Wharton psychology guru on the risky mind defining post-Covid consumer

Pedestrians wearing protective masks walk past a Lululemon store in San Francisco, California on Monday, March 29, 2021.

David Paul Morris | Bloomberg | Getty Images

Instead of jumping to a hasty conclusion about the post-Covid consumer, return to one that psychology studies taught us about long before the pandemic. People do not change their habits so easily, and what they could lose by changing their behavior weighs heavier on their minds than any possible gain.

“Habits are hard to break. It’s an uphill battle,” Deborah Small, Wharton professor of marketing and psychology, recently told CNBC Small Business Playbook Summit.

The idea behind it is known in academia as risk perception and has been made more difficult by the pandemic. An unprecedented event that suddenly forced consumers to go against their nature and new behaviors, overcoming many of the previously taken for granted commercial interactions: bars, cafes and restaurants, personal fitness classes and personal training. Consumers have been researching alternatives in ways they seldom do, and it did so on top of an ever-changing consumer landscape that in recent years has been mostly related to digital buying and selling.

“A lot of ways people used before the pandemic are not going to return to that level,” Small said. “We have changed sustainably through various experiences that we have had over the last year.”

But the Wharton professor also says that, for all we know about the consumer brain, it is unwise to assume that the habits formed during the pandemic will become a permanent preferred majority state. A recent Forrester survey found that 75% of adults in the US said the pandemic would bring about long-term behavior changes, but research also highlights that the consumer has always been in a state of change; it’s just maybe now more likely that Change is the “new normal” for consumers.

In Small’s view, there isn’t a single consumer to sell to – and to think that way would be a fundamental mistake.

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Take as an example the peloton training and advancement from home before its momentum was taken away by what Wall Street calls the reopening trade. Meanwhile, Lululemon continues to sell a lot of yoga pants, but it has become one steady increase in retail traffic After seeing the popularity of selling athleisure apparel directly to the consumer during the height of Covid in the US, it also bought the home fitness start-up and peloton competitor Mirror.

Relying on more than one type of consumer – which began to emerge before the pandemic with the advent of digitization – is a smarter strategy than planning around a firm perception of the consumer that emerged from last year.

“Imagine someone who used to go to the gym and then couldn’t, started exercising from home. Maybe they really miss the old way and really want to go back and couldn’t do it again at home, ”said Small. The pandemic may ultimately confirm that person’s original preference. On the other hand, she says, some consumers try new shapes and come to the conclusion that it’s comfortable for me and changes forever.

This way of thinking already has a name and a huge presence in retail: omnichannel. In other words, spread your stakes instead of concentrating them. Meet the consumer where they want to be met and understand that not every consumer is motivated by the same preferences. Small said this was the mindset small business owners across the country – if they could survive the pandemic or are opportunistic enough to start a new business during that time – must act when the post-pandemic period begins.

She provided CNBC with some key ideas to address this difficult consumer landscape.

1. Learn the difference between risk and risk perception.

Lots of people want to put the consumer in the pre- and post-pandemic buckets, and Small said this is actually a reasonable starting point for making predictions. People tend to categorize the world, but it becomes dangerous to categorize all consumers as similar.

“There is tremendous heterogeneity, differences between consumers, in their views, risk preferences, political ideologies … all that affects the way change affects them,” she told CNBC.

Therefore, the difference between risk and risk perception should first be kept in mind.

“Risk perception is not a risk,” said Small. “Risk is reality, its truth. Risk perception is psychology of what we feel and think.”

Risk perception is a function of the personality and culture we live in and the information we consume. And all of this can be varied individually and at the community level.

2. Accept that Covid-19 policy will continue to be a huge buying and selling factor.

3. Don’t draw a pandemic line, maybe segment according to your preferences.

Vaccination efforts in the US have made great strides and the number of cases and mortality from the virus have fallen sharply, but there is a significant segment of the public who will need more time to familiarize themselves with Covid.

Small says maintaining a hygiene-centric attitude is wise, but also realizing that among your customer base there may be those who believe that society has gone too far in responding to the risk of the virus, and there is Risk of backlash against companies that overestimate hygiene.

“This is a tricky balancing act,” said Small, one who is perhaps the hardest one for companies in “purple states” to find.

She strongly recommends considering whether there are any ways to segment consumers to meet the needs of those who continue to emphasize Covid hygiene and those who may feel different. The idea of ​​segmentation goes back to the heterogeneity that underlies human risk perception. An example could be setting business hours for different customer segments. Some stores kept business hours reserved only for older customers during the Covid peak.

Small also said business owners shouldn’t lose focus on one forced change that has worked very well: doing business outdoors. Some of the best innovations she’s seen in the small businesses she lives in relate to finding more ways to do things outdoors. “It’s better for safety and less risk … so that’s great if possible. Why didn’t we think of it before?”

4. Ask your customers what they want.

The best way to find out what customers want? Ask her.

For large corporations, that can mean market research, a science that contains in-depth tools for measuring concerns and preferences. And can get expensive.

Small said that there is no need for a small business to give up the hassle because it cannot afford proper market research. There are plenty of great alternatives out there, from doing it yourself analysis from Google Trends to creating surveys using free online tools or Instagram for a quick survey.

“Asking customer questions is the most important thing,” she said.

And it’s important because another side of human nature that often trips us up is overconfidence.

“We believe we know our customers well. Often our intuitions are wrong, ”she said. “So it’s really useful to ask them … not just accept. Ask them these questions.”

And she says people tend to tell the truth.

“As a general rule … when it’s your customers and you have a relationship … they want you to be safe, so it’s in their best interest to be honest,” said Small.

Right now, you probably have a lot of valuable information to share too.

“We’ve all had a lot of time to think over the last year and they have opinions … listen to customers,” said the Wharton professor. “Don’t try intuition. Talk to customers, get feedback from them, and try to understand what is important to them.”

While assumptions are bad and intuition can be wrong, Small also stressed that business owners shouldn’t get overwhelmed by the challenges and should start to think about what they have learned from so many changes, the innovations they have come up with, and that The extent to which they were adaptable. “Trust yourself. If you have adapted before, you can adapt again, and you can learn from the ways you have adapted before and apply them in the future.”

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