Consumer brand loyalty is earned, but as we’re learning through the ripple effects of the coronavirus (COVID-19) pandemic, it remains fickle. Consumers regularly use a poor experience as an excuse to switch to a new product or service provider, but empty grocery shelves, shuttered retail stores and lagging delivery speed due to the current health crisis have been the latest impetus for shoppers to try new brands.
In the last few weeks, the lack of availability of basic household items has pushed me to try new brands of toilet paper, paper towels, hand soap, cleaners, bread and other food items simply due to accessibility. In many instances, immediate gratification and necessity have superseded personal loyalty. This has been the norm for most shoppers. A survey of 1,006 U.S. households conducted March 27-31 by consulting firm AlixPartners indicated 79 percent of consumers tried a new brand that month because their normal choice was out of stock.
What’s interesting is many consumers have indicated they plan to stick with new brands once the COVID-19 crisis is over. Across 17 consumer-product categories tracked in the survey, 31 percent to 48 percent of consumers indicated they expect to stay loyal to the new national brands they’d recently purchased.
The good news for self-storage operators is this quirk in consumer behavior isn’t likely to affect rentals. Most tenants who vacate a unit do so for reasons other than competitor availability, though convenience certainly ranks high when trying to convert new customers. The larger threat will likely come from discretionary-spending decisions stemming from prolonged economic uncertainty.
With unemployment hitting a record 14.7 percent and 20.5 million jobs lost in April, the resiliency of the self-storage industry could be tested similarly to the Great Recession. While the industry performed admirably during the last downturn and anecdotal evidence suggests consumer demand for storage has continued through the first two months of this health crisis, much may depend on how long it takes for the U.S. economy to begin churning once stay-at-home orders are relaxed and urban centers reopen. Another outlier is whether a second surge of COVID-19 cases occurs as a result of reopenings and what restrictions on businesses may be issued in response.
Despite all the uncertainty and upheaval caused by the pandemic, U.S. consumer confidence remains reasonably high, particularly in comparison to Europe. That bodes well for restarting key segments of the economy, depending how long it takes for population-dense areas to reopen and how well they function under phased restrictions. Though it may not always feel like it, self-storage operators are in a good position, which means it’s important not to overplay your hand by testing the loyalty of customers whose collective patience is likely to thin the longer lockdowns are in place.
This is why there is tremendous value to communicating clearly with tenants any operational adjustments you’ve made to promote health and safety onsite, and why demonstrating empathy to tenants impacted by the crisis buys you goodwill. Operators across the nation are leveraging contact-free solutions to minimize or eliminate face-to-face interactions with customers, while still providing a seamless move-in or move-out experience. This includes allowing online payments and other options that eliminate touchpoints and minimize the risk of spreading infection.
Operators are being forced to make difficult decisions, ranging from what to do with prescheduled rent increases to handling delinquent accounts. For tenants facing hardship and an inability to keep up with rent, some operators have chosen to waive late fees, set up payment plans and delay lien proceedings on a case-by-case basis. These are important decisions that not only affect the immediate bottom line but contribute to tenants’ perception of your business. If you’re in a position to be able to demonstrate compassion, you’ll likely gain loyalty in the near and long term.
These types of decisions can also affect outside optics through tenant referrals and online reviews. While this can be an asset to building brand influence and gaining market share, a sound-but-negative business decision in the midst of a crisis can get magnified and force an operator into defending its actions and fighting to restore its reputation. All it takes is one disgruntled customer to set in motion a firestorm that grabs media attention for all the wrong reasons. During a time of heightened sensitivity, I’d argue operators should err on the side of reasonable benevolence whenever possible.
Though the coronavirus pandemic has shown us once again that consumer loyalty can be fleeting, customer relationships can also be nourished and enhanced during difficult times. Unexpected acts of kindness that run counter to outside expectations can fuse bonds, build loyalty and position businesses to pounce once day-to-day business returns to something closer to normal.