How to Understand Your Customers During Inflationary Times?

Inflation is harming customers, from petrol stations to grocery stores. As a result of feeling the squeeze, many consumers are reconsidering their buying behavior:

56% of U.S. consumers and 47% of U.K. consumers are willing to shop less.
75% of customers expect to delay electronic device purchases, while 36% will buy fewer groceries.

Even famous names like Disney, Netflix, Walmart, and Target have seen customer losses or sluggish growth due to changes in consumer purchasing.

The high level of inflation in the current environment poses unprecedented difficulties for many businesses. Thus, as with any crisis, you must comprehend how your customers will likely behave. Ultimately, you'll need to modify your plans to keep providing value to your customers and set your brand apart from the competition.

8 Ways to Understand Your Customers During Inflationary Times

Your team must control your company's brand image and products and be ready for various eventualities during inflation. It should pay special attention to being adaptable enough to meet shifting consumer needs.

In short, you should be open to change.

This entails being transparent about price or product adjustments, speaking empathetically, and emphasizing your products' advantages over competitors. This contributes to developing a robust and favorable brand image that can lessen the adverse consequences of changes in consumer spending.

Your C-suite team and other concerned departments are essential to comprehending your customer, how they feel, and how they are likely to behave in this atmosphere of rising inflation. They would have to take the lead in evaluating and responding to pricing, distribution, product, and promotion plans.

In light of the current economic crisis, let's assess how you should understand your customers and modify your business strategies accordingly:

1. Empathize With Your Customers

While only 37% of consumers feel that their chosen brands convey genuine empathy, 68% expect brands to empathize with their needs.

To understand your customers during the economic crisis, you need to have a connection with them. Empathy helps you build that connection. Consumers in a bind want to feel like you, as a business, is aware of their demands and circumstances. Even in difficult times, customers can remain loyal to your company if you use an empathic communication strategy.

And thus, your brand's communication approach must be empathetic during an inflationary period.

What does that actually mean? Understanding your consumers' backgrounds is the first step, of course. Due to the rising expense of living, they may feel annoyed or even angry.

So, it's crucial to keep it in mind when speaking with them. In light of this, your team can perform the following actions to empathize with your customers to build a connection with them:

Share your personal experiences with inflation.
Show your target audience that you are aware of their struggles.
Connect with customers facing the same difficulties using a social media platform as a forum.
Create educational and empathic social media content to increase brand loyalty amid inflationary times.
Share some advice on budget-stretching strategies, such as couponing and frugal living hacks, if your target audience feels the painful effects of inflation.

For brands to engage and develop bonds with customers under pressure, empathic communication across touchpoints is essential during times of crisis. Put yourself in the customer's position by being human and concentrating on providing supportive, empathetic, and considerate communication.

2. Emphasize Human-to-human Communication

60% of customers stated they would wait in line to speak with a live person immediately. Customers are likely to use live chat more frequently, according to 42% of them.

Talking about empathy, human-to-human communication is even more crucial during difficult times. This is comparable to people turning to their friends and family for support and guidance. Brands should hence do the following to ingrain the human element in their interactions with customers to understand them better:

Focus on influencer marketing and word-of-mouth campaigns.
Respond to comments and inquiries.
Post entertaining and thought-provoking content.
Share user-generated content.
Go live more often.

More specifically, social media is designed for informal, amicable human exchanges. It provides excellent options to interact with and learn more about your audience.

3. Leverage Customer Insights and Social Listening

Customers will use social media platforms to complain about goods and services in 47% of cases. Your customer feedback and insights may differ significantly during inflationary times as the buying behavior of your customer's changes. Thus, your company can gather, follow, and analyze customer feedback for product development and innovation by investing in social listening and real-time analytics.

Real-time data can better identify customer preferences and behavior fluctuations during a crisis. Such data includes purchases, transactions, spending, reviews, repurchase information, and consumer mood. This information will enable you to adapt your offering or portfolio as necessary in the following ways:

Keep an eye out for shifts in consumer behavior.
In particular, stay updated for indications that customers are diversifying their spending.
Conduct market research to learn about the most recent consumer trends.
Use public channels such as social media and product review websites to keep up with discussions about category-level changes.

If the indications and outcomes from the above actions point to a considerable shift, brands may need to adjust their product mix, packaging, pricing, or distribution strategy.

4. Maintain Exceptional Customer Service

Customer service is a crucial component of the brand experience. It can significantly impact how satisfied customers are and how likely they are to make another purchase. Therefore, you need to maintain the excellent customer service you provided your customers when there was no inflation. To maintain good customer service, your business should focus on the following actions:

Develop your customer service abilities.
Boost the way you engage with customers.
Improve your customer service approach.
Make sure the salespeople are focused.
To learn about your consumers' wants, ask them direct questions.
Pay close attention to the customer's needs and summarize them for them.
Make the consumer seem genuinely interested in both their predicament and you.
Give your consumers a chance to leave reviews and testimonials online.
After they have used your goods or service, personally ask your customers what they think.
Write your customers a brief, honest message of appreciation as an extra step (or thank them publicly on social media).
To make them feel more special, give them freebies or specialized discounts.

Your consumers are less likely to leave when they feel valued and appreciated. A great customer experience will help you connect with your customers, retain them, and stand out from the competition in the market, where there is a cutthroat rivalry to be the best during these inflationary times.

5. Reward Loyalty With Discounts

Consumers claim that 66% will divulge personal information if they believe it will improve their customer experience. Providing discounts and other perks to your customers only assures them that your brand is dedicated to providing the best service. Considering the data above, the information your customers will thus offer will help you understand them better.

Moreover, customers are more likely to shop again at brands that provide them with the most value for their money, especially during inflation. Customers are more inclined to stick with a store if it can offer this through a loyalty program, even during rising prices.

Thus, you can offer rewards through loyalty programs for doing business with your company. These benefits may take the shape of savings, gifts, or points that can be used to pay for other purchases.

Although you can, you don't necessarily need to create an extensive loyalty program. You can start small. Giving your customers more value for their money helps counteract the consequences of inflation.

6. Invest in Product Innovation

One in four consumers is willing to pay up to 10% more if they are guaranteed to have an outstanding customer experience. Appropriate product innovation adds to a better customer experience. Innovation is essential to promoting and maintaining brand growth, whether in the form of a tangible good or a service. Moreover, there is an even greater necessity to upgrade your products and services according to the shift in consumer preferences.

In light of this, your teams should focus on the following aspects of your product strategy to deliver valuable customer experience even during inflation:

Create a list of concepts based on customer research.
Consider innovating on crucial elements that generate fresh buzz and provide the rationale for increased consumer spending.
Co-creating with your customer will increase the likelihood that your invention will succeed.

Co-creation with consumers or influencers is a fantastic approach to understanding your customers. This way, you can develop products and services most likely to satisfy your customers' needs while lowering the risk of failure. Remember that now is the moment to focus more on quality, performance, and sustainability.

For example, you could co-create premium or limited edition offerings with your customers. These goods will be more likely to offer them better value. By doing this, the adverse effects of rising costs on your current products will be lessened.

7. Focus on the Right Products

Customers will try to change their buying behavior and areas where they spend their money. But, this won't be the same for each commodity or service. For example, they could downgrade to lower-tier brands or goods that still provide acceptable quality and performance to concentrate their expenditure on necessities.

Remember that customers are searching for more value in your goods and services. This is because, given the inflation, they may be more careful about spending. They still want to feel like their money is well spent. So, it would be best if you were sure that your team effectively conveys the value of your goods and services to your target audience.

Recognize which areas of your product portfolio your audience will find more enticing during the crisis.
Emphasize how your goods or services can ease their lives or help them save money during these trying times.
Make sure to highlight the distinctive qualities of your goods or services that make them worthwhile in your marketing and social media posts.

Customers are more inclined to continue with a product or service even when costs start to climb when they are confident in its value and quality. So, your company should ensure that you maintain brand loyalty during periods of inflation by concentrating on the value of your offerings.

8. Assess Your Customer's Willingness to Pay

If you decide to raise prices, keep in mind that consumers will only do so if they feel that the product or service provides them with enough value. This entails figuring out how the product assists them, how it differs from the competition, and why it is the superior choice.

Moreover, your company can forecast consumers' willingness to pay by combining real-time analytics with machine learning and modifying your price or promotional offers. For that, you need to perform the following actions:

Consider cutting on a few features of your products to slash their prices.
For brands, trying out different price tiers that appeal to various consumer segments is a good idea.
You may also think about altering package dimensions to counteract price increases.

For example, a brand can wish to provide more affordable customers with smaller packages and more expensive customers with larger bundles.

The Key Takeaway

The easiest method to understand your customers and retain them is to put their needs ahead of making severe expense cuts or indulging in shrinkflation. Your brand's health depends heavily on the product or service. Therefore, brands should continue to innovate their product pipeline and pay attention to customer insights, social listening, success rate, and the CX, even when there is inflation, economic uncertainty, or a catastrophe.

To strengthen consumers' emotional connections to your business, empathizing and conveying the value of your products and services are essential. Moreover, if you stop communicating this or cut back, your brand may suffer irreparable damage, particularly in market share loss, diminished brand recognition, poor positioning in the market, and weakened customer relationships.