Welcome to Material's New Behaviors Series, four weekly pieces of content that will explore how brands are dealing with the challenges and opportunities created as a result of COVID-19. We aren’t focusing just on what brands are doing today, but also on how they see the road ahead and what they’re doing to ensure their brands stay essential during this period of change for their customers, employees, and business.
We’ve identified four unique scenario groups (Adapt, Disrupt, Recover, and Reimagine) that brands need to navigate in these difficult times. These groups were introduced in the New Demand framework, which plots these evolving need states against decades of research on the momentum and the permanence of new habits.
Just as importantly, we’ve integrated real-world feedback from brand and marketing leaders who are tackling these issues on a daily basis. Working with established and emerging brands across a wide range of categories including Technology, Healthcare, Entertainment, Consumer Goods, Real Estate, Transportation, and Education we’ve heard their perspectives on which behaviors are transitional and those they believe will become more permanent.
Over the course of this series, we’ll be looking into each of these scenario groups, help you find out which one relates most to you, and then give you clear guidance on how your brand can rise to meet the issues they present.
Time to adapt to new consumer habits
In a time when so little is knowable, this series is aimed at being as practical, tangible, and concrete as possible. Be sure to check out each installment.
We’re starting our series off with a scenario group that many brands find themselves in; the world has dramatically changed and you have to pivot. For brands like Home Depot and The Gap in retail, Disney or NBCUniversal in entertainment, or Resy and MailChimp in SaaS categories, these adaptations are key to surviving.
The implications of Adapt
This part of the framework is best thought of as temporary habit changes that may return to normal, and these changes are being adopted quickly. If your business has been impacted, but not completely halted, then you’re in an Adapt scenario. Over 90% of brands we talked to say they’ve been directly impacted and need to make changes.
It’s a bucket full of uncertainty and the first course of action has been triage. Now, after nearly 2 months of quarantining for many Americans, the dust is settling and a new reality is emerging. Options are expanding.
Scenario 1 – Parts of your business are struggling, while others have gained from new consumer behaviors
For some Adapters, parts of your business have truly suffered. But other parts of your business have actually been doing better than before COVID-19. It can be a nice problem to have, but the concern is one of sustainability. How reliable is this new business model? And will this pivot permanently shut out a part of the business that was previously vital to your brand?
Problem: Your traditional avenues are closed and you need to get your products or services to your audiences.
Action: Seek out other avenues that maintain a semblance to the old reality, like digital or delivery options.
Example: McDonald’s same-store sales have declined by 20% in April (25% in March). This is because, in large part, they’ve shut down all dine-in options, as well as halted all revamp projects across the country (and most of the world). This has had a severe impact on their revenue. But their drive-thru business is booming, now accounting for 90% of sales (previously only two thirds). In addition, they’ve expanded delivery partnerships. By focusing on how to increase the ways their products are available, McDonald’s has capitalized on the situation in a way that doesn’t tie them down when the world returns to a version of normal.
Future: The question for the future becomes, of course, how far McDonald’s should go with delivery. Right now they’re using 3rd parties, but in the future do they commit to creating their own delivery service? Do they do away completely with dine-in options and innovate further on drive-thru experiences? How far can McDonald’s take their brand promise of convenience?
Scenario 2 – Your business and customer satisfaction are impacted by other industries
You may not need to adapt because your business isn’t being directly affected. Instead, the other industries or companies you rely on are being heavily impacted. And that ripple effect may be coming, though the size and timing of that wave are unclear. So you’re finding yourself having to change based on these outside parties. You might be a service brand that works with restaurants or travel brands. Or your logistical infrastructure is being heavily impacted. You’re hurting because they’re hurting, but it might feel like you have even less ability to create or implement a solution.
“It will be the ecosystem of struggling partners that will impact [our] business most, so we are not immune and do need to adjust areas of focus.” (New Behaviors Research, April 2020).
Problem: Impacts to third-party partners mean your products and services aren’t getting out there.
Action: This is where strong brand building blocks come in handy. If you have a solid brand purpose, then you’re well-positioned to show it in a new way. Mine your brand purpose to expand beyond previous engagements, creating new relationships with your audiences.
Example: Zappos’ sales might be down because people may not need shoes as much (though slippers and sweatpants are in high demand). But shipping delays are absolutely affecting business, especially customer satisfaction. Zappos’ brand purpose isn’t to deliver shoes, it’s to deliver truly exceptional customer service. So they manifested that purpose through their Customer Service for Anything. Literally, anything. Do you want to chat to someone about Tiger King? They have a number for you to call. Wondering if your grocery store has any flour (spoiler alert: they don’t)? You can call them for that too. Zappos is taking action for the things it actually can control and marketing itself in a genuine way.
Future: For Zappos, might the future look even less product-centric and more experience-centric? What if the infrastructure system becomes even more backed up? Will that force Zappos to really hone their brand purpose to a laser-sharp focus on doing one thing right (scaling back their product to a limited selection whose delivery date they can guarantee) or will they expand it out (regardless of the product, exceptional customer service comes first)? Could Zappos make exceptional customer services a product?
Scenario 3 – Some anticipated changes have arrived early
You’ve maybe predicted that 10 years into the future, some core part of your business will change. Consumer habits will go more digital, perhaps. You had ideas about what this future world would look like, but that was so far off on the horizon. Now that hypothetical future has arrived in full-force and you’re caught off guard, unprepared. Industries like education, healthcare, and entertainment were already moving towards digital offerings, but many brands weren’t ready to transition overnight. A core reason was that consumer behavior hadn’t completely changed. But now it has, due to quarantining and shelter-in-place orders. If this is you, then you’re faced with a dilemma: how temporary are these changes?
Problem: Behaviors have changed, but you’re not sure how fully you should adapt for this new situation.
Action: Look for options that don’t require a long-term commitment, that you can walk back if need be.
Example: In its first week of its digital-only release, Trolls World Tour made more money than its predecessor, Trolls, did in three weeks. That is…insane. Contrary to what many studios have done, NBCUniversal decided to not postpone the release. Instead they leaned into digital rentals and charged $19.99. They gambled on parents dying for some new forms of entertainment and on the rising trend of video-on-demand. And it was obviously a great success. They then announced that, going forward, they will always release new films in both theaters and on streaming. Normally it would put them with the Disrupters (our second group of scenarios).
Unfortunately, NBCUniversal forgot about another audience: theaters. After making those comments that going forward, NBCUniversal was met with a categorical banning from many theater chains. For example, AMC has claimed these plans would be a violation of “windowing” practices where theaters have exclusive rights to exhibit films before the distributor uses other formats (home video, video-on-demand, etc.). While it may be too early to tell the full implications of this, NBCUniversal’s attempt to walk back their comments show how Adapters need to consider this situation as very much temporary.
Future: Has NBCUniversal gone too far? Have they upset theater chains too much? Theatrical runs have been the traditional method for a film to make money and theater chains banning NBCUniversal could have disastrous effects. Or is NBCUniversal onto something? Have they accurately predicted that audiences are ready for new releases at home? And why stop at the films themselves. Will other habits around the traditional theatrical experience adapt for a remote world? Are 100+ years of movie theater behaviors coming to an end?
Use brand purpose to navigate the change in consumer behaviors
Adapting is a scary bucket of scenarios precisely because change is hard. But change needn’t be unknowable. Whether it’s finding alternative versions to make your products and services available or embracing changing attitudes you thought were far off in the future, the driving force should always be your brand. Which actions speak true to your brand purpose and mission? Instead of adapting your brand, use your brand purpose and mission to inform and guide your adaptations. Temporary messaging can help to build on your existing brand platform instead of completely abandoning it. No matter what form the change takes, Adapters should be able to go from just surviving the pandemic to thriving in it, before merging these new habits back with their pre-COVID ways of business.