How to Support Your Customers During Times of Heavy Inflation

It’s safe to say that most of the world was unprepared to deal with a prolonged pandemic. While many people have started experiencing a pervading feeling of apathy, we are still left to deal with the economic and financial implications of the Covid-19 pandemic. Service interruptions and supply line disruptions were expected.

However, no one could predict the extent of its real impact on inflation and its effect on customers. A fine example of this is the semiconductor shortage and its effects on multiple major industries, including gaming, medicine, and the automotive industry.

Nevertheless, with the discovery of more Covid-19 variants, there is still an overwhelming sense of uncertainty hanging in the air. Added to various daily stressors and the increasing price of consumables, we can only expect these circumstances to worsen the global mental health crisis. Now, the question is how your business can help.

There are ways everyday consumers can stay ahead of inflation, but under current conditions, many still need a lift up. This guide will examine what practices businesses can implement to assist customers during heavy inflation. We’ll explore how you can retain your customers and make new ones by applying a few clever mitigation strategies.

Retaining customers during periods of inflation and other tough times

Applying a customer-first approach isn’t a purely altruistic endeavor. Taking a more compassionate and humanistic approach will ensure that your brand is transfixed in your customers' memory. Thus, it’s clever marketing as much as it is magnanimity.

Integrating this ethos into your core values and core purpose will help your business maintain growth and stay relevant during these very unpredictable times. However, there are a few things you need to do before you can implement a successful customer-first strategy.

Re-examine your customer base and their relationship to your brand

“The only constant in life is change.”—Heraclitus 

You may be certain that you still understand your customer base. But as we’ve highlighted in the introduction, these are uncertain times. The pandemic has changed customer behavior and expectations.

First, we need to figure out how these factors have changed and impacted your business. We can start by analyzing key data,  such as shopping habits, customer wealth, shopping channels, customer priorities, etc. It’s important to examine how the pandemic has influenced this data.

A good way to use this data is to analyze how the pandemic has influenced customers' saving and investment behavior. Take into account how a Bankrate study found that 25% of respondents indicated they have no emergency savings. This provides a perfect opportunity for financial institutions to market high-yield savings accounts to their customers. Nevertheless, this suggestion is only one example of how new information can influence a brand’s customer strategy.

Other observed changes in behavior include more customers shopping at discount stores, an increase in credit card usage, and more customers buying in bulk. Just as with the previous savings account example, businesses can use this data to refine their own customer-first strategies to offset the negative effects of inflation.

Nevertheless, there are a few questions you need to ask yourself when doing so. These may include:

• Is our customer strategy still relevant?
• Should we alter our marketing strategy to entice more price-sensitive consumers?
• What promotions can we run to attract more customers and keep current ones?
• How can we make our brand more socially relevant? Should we be involved in more charitable causes or host competitions?
• How do we appeal to our customers' evolved needs and desires?

Once you formulate and answer these questions, you’ll have the foundation for an excellent customer-first approach.

Apply price tiers

Your prices may be a part of your brand identity. A good way to maintain your reputation while retaining and appealing to more customers during periods of inflation is to add more price options. This strategy will prevent you from alienating previous repeat customers who may have suffered a loss of income due to the pandemic.

Adding more nuance to your services and packages will also save you money. Producing or shelving smaller bundles may be less expensive. Furthermore, you can market your older, more expensive packages as premium options. This will appeal to wealthier customers in search of some exclusivity.

Large retailers that sell a variety of products need to identify items consumers gravitate to the most during these times. Once you discover which category of products you need to focus on, you can add more products with more diverse price options. For instance, if you know that customers typically buy more bread during these times, add cheaper alternatives such as half loaves of bread.

Retail and consumer packaged companies aren’t the only businesses that can benefit from diversifying their packages and offers. For instance, many insurance companies have started including joint life insurance packages where couples can earn discounts (and/or other incentives) when they apply for life insurance at the same time.

Implementing some of these suggestions will help mitigate the effects of heavy inflation on your business and customers.

More articles from AllBusiness.com:

• How to Create a Customer-First Company
• Even When the Customer Isn’t Right, You Should Act Like They Are
• 5 Tips to Stay Ahead of Inflation
• How to Protect Your Company’s Most Valuable Asset: Your Brand
• How to Offset Inflation

Place focus on consumers’ price perceptions

When price wars break out in retail, it’s usually due to four reasons:

• A rise in price transparency
• A sharp increase in consumer choice
• Fewer switching costs between various options
• A rise in the number of discount options in the market

During these price wars, companies collectively invest billions into price investments. However, consumers oftentimes don’t give credit to companies that make these price investments. Consequently, some companies receive way more acknowledgment for their pricing than what is fairly due to them; i.e., their prices aren’t as competitive as customer perception will lead you to believe.

To ensure that your company receives fair returns from its price investments, there are four central areas you can work on to improve price perception:

• Prices should not be democratic. There are areas where you can increase and decrease prices based on which key-value categories (KVC) will make a bigger difference in consumer perception.
• Provide customers with great deals. These can be in the form of promotions, rewards, coupons, loyalty programs, etc. Furthermore, it’s important to balance these deals with everyday low pricing. It will add more to your general shelf pricing.
• Focus on how you communicate your pricing. This can range from signage to marketing and advertising. It’s important to assess what you’re telling your customers about your pricing compared to your competitors.
• Looking at value proposition. You need to identify the standard or value of your products against your brand. For instance, you need to assess if your focus is carrying premium or low-end products. Additionally, it’s highly advisable that you examine the design and appeal of your store. Does it appeal to high-end clients or mid- or lower-end consumers? Finally, it would help if you studied the level of service you’re supplying in addition to your prices.

All of these areas can influence your price perception. Companies that are committed to providing high-end products or experiences will find it difficult to compete with their lowest price competitor—it’s an empty pursuit. They typically never get rewarded for chasing that price perception, despite investing a lot of money into it.

Next, you need to assess what customers in your industry value the most. You can use this to customize your strategy for the price perception you’re pursuing. Implementing these all-encompassing measures alongside your pricing strategy can provide you with an answer to constructing a concrete price perception.

Using technology to close the gap between you and your customers

The Covid-19 pandemic drove digital transformation to new heights. The value of the global digital transformation market in retail was $143.55 billion in 2020; it’s expected to reach $388.51 billion by 2026. These figures shouldn’t be surprising as internet reliance grew during the pandemic. A survey conducted by Pew Research Center found that 90% of Americans claim the internet has been either essential or important to them.

If most of their customer base is online, businesses can’t continue to maintain a limited online presence. This is not to suggest that all retailers must switch to e-commerce. You can implement technology and use the internet in unique and creative ways.

For instance, you can add more digitization to your loyalty programs. If you run a point-based loyalty program, consumers should be able to review their points and what they’re worth using an application or website. Your business should have exclusive mobile applications and websites that users can access using their own private credentials. This also allows you to advertise new products.

You can also encourage your customers to fill out surveys and make recommendations. This allows you to gather consensual consumer data, which you can use to modify and improve upon your strategies accordingly.

Furthermore, digital adoption gives you the chance to sell virtual products and services. A good example of this is how promoters and event planners have found creative ways to monetize virtual events. Digitization also allows you to accept more payment options. Again, thanks to the pandemic, many countries have started pushing for digital payment options.

Bitcoin became one of the highest valued assets of 2020. Digitization enables your business to trade in crypto and digital currencies. Moreover, it gives you more product opportunities. For instance, you can offer services and options for securely storing cryptocurrency for your customers.

It’s important to take advantage of the flexibility and speed that current technology affords us. Mastering it is the fastest way to understand the current consumer zeitgeist. You can then use this information to construct a well-grounded, customer-first strategy to stay afloat when inflation comes knocking.

Keep customers during periods of inflation by adopting a customer-first strategy

Sustainable business models are important. Thus, your customer-first strategy should not be myopic. You need to consider your business’s current position and how it will stand post-pandemic (if the economy should ever stabilize).

To support your customers during periods of heavy inflation, remember that your customers are people first, and thus a humanistic approach is imperative to surviving these volatile times.

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