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Oct 12, 2022,08:50am EDT
Consumers feel battered by high inflation and the rising cost of living, with the changes they are forced to make in their buying habits hitting businesses hard. Entrepreneurs, too, are feeling the pressure of rising business costs while trying to find ways of helping their customers through difficult times and retaining their loyalty long after the cost of living crisis is over.
Research from consumer intelligence company QuMind found that 49% of customers in the U.K. would like to see price freezes on non-branded products, 46% would like more loyalty rewards to make items more affordable, and 41% would enjoy free delivery or collection services.
QuMind’s CEO Mark Ursell says: “Entrepreneurs need to stay agile in their response to changing consumer behavior. However, decisions must be based on genuine customer insights rather than gut feelings. Guesswork not only risks commercial opportunities being missed, but entrepreneurs could also find themselves out of pocket by investing in new initiatives that don’t reflect the current needs of their customers.”
Pricing strategies that support
Some companies are committed to helping customers by not passing on price increases. When Rock Balboa launched his vitamin and nutrition company, Rock’s Discount Vitamins-N-More, 16 years ago, he pledged to keep his prices lower than any competitor and price match if anyone found a lower price. That strategy continues today, as the company’s VP of organizational development Richard Trevino, explains.
“With the economic disruption and volatility of the last few years, the costs of materials and products have skyrocketed, putting many supplement companies out of business,” he says. “However, Rock has refused to pass that cost on to our customers because what we sell them is essential. We reassessed our financials around our commitment to our employees and customers; we didn’t raise prices and re-negotiated with our vendors to keep our costs as low as possible. We are weathering the storm.”
Luxury slipper retailer Shaffay has reduced its prices, conscious that with the cost of living crisis, customers will struggle to heat their homes and need slippers to keep their feet warm over the coming months.
Founder Anna Elshafei says: “We know that sales of things like lipstick tend to increase during economic downturns because people want to be able to give themselves an affordable treat when times are harder. A new pair of Shaffay slippers is a treat. They’re not cheap, but by reducing the prices, we are making them an affordable luxury for more people.”
With the slipper season barely underway, an upturn in sales has yet to materialize for the new brand. However, Elshafei believes that supporting customers during difficult times is key to retaining their future loyalty. She says: “We think of our customers, our ‘Slipper Souls, ’ as our community, and if our customers know that we support them, then they will support us.”
Customers in control
Other companies have focused on easing the pressures of meeting deadlines for bill payments for those struggling with soaring living costs. Billing and payments firm Bluechain has developed a digital payments solution using Request to Pay technology to empower customers.
U.K. managing director Tim Annis says: “They can choose the date that payments are scheduled to reoccur, allowing them to set bills on days that meet their financial needs, such as aligning with payday, or splitting payments into smaller more manageable amounts, for example, weekly, and raising queries directly in the bill.”
This puts the control in the hands of the customer while delivering real-time insights to the company sending the bill and removing the black hole of invoicing. “It brings certainty to billing and payment for both sides that transforms the customer experience,” says Annis.
In the current climate, it’s more important than ever that businesses remain true to their purpose and continue to meet customer expectations, as a study by the Chartered Institute of Marketing (CIM) has revealed. It found that 57% of consumers don’t believe food and drinks firms when they say they’re trying hard not to increase food prices on items. Only 34% said they were happy when brands openly communicated about price increases, while 12% felt concerned and worried when they shared it.
Understand consumer spending choices
James Delves, head of public relations and external engagement at the CIM, says: “Marketing departments need to build trust with consumers to ensure they are front of mind when customers and potential customers are deciding where to spend their limited budget and understand the current trends in their markets.
“They can do this by auditing their customer base to understand how priorities have shifted, communicating directly with them to understand immediate and longer-term needs, and engaging with consumers authentically through the channels they trust. Only then, with sight of the bigger picture, can businesses expect to maintain brand loyalty and engagement.”