The unprecedented economic situation means that many products, services and entire businesses are now based on an understanding of their market which is outdated. There's a real danger of businesses providing square pegs for their customers' metaphorical round holes.

In a previous life, I was a recipient of the famous 1995 Bill Gates sea-change email. From that day on, the strategy at Microsoft changed. BillG echoed many business owners around the globe who hurried to adapt their business plans to incorporate online channels and internet connectivity. This simple change in direction has shaped the commercial landscape ever since. Those who adapted successfully and who understood the commercial opportunities and changing customer requirements have been the most successful.

The latest sea change is not one led by technology innovation, but by a dramatic shift in consumer behaviour. In all walks of life attitudes are changing, compounded by the constant media barrage of stories of economic doom and gloom.

"Deep recessions deliver more than just an economic shock: they can shock an entire social system into new ways of thinking and organizing." NESTA (2008) Attacking the recession: How innovation can fight the downturn.

It is all too easy for businesses to focus inwardly to drive efficiencies, or to focus energies on increasing revenue through additional marketing. These energies will be wasted, and even potentially damaging, if the product or service has become fundamentally out of line with the customers' needs & expectations.

We will see...

• Motivations to spend and interact changing, driven by a focus on essentials, economizing, escapism & networking.
• Brand loyalties are shifting as people openly look towards cheaper alternatives and shun luxury goods.
• Trust is no longer a given with established brands... Trust must now be earned in other ways and the risk / reward balance for the customer must be carefully considered.
• The decisions people make and the process by which they research options will be different. The network will play an ever increasing role as people search out value.
• The susceptible moments when customers may be open to up-selling or cross promotion are likely to shift.
• Market segments will rearrange themselves based on potentially new criteria related to goals.
• The list could go on...

Although the effect of these changes varies across sectors, businesses can no longer believe they ‘know' their customers based on old research, results or instinct. While companies focus inwardly on reducing the impact of the recession, the distance between their customer insight and the real customer attitudes and behaviour is growing. Their products and services run the risk of being upstaged by competitors who innovate based on a new understanding of the changing market and user requirements.

This is not a short term situation... these changes will have a lasting impact regardless of the duration of the recession. You only have to look at the attitudes of a generation who have passed through previous economic downturns to see the way it affects their long term attitudes as consumers.

What can be done?

At Flow, we believe that you need to get under the skin of your customers in order to develop and improve products & services. Many of our own case studies illustrate where this user centered approach has led to increased turnover and profits, and reduced costs.

We've previously blogged about a 3 pronged approach to designing in an economic crisis. All 3 require a fresh understanding of your customers:

1. Innovate: The situation provides real opportunities for companies willing to innovate based on fresh user insight. History has shown that recessions are ultimately great drivers of innovation. He who dares wins... UCD enables innovation with minimum risk because you know you're building the right thing from the start.
2. Optimise: It may well be that your existing products and services need a little adaptation for the changing market. Some small improvements can lead to large rewards. Fresh user insight will point you towards some optimizations which are likely to range from simple messaging changes, through to new ways of navigating.
3. Cut costs: A cross channel view across your complete customer will highlight some areas for cost cutting whilst enhancing the total customer experience. Online retailers are currently reaping the rewards whilst their high street rivals are struggling to maintain expensive, and less convenient, channels to market.

User centered design is available in shrink-to-fit. It doesn't need to be expensive, but it must be included if you want to capture the attention of a rapidly changing market.

- Meriel Lenfestey, CEO & founder of Flow