Inflation has become the dominant theme in retail and other consumer sectors. As energy and food prices increase, consumers are tightening their belts. Consumers are reviewing subscriptions, bills, other expenses to make the household numbers work.
Retaining consumers becomes hard during inflationary times. Very hard. The temptation is to bribe and retain loyalty. But bribes are expensive. It hits the bottom line and importantly trains the consumer to look for the next bribe, and switch to the highest bidder.
There are better ways to retain customers during inflationary times.
Here are 5 steps:
Based on what the customers are telling you, review the value you are delivering across categories.
If you listen to the customer carefully, you will understand that they do not value every feature, every SKU, every size equally. This gives the opportunity to optimise the sizing, the feature set and the SKU range to adapt to the increased cost of goods. In other words, you may be able to keep the customer price the same, by adapting the product - reduce the features, the content volume, the packaging etc..
The disruption caused by inflation is a good time to review the pricing and promotion strategy. Are they driven by customer requirements, or the funding provided by the suppliers? While the short term upsides of back end funding is high, it is often negated by the lower purchases by the customer.
Price increase and promotions may be inevitable, but it should be rooted in data analytics. Price increases has to be tracked against customers willingness to pay and the impact on overall retention. If prices increase on a critical product or feature leads to high level of churn, the overall benefit is highly negative.
All responses to the inflation has to be rooted in data.
Customers clearly signal what they value, their price sensitivity, the likely response to changes in value proposition. Continual listening to this data, and parsing its meaning is critical to the success of a company’s response.
While the customers signal their intent, it needs to reach rapidly to the right people in the organisation. If customers are stopping at the point of sale because of a new delivery charge, the commercial team needs to know immediately so that they can make a decision.
Data and insights tell you about the customer behaviour and intent. But if the company does not respond, it does not deliver value.
Signals need to be listened to continually, and fixes made. Successful brands do that rapidly, so that emerging issues do not become a tsunami of customer churn.
Most companies today receive high volume of data from customers. Some of these are directly sent, while others are in the social sphere. Successful brands invest in listening to all of this data, parsing them, and taking actions fast.
In inflationary times, the capability to listen to data and acting on them at speed will bring survival and rewards.
A single AI based platform to identify emerging issues, and help you reduce your customer contacts and costs.