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10 June 2020

Wake-up call for business as consumer scrutiny grows during Covid-19 crisis

Eagle-eyed consumers are ready to call businesses out on decisions they feel are wrong

By Nic Ray, DataEQ CEO

Businesses face many challenges in the COVID-19 crisis, from protecting the health of staff to navigating disrupted supply chains and new methods of doing business. The decisions they make are important but executives would be wrong to think they matter only to their board and shareholders. Eagle-eyed consumers are watching them closely and are ready to call them out on decisions they feel are wrong.

Limited access to traditional customer service channels, coupled with increased online activity by vulnerable consumers has been the perfect recipe for heightened scrutiny. In the grocery retail industry, for example, consumer social media conversation increased by 300% after the President declared a national state of disaster as consumers found digital channels a convenient place to look for information and voice their opinions on retailers’ early-COVID responses.

In May, DataEQ and Deloitte jointly published a report on the impact the pandemic has had on South African grocery retailers. In the initial five-week lockdown period, the primary driver of consumer praise pertained to in-store health and safety measures that had been adopted to protect staff and customers. CSI initiatives and treatment of staff were also key drivers of consumer praise. Affordability fell below all of these themes, suggesting that even for pressured consumers, good governance and ethical leadership remain important.

A new survey by FTI Consulting found that since the outbreak, Americans have increased their online activity and are paying greater attention to the behaviour of major corporations during the pandemic. The survey, Shifting Expectations, found 83% of Americans were paying more attention than usual to CEOs “stepping up to help those in need”. 86% of respondents said they were paying more attention than usual to “how companies cared for the employee’s safety and well-being”, and 30% of respondents posted about business leaders “going above and beyond”.

In South Africa, we have observed a similar trend. On social media, consumers welcomed Woolworths’ announcement that its executives would take a pay cut to ensure it could support its employees during the crisis. In the week following the announcement, 71% of 3177 consumer social media mentions about the story praised Woolworths, while only 4.6% were negative. 98% of this conversation took note of how companies were treating their staff. After Woolworths’ announcement, consumers began asking when other retailers would do the same.

But making promises and delivering on them is not quite the same. Organisations must be prepared to operationalise their measures before making them public. Some South African banks, for example, responded very quickly to the crisis, publicly offering a number of relief measures. While initially welcomed by consumers, drawing large spikes in positive sentiment, trust quickly eroded as many customers struggled to find information, realising that many of the details had not yet been ironed out by the banks.

The sentiments expressed by consumers have real consequences, they do not exist in isolation online, and businesses would do well to listen to what’s being said. Edelman’s new Trust Barometer COVID-19 Report found that one in three consumers were punishing brands for responding poorly to the crisis by no longer buying from them. According to the report, 71% of respondents said that if they perceive that a brand is putting profit over people, they will lose trust in that brand forever. In South Africa, we have observed a similar trend. In the last quarter, on social media, close to 60% of customers who threatened to change banks cited a bank’s improper market conduct behaviour, such as accusations of fraud, inadequate disclosure of pricing and information, and account irregularities.

With so many small businesses, essential workers and ordinary citizens making sacrifices during the lockdown, consumers are looking to big corporations to do the same. The brands that emerge from the COVID crisis with their reputation intact, or even improved, will be driven by ethical leadership that listens and responds to consumer feedback, particularly as it emerges on digital channels.

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