Were you a brand that actually did something to make a difference, to help the world, or did you sit on the sidelines? Or did you take advantage, which is definitely the wrong space to be in.”

Eventually the coronavirus crisis will end. In all likelihood, shoppers will be cautious with their spending, at least for a time, meaning companies will find it harder to earn their dollars. If they want their customers to be loyal to them in the future, they may need to be loyal to their customers now.

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