The cost-of-living crisis is dominating UK headlines. Inflation is continuing to rise; shop prices are at their highest in 10 years; and consumer confidence is at a record low. Research suggests the cost of some everyday groceries has risen more than 20%. Consumers now plan to cut spending as a result. It’s no surprise that shoppers are choosing cost savings over brand loyalty.
Global supply chain constraints are causing further disruptions simultaneously, making price rises inevitable. Brands must decide if and when to raise prices, whilst understanding the impact it can have on customer’s long-term loyalty. They must now focus on delivering unique and exceptional customer experiences to counteract the fallout of price rises.
Own the price change narrative
No customer likes price increases. But there are ways to turn less-welcome news into a positive brand experience. 81% of consumers say they want a relationship with a brand. The basis of any good relationship is honesty and communication. Transparency behind price changes can help customers understand the reasoning and plan future purchases accordingly.
The perceived ‘fairness’ of change is the second-biggest driver of how customers react (second only to the magnitude of the change). It is vital to be transparent about why prices are rising. For example, the increased cost of raw materials, rising wages, or delivery and supply chain issues.
The way a brand communicates changes can also set them apart from the competition. If keeping costs lower would mean compromising on the calibre of your product, you can use this as a chance to reaffirm your dedication to quality. When Peloton increased pricing in 2022, they appealed to their customers by citing investments such as ‘new features and additional instructors’.
Timing is also essential. Alerting customers quickly and as soon as possible can help set expectations and eliminate surprise. In some cases, brands can use the price increase to encourage their loyal customer base to ‘stock up’ on favourite products before the price increases. In the Peloton example above, the company gave subscribers six weeks’ notice. In contrast, when activity tracking app Strava made a drastic change to its subscriber model, communications noted the change was effective immediately.
Consumers want to feel appreciated and recognised for their loyalty consistently within this relationship. Sharing pricing news in an open, honest, and sensitive way can help solidify brand loyalty long term.
Refocusing on value, experiences, and frictionless communications
The online CX is more important than ever to make consumers’ lives easier when shopping. Frictionless experiences provide the customer with what they need, exactly when they need it. Out-of-stock situations can be a huge frustration for customers. Quickly alerting them if a product is out of stock could be the difference between an abandoned shopping cart and a positive sale experience. This also gives brands the opportunity to share pre-order information; similar products that are in stock; or the ability to be notified when a product returns.
In a similar way, all channels – from websites and social media to email communications – must have cohesive messaging. The consumer should be able to go onto any channel at any time and have the same great experience. By focusing on the value a retailer can offer, brands can provide a truly personalised experience and keep up with ever-evolving consumer expectations.
This could include: VIP experiences; sending a discount code as a thank you; inviting consumers to be a part of a feedback group; or building in enhanced post-purchase experiences. After all, it’s all the little things added up that make for an overall great experience with a brand.
Using data to your advantage
Understanding customers on a personal level is possible through data. Powerful analytics allow brands to uncover consumer behaviours and attitudes. Using multi-dimensional data across each customer touchpoint provides the insight brands need to take the next steps towards loyalty. This runs from personalised promotions to genuine messages of gratitude.
With a digital approach, it is not all about discounts. You can meet customers when, where, and how they want while also collecting valuable data to enable further personalisation. Connecting long-term loyalty and repeat purchases can enable a brand to send proactive emails. This includes the likes of – ‘you’re about to run out of contact lenses, don’t forget to reorder before it’s too late!’; or ‘you haven’t sent birthday flowers to your sister yet this year – make sure you don’t forget!’
People love to be understood and recognised. How many of us pride ourselves about being asked if we want ‘the usual’ at our local coffee shop? It shows that companies recognise, remember, and understand you. Mine your data for key trends that will help delight your customer and encourage continued purchases.
Convert existing customers for long-term loyalty
Even before today’s inflationary climate, successful brands recognised that long-term loyalty is the ultimate prize. It will always be cheaper and easier to convert an existing customer than acquire a brand-new one. By demonstrating the core values of honesty, transparency, consideration, and gratitude, brands can continue to convert customers through an informed, responsive, and personalised loyalty programme.