Concerns over inflation and recession can negatively impact consumer mindset. STEVEN VAN BELLEGHEM shares advice on thriving as a retailer in a market populated by sensitive customers.
One of the topics I’ve been questioned over most commonly in the past weeks is dealing with customer experience in times of high inflation.
It’s a very relevant issue today, of course, and due to the state of the global economy retailers everywhere are dealing with customers that are very mindful and careful of their spending habits.
So how can a business deal with this in terms of customer experience? In my experience, there’s a short-term answer and a long-term answer.
Beginning with the immediate answer, managing a trepid market as a retailer is all about successful budget management.
Increase in price
In difficult times, many businesses are looking for short-term measures to keep their position stable.
These are often to their own advantage, however, sadly also often come at the disadvantage of the customer. A simple example would be raising the price of a product or service. For some retailers, a price rise may not be a matter of choice, but of survival.
How do you deal with a price increase from a customer service standpoint? There are three important points to take into consideration.
• Be transparent: You have to tell the real story about your situation to your customers. Be open about why you need to increase the prices.
• Be proactive and honest: Never surprise customers with a price rise, but warn them up front and, again, be open in your communication about the factors behind the rise.
• Brief your team: In my experience, this one often gets overlooked. Staff on the salesfloor will get a lot of complaints and questions about the price increase. You cannot have staff provide customers with vague answers such as “it’s something the boss decided.”
Keep your staff informed and updated on the narrative so they can relay that information with the same conviction as someone else in the organisation would do, as this can make a significant difference in the way difficult news is perceive by customers.
Remember, there is always the choice to not raise your prices, particularly if your competitors do.
In that case, it is important to communicate that decision publicly. Inform your staff of the decision to maintain current prices and ensure that the messaging is reaching your customers.
Another popular short-term way of tackling the pressures of inflation is by reducing expenses.
Unfortunately, that often involves the area of customer service and the relationship your business has with customers may suffer as a result.
Sometimes, businesses have no choice but to make these kinds of cuts. However, if you find yourself in this position, make sure you make the most of the change by creating ‘moments’ or offering self-service alternatives.
Lately, I’ve been discussing Dan and Chip Heath’s book “The Power of Moments”.
The premise of the book is simple yet brilliantly effective. If we were to measure every single interaction of a business with a customer, most would probably have an average score of about 6.5 in 10. That’s normal, because there are bound to be highs and lows in the data.
However, if businesses manage to compile a number of interactions that are outstanding, surprising and overwhelmingly positive, the overall feeling will eventually climb to an 8-9.
It’s a simple lesson based around the impact significant outlying factors can have to an average within a data set.
For me, this is the perfect mindset to pair with downsizing and cost-cutting.
If you are going to cut costs in customer service, it’s crucial to rethink where you will be able to create a positive surprise to counter that loss.
If you choose those moments right, you may improve your word-of-mouth, while decreasing your costs in other places.
Another method for improving customer experience while still lowering costs is by optimising your self-service capabilities.
Explore methods for prompting customers to find the solutions to issues on their own. A perfect example of that is Dutch e-commerce company Coolblue. It constantly monitors the questions asked in their contact centre and then creates short and simple explainer videos for those questions that are commonly repeated.
Coolblue has exceeded 130 million views on its videos.
The success for Coolblue in this example is two-fold. Firstly, the business has sent clear messaging to customers that it is not only a provider of products, but also a reliable resource for troubleshooting issues around its products.
Secondly, Coolblue has reduced the overheads associated with operating a customer contact centre, as staff field less questions when customers can easily access solutions online.
The long term
So, what about the big picture and is there a long-term solution to handling customer concerns regarding inflation?
In my experience, there is one crucial question to be asked of an organisation: Are you willing to sacrifice as a business in the short term to win trust in the long run? Are you willing to experience some pain right now to maintain a healthy customer relationship?
In my latest book, I discussed the ‘offer you can’t refuse’ model.
If you’re not familiar with it, this is a brief summary – the bare minimum demand of today’s market is that you meet the following requirements: a good product, service and price, paired with digital convenience.
These four criteria are the recipe for a quality transactional relationship in 2022. However, that’s only half of the story, the bottom half. The top of the model is about being a ‘partner in life’ which means fostering a more in-depth customer relationship based around positive business contributions to the community.
The concept of a great offering and digital convenience – is what helped us through COVID in a transactional context. The top of the model is the aspect that will help businesses survive these times of high inflation.
If you succeed in increasing your value to the customer and to society, you will be able to develop a more enduring emotional relationship. You will keep customers loyal to your brand in difficult times by helping them create positive change in their lives.
Ideas and inspiration can be found for jewellery retailers in other sectors.
When the pandemic began many in the restaurant industry began offering home deliveries to keep customers engaged and donating leftover food to those in need via charities sends the message to customers that these businesses value the health of the community around them.
In real estate, going above and beyond with a customer is what creates long-term connections. An agent who goes above and beyond to help a tenant find the right location to live will be remembered. Likewise for a landlord who is conscious of rises in the cost of living and willing to alter agreements with tenants to help them through difficult times.
Jewellery retailers should be able to utilise similar options in difficult economic times.
Remaining engaged with customers via social media, offering videos showcasing the latest products. Exploring reduced prices wherever possible, for example, via a loyalty program. Enter the business in community events and supporting local charities keeps a store active in the minds of customers.
Ensure that when a customer does visit your store, their needs are answered by quality customer service which guarantees that the next time they’re in the market for jewellery, they’ll be returning to your store.
Are you willing to sacrifice in the short term to create trust in the long run?
Answering this question correctly is essential in periods of inflation. Why? You must always be aware that you, as a business, are not the only one looking to cut costs!
Your customers are also in cost-cutting mode and feeling similar financial pressures. And therefore your biggest challenge, in over the next few months and maybe years, is to make yourself so likeable and even indispensable, that customers do not cut you out of their budget.