Article

The COVID-19 epidemic completely changed the needs of the consumers, what is a huge challenge for companies. Firms primary have to think about whether they have a product or service in their portfolio that can alleviate their customers' concerns about the coronavirus.

In many cases, this will only mean a shift in focus within the product portfolio, as shown by increased data traffic for telecommunication companies or increased subscriber demand for streaming companies. In other cases, however, it means rethinking the product and service portfolio, such as  online trainings, wine tastings or conferences. In a more radical case, if demand for our products is temporarily eliminated, we may even need to recalibrate our production capacity as seen in the case of luxury perfume factories switching over their production to hand sanitizers, or car manufacturers gradually shifting their capacities to produce ventilators or medical equipment.

Continuous analysis is required to identify changes in consumer demand for our products. In addition to the regional differences by product categories, significant demographic differences in consumer habits may emerge, as consumer baskets will change drastically during the crisis. Rapid recognition and adaptation to changing consumer needs are the most crucial success criteria for companies to survive.

In extraordinary situations as this current one, drastic change in the price sensitivity of customers can be seen. In the case of long-lasting fast moving goods or products short on supply, they are willing to pay any price, while in other cases, purchases will be postponed even at the same price and condition level. In this situation, companies have to follow different pricing practices (tactics) than in "peacetime".

We see retailers trying to maximize their short-term profits by (or above) the competition and consumer protection rules, by dramatically increasing the price of some crisis-products. A good example of this is the brutal rise in prices for medical masks or hand sanitizers.

In contrast, in case of other companies, pricing is not driven by instantaneous short-term profits, but rather by maintaining sustainable profitability and long-term customer and supplier relationships. In case of crisis-products, many companies have introduced step pricing, which means that purchasing more products the unit price will be higher. Extreme example of this pricing practice (and corporate social responsibility) is the case of a Danish supermarket, which offered one bag of hand sanitizer for €5.5 while the second one for €134.

We may also consider asking for money for services that were previously free. This is also the case with home delivery fees.

There are also pricing solutions to minimalize postponed purchases. Before we start reducing the numbers on the price tag, we should try to use alternative pricing methods. For example, we can make flexible our cancellation policy (as airlines have done) or offer installment instead of prepayment.

In times of crisis, there is a need for dynamic pricing that takes into account real-time demand for our products, the effects of (further) restrictive measures, changes in regulatory requirements, supply chain stability and stock levels. And of course, repricing must be possible on daily basis!

Due to restrictions introduced by authorities in recent weeks - curfews, shop closures - the vast majority of purchases have shifted to online channels.

The most obvious channel in this new situation is the webshop. Grocery stores and drug stores are facing with unprecedented traffic, which is more complicated by the fact that fresh goods are usually delivered via own courier networks due to special delivery conditions. At some webshops, however, demand has only increased for certain product categories (e.g. televisions, laptops or refrigerators; clothing for home or training), while for others has significantly decreased.

So far, many companies handled their webshop as an additional channel. However in these changed circumstances, the webshop is the only opportunity for these companies to survive, and they are doing everything, often with a lot of manual back-work, to serve their customers and reduce their loss of revenue. The good news for webshop developers is that, after the crisis is over, these companies will almost certainly be developing their neglected online channel at a crazy pace. If they survive!

Lack of own digital channel only option remained is to join a digital platform through which our consumers can be reached quickly. Most sectors have successful online marketplaces to which we can join quickly by partnerships (e.g. online food ordering portals, financial services portals, online "hypermarkets", ecosystems built around payments).

Most of our clients are still working, and most companies are still in business. The main change is that the number of personal contacts and touchpoints of the sales process have to be minimized and redirected to remote channels. This is why it is extremely important that we need to communicate with our clients a lot and keep them informed of all our relevant operational changes and available channels.

In B2C we can use mass communication tools such as email, pop-ups or call/contact centers. In B2B age of digitization is here! Instead of personal meetings, we should not be hesitant to use online communication tools; telephone and video conferencing are channels that have been used by almost every company for a long time now.

However, we must make sure to reach every customer through the appropriate remote channel. For example, pharmaceutical companies differentiate between doctors who are open to digital channels and reach them via email, partner portals or webinars, while they search for less digitally active ones over the phone.

The full digitization of our sales and customer management processes is unmanageable in a matter of days, but with manual support in the background, we can quickly achieve great results. Paper-based filling of documents can be replaced by simple online forms, personal identification by webcam methods, personal advice by video conferencing, and personal pickup by home delivery. For example, in recent weeks, there has been a bank that has channeled its investment advice, which was only available through personal consultation so far, to an entirely online channel. In this case, there was no end-to-end process development and IT implementation, but only the client-side (front-end) activities were digitized, while the back-end processes (such as data processing, document generation) continue to run manually and with live workforce behind the scenes.

The extra workforce demanded by "manual digitalization" can be offset by reallocation within sales or from other areas.

The current situation requires a rapid and flexible reallocation of human resources to where the work of colleagues is most needed. If the workload of personal customer service is decreasing, we will have to redirect our colleagues to the call center with increased workload or to the groups that support the operation of digital channels. For telesales, it is worth increasing our usual resources, as the availability of our customers is greatly expanded by spending most of their time at home. Access rate of potential customers is expected to be better as many people are around the phone practically all day long.

In many countries, redirection between positions is allowed by the regulations even without an extraordinary situation such as this. Flexible work organization is key, as bottlenecks in our ever-changing and digitizing processes can change day-by-day.

Another chance for reallocation is between business units; we can temporarily redirect our colleagues from sales to operations, for example, to support home delivery logistics or back-office administration. We already experienced some good practices between sales and operations where companies established a common platform to manage their front- and back-office resources jointly.

By reallocation, we may not lose either our valuable employees or our critical clients, not to mention reducing the risk of infection by redirecting personal contact heavy services to other channels, which is probably one of the most important aspects at the moment.

Based on daily data, we need to make constantly updated revenue forecasts with different scenarios due to the high uncertainty of the economic situation. For the sake of accuracy of the scenario analysis, it is also worth classifying our clients into different risk groups to see for sure which revenues are likely to be expected and which will be lost in the short term already. In the case of critical risk clients, the goal is to confirm our assumptions as quickly as possible and then minimize losses.

The continuous monitoring and forecasting of the daily sales performance and pipeline are the basis for the sales actions described above. Based on the daily performance trends across product categories, points of sales, regions or channels, we will be able to make rational decisions and focus on the right products and resources.

Important prerequisites for performance measurement of sales staff are providing adequate IT tools, regular (even within a day) measurement and continuous feedback. Working remotely without personal contact requires more guidance than usual, more detailed instructions, or even a daily task plan, ideally supported by CRM systems. The frequent use of these methods gives us the opportunity to implement extra performance measurement points and monitor sales performance more closely than usual.

In addition, constant feedback to our colleagues helps us maintain their personal motivation and commitment, which are crucial in crisis situations.

Adapting to a constantly changing new market is only possible with quick and effective changes. This requires continuous monitoring of our environment, responding promptly to new regulatory changes, communicating intensively with our clients, exploring quickly the changes in their needs and expectations, seeing clearly the current performance of our company and forecasting sales for the next few weeks. All of these are essential to be able to react quickly and flexibly to change.