Tracking real-time consumer confidence with an algorithm: Consumer Trust Index
COVID-19 is paralyzing our economies. The only way out for companies and brands is to develop strategies to understand the future of customer behavior.
And these strategies need to rely on consumer-related data. This is what our Consumer Trust Index is all about.
CTI is an index that companies can use to understand the market and to significantly reduce their losses. Moreover, it will tell them when consumers are going to start spending again, making them play with an unfair advantage over their competitors after the COVID-19 crisis.
How Italian industries are facing the Crisis
The whole world is now witnessing a black swan, a challenge nobody could foresee. Coronavirus is a huge threat to the worldwide economy and we are under a test we must not fail.
We can acknowledge the crisis just by looking at what is happening in two of the most important industries in Italy: Fashion & Luxury and Food & Beverage.
The first has registered enormous losses due to the worldwide effects of COVID-19, as a previous article from the KPI6 team already showed. The latter, as these very recent data point out, is experiencing a major crisis, also due to the collapsing internal and external demand for goods.
Given this scenario, it’s crystal clear that everybody has got to make their own contribution.
We decided to play our part by doing what we know best: data analytics. Specifically, we are here to support companies in this difficult moment.
The Consumer Trust Index wants to be a reliable ally, guiding their strategic decisions to avoid losses as much as possible. And, in the recent future, by showing them when and how to invest again in order to maximize revenues when the economy starts growing again.
It’s all about Data and AI
In an emergency management context, AI technologies help a lot in the process of understanding customers, their trust, their willingness to spend.
It is of critical importance for companies to get these insights with the right timing. The goal should be adopting the best communication strategy according to what people are thinking and their emotional state.
Real market and consumer data are the main sources of information to achieve these goals. The web and social media are literally overflowing with opinions, ideas, emotions, needs and, most importantly, consumer behaviors. It is essential to listen to online conversations to understand consumers’ needs, but also to know how to analyze their web- searches, and similar information.
We gather, combine and analyze data from different sources: web, social networks, search engines, stock market and much more.
The final output is something that resembles, in its outside form, classical trust indexes, so it is extremely easy to read and to interpret. But it shows major improvements:
- it is real-time, so it can be used immediately, not only after the year quarter it describes is already passed (the major issue with standard indexes);
- it can be declined locally and by industries, since the data we collect are referenced to their respective geographical areas and market segments, thus providing very specific insights;
- it is predictive, allowing to read future trends, not only the past ones;
- it is based on a sound methodology and the most powerful Artificial Intelligence in the industry of market research.
But the main advantage of CTI lies in its nature: it is perfectly suited to face a crisis, and it will prove extremely useful even in the next challenges a company will face.
Use cases for our Consumer Trust Index
As mentioned before, our index is able to understand customer confidence and the propensity to buy.
Moreover, it allows a company to intercept developing trends (and how to make a profit out of them) and detailed information regarding the performances of the single brand.
More specifically, CTI will prove useful in 3 main moments of the COVID-19 timeline.
1. Crisis management
The CTI will help brands enhance their strategic activities to minimize losses due to stagnant demand during the expansion of COVID-19. Browsing the trends daily, brands can remain top of mind in the consideration funnel of their customers.
2. Predictive model
The main function of CTI is to study consumer confidence levels to predict when confidence will return to pre-crisis levels. This way, the affiliated brands will be able to take advantage of the trends of the trust of their customers to anticipate by months their economic/financial recovery.
3. Post-crisis strategy
Once obtained a huge competitive advantage, brands will be able to continue using CTI data to interpret the level of market confidence. The current and predictive analysis of customer trust will guide the strategic choices of a brand, which will, therefore, be able to maximize its performance.
Global and industry CTI
Another important trait to distinguish our Consumer Trust Index from survey-based indexes is the fact it is declined by industry. It can be read in two different visualizations:
● the global index, which represents the confidence and propensity to consume the entire population in a certain state;
● the industry index, which instead shows trust trends in a specific market fragment, such as FSI, Fashion or Food.
The index will therefore allow companies to know their share of market and voice in their respective industry (and their competitors’ one, of course), but above all, it will make the relationship of trust towards its industry and competitors more evident.
It will ensure an analysis of current and potential trends, and how to exploit them to your advantage, reaching the target customer, profiled for each individual brand.
We wanted to create something to help the entire world fight against a common enemy. A tool to gain trust in ourselves, strength, and motivation. And an ally that is extremely easy to read and to use, because it takes the form of standard charts and projections.
This is what CTI is in our mind and in our charts: an economic index of trust, but above all of an index of hope and wealth, that will enlighten the way towards a rapid economic and social recovery.