Here’s a rundown of what brands should consider as they approach annual planning for the year ahead.
Remember the plan you wrote last year to execute in 2020? And when you had to throw it out in March and take on the year a week at a time? 2020 has obviously been a year of challenges that no one could have foreseen, but the good news is that things will get better. As 2021 approaches, the Federal Reserve is forecasting 4% GDP growth next year and 3% the following year.
While it’s important to keep a positive outlook, it can be hard to imagine a time when we get back to “normal.” Even when consumer confidence returns as the pandemic fades away, what will normal look like? Certainly, some of the things we learned by working remotely and using virtual meeting tools like Zoom will be part of our new reality. But plenty of unknowns will remain.
For brands, performance varied widely by vertical in 2020. Travel and hospitality were hurt badly. Ecommerce, grocery, and big-box retail did well. Can you count on the same trend line for future years? The answer is probably not. So, as you think about how to plan for an unpredictable 2021, consider the following:
What did you learn in 2020 that you can do more of next year?
As a starting point, pay attention to goals you want to achieve rather than specific, quantifiable metrics. Be flexible throughout the year and watch for progress so you can adapt as you test and learn. Refine objectives as you go and the “new normal” stabilizes.
Don’t overly rely on this year’s data. It’s not that you can’t trust the performance data acquired in 2020—a year like few others—but in a historical context, it’s more likely to be an anomaly. What was the trend before the pandemic? What changes from pre-pandemic are likely to be permanent?
Focus on performance metrics. If you’ve made investments in, say, digital transformation, how are they performing in terms of delivering a better customer experience? You may not have seen much of a sales lift in 2020, but has a leading indicator like customer satisfaction improved?
What are the macro-trends that won’t change and how will they impact your business?
If you’re a retailer, what will be the role of your brick-and-mortar locations? Some predict that this holiday season will be the knockout blow for Main Street. Chances are it’s not going to be as bad as they say. However, a complementary channel strategy—tying together your mobile, physical locations, website, as well as all your digital touchpoints—will separate the leaders from the rest of the pack.
If you’re in travel and hospitality, supply is likely to be chasing demand in the near term. That could imply price wars and thin margins that are difficult to rebuild. Investing in relationship building, especially with your best customers, will pay off. We don’t know when consumer confidence and business travel will return. But when it does, consumers will want to spend their money with the businesses that inspire strong emotional loyalty. Personalizing consumer communications and experiences based on first- and zero-party data will build value and help maintain margin.
Macrotrends, like climate change, may have taken a small step back during the pandemic. However, someday soon when the pandemic and recession is in the rearview mirror, climate change will be one of the most important consumer issues. Show you share these values and strengthen emotional loyalty with initiatives that demonstrate your commitment to a greener future.
With so many unknowns, how can you rethink your annual planning process?
No one has all the answers today, just informed guesses. Based on near real-time information, what will you start, stop, and keep doing throughout next year?
Consider an ongoing virtual planning process that brings together a broad group of stakeholders from across your organization to evaluate and respond as new data comes in. For example, we use Spark Labs design sprints to help brands unify diverse stakeholders to organize and plot a way forward.
There isn’t room for a siloed approach. Discuss business results, leading indicators, and the voice of your customers. Be agile. And if you need help figuring out where to start, reach out to a partner like ICF Next.