We’ve recently had the news that the ‘R’ word is back. It may only be a technical recession, but nevertheless it is a blow to confidence and morale as 2024 gets going.
On the positive side, the size of the drop and related recession is marginal. It’s different to those we’ve experienced in the past in that it’s not deep or dramatic, and it hasn’t yet brought waves of redundancies with it – in fact, there are still skills and availability shortages in the market. Hopefully we will exit it almost straight away. But it reveals the problem that the economy has been struggling with for successive quarters now, namely a lack of growth.
The UK is certainly not alone in this, but right now, we seem to be stuck in a low-growth rut where businesses are struggling with costs and margins and consumers continue to be squeezed by the high cost of living.
High street casualties
There is some indication that things will improve if inflation continues to fall and interest rates start to come down. But in the unpredictable world we are in, we can’t afford to rely too heavily on external factors that are essentially beyond our control. Businesses need to look at what they can control and create their own roadmaps to growth.
It’s something I was invited to discuss recently on BBC Radio 5 Wake up to Money. The trigger for that was the news that one of the icons of the British high street, The Body Shop, has fallen into administration. They are not the only recent casualty, either. It didn’t grab the headlines to quite the same extent, but Lloyds Pharmacy went into liquidation in January – certainly a sad loss.
Being relevant
Our retailers face difficult trading conditions, which they have been battling with for some time. And this isn’t just a retail issue – most sectors are challenged in one way or another. An uplift in the economy will help them find their way out of this, but at the same time I believe there’s another key issue at play, and that’s another ‘R’ word: relevance.
The fact is that consumers and business customers have become more discerning and demanding. With so much choice open to customers, and the ability to switch providers so easily via digital channels, brands need to be careful: if they don’t feel relevant to their customer base, they will soon suffer.
I’m not here to provide extensive commentary on The Body Shop, but I don’t think there’s any doubt that this question of relevance has been a factor. The business has a big and loyal fan base from its many years of trading, but these are mainly customers who are now in their forties and upwards. It hasn’t been able to resonate as strongly with the younger generations who have been attracted to some of their competitors instead. At the same time, the competition has stepped up its game.
Retaining your relevance
How can businesses ensure they remain relevant? It’s a combination of many things, including obviously product range and options. But it goes much further than that. It’s about understanding your customer base at a detailed level, not just around the products and services they like but importantly their behaviours; it’s about genuine personalisation, making the customer feel that you understand them as an individual and are tailoring what they receive around their interests and purchase history; it’s about ensuring the brand promise and purpose still resonates and is authentic.
Being relevant is also about showing customers that you’re on their side. Price and value is obviously important here, but again that’s not all there is to it. Businesses that give their customers useful advice or insight are more likely to build brand loyalty. For example, some supermarkets have become very skilled in sending their customers tips around how to reduce food waste and make what they buy go further. This helps customers spend less (but not simply through slashing prices) and plays to the sustainability agenda. It makes the customer feel both that the brand is looking out for them and is in tune with the issues of the time.
The importance of service
Embracing the service agenda helps to reinforce this sense of relevance, because it makes the customer feel the organisation values them and cares about the experience they have. Being available across different contact points and understanding what the customer wants to do in each channel, responding quickly to queries or problems, gaining feedback and asking for the customer’s views – all of these things build the sense that the customer matters and is relevant to the organisation.
In recent months, I have become concerned that organisations are not always asking the right questions, not challenging themselves enough and not really getting to the heart of what their customers want. They are not digging deep enough and not getting a deep sense of understanding. It’s important to challenge this and, where complacency is starting to creep in, ask yourself: do we really know why something is important and how do we know we are still relevant? What makes us so sure, and have we spent enough time on the detail?
Staying relevant also requires businesses to move with the times, reading the signals that are coming from the market and thinking outside of their sector. It’s about being curious, innovating in new areas of demand, and reinventing aspects of the brand when necessary.
As I’ve reflected before in this blog, we need to find our collective way out of this sluggish period and into growth. Reassessing, refreshing and revitalising service relevance could be the way to do that for both consumer-focused and B2B brands.
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