GUEST COMMENT Why the cost of living crisis must be met with marketing innovation, through wise investment
No one can escape the impacts of inflation and a cost-of-living crisis. Prices of essentials are soaring as vast swathes of the population are living in growing fear. For marketers, this crisis raises fundamental questions about how to engage with consumers in a way that is empathetic to the very real concerns they face, and what investments should be made in furthering brands amid this climate.
As we will explore, now is not the time to retreat from brand building, but a time to wholeheartedly invest in strategies that support customers, while also ensuring the brand remains top of mind. How, then do marketers demonstrate that brand investment remains essential and which areas will deliver the best return?
Investing in brand building at a time of crisis; boom or bust?
Alongside appropriate and empathetic customer engagement, marketing departments are challenged with addressing their own costs and budgets. The knee-jerk reaction might be to batten the hatches and wait out the storm. But as the IPA recently highlighted, during a crisis “the companies that recover fastest are the ones that either maintain or increase their marketing spend during difficult economic times.” For example, after years of building brand reputation, it’s vital to continue building share of voice (SOV) during a time of economic uncertainty. Although brand awareness campaigns are often among the first to be scrapped when businesses are looking to cut back on advertising spend, this could be one of the key periods for reaching new customers.
Insight, communication, and response
No matter the financial climate, the rule remains that businesses must put their customers first to be successful. In fact, this is particularly pertinent during a cost-of-living crisis, where customers are increasingly looking to cut back on costs and get as much value for money as possible. According to our recent research, more than half (51%) of consumers say that businesses should be prioritising cost-of-living offers and nearly two-fifths (39%) would appreciate strong loyalty schemes. While 86% also agree that a lack of promotions and discounts is a reason to desert one brand for another.
However, while industry-wide trends are vital to monitor, it is the needs of your particular customers you need to have insight into. This means pulling on all sources of information and data possible to understand customer reality, especially as this may constantly change in response to the current uncertainty. This insight will help you to adapt your strategy, ensure two-way communication, actively seek feedback and listen to customers, create a considered and consolidated view of what the feedback means, and learn how you can shift the brand proposition to align with it.
This is key during a time when the wrong message can leave customers feeling alienated. Brands that are constantly curious, constantly in dialogue and empathetic to their customers will be able to offer products, rewards or services that align with needs. The result is an increased likelihood to be rewarded with loyalty and engagement.
Invest in loyalty
Customer loyalty will undoubtedly be affected by the cost-of-living crisis, with many loyal customers who were previously driven to a brand due to factors outside of cost, (such as quality of product, or convenient delivery options, etc.) opting for a cheaper option from a competitor.
Customers are used to the format of being rewarded through loyalty programmes, which offer the ability to bring customers into direct engagement with brands. As a result, participants are much more likely to give feedback and fill out surveys, enabling brands to capture rich data that can go on to inform how they operate. This enables that vital two-way communication so that marketers can facilitate relevant communications and rewards to each customer, so they are more customer-facing in how they align their operations with the feedback they receive from their customers.
Right now, sophisticated loyalty programs, harnessing data, facilitating dialogue, and enabling fast responses to shifting needs can make the difference between a customer remaining loyal and shifting elsewhere. In fact, 72% of programme leaders in EMEA are now looking to revamp their programmes, and 84% want to increase their overall investment within the next three years. Loyalty should therefore be a key driver of investment over this period.
Find new ways to respond
Customer behaviour is changing dramatically and not just in response to the current crisis. As ever, retailers must be agile to adapt to these changes. However, this new climate makes some behaviours and expectations more prevalent. For example, brands may need to accommodate gradual payment for customers (using platforms such as Klarna etc) or increase the value of loyalty points.
Crucially, however, marketers should carefully consider how risk be reduced for the consumer. For instance, by providing extra guarantee cover for products at no extra cost, as offered by John Lewis on many products.
Organisations have faced a lot of fast-paced change in recent times with shifts in the political landscape, the ways people spend their time, digital expectations and consumer desires in terms of value-driven purpose. The cost-of-living crisis falls right into this evolving narrative, making it even more important that businesses have the best processes, structures, and cultures in place to adapt quickly.
Now is not the time to squeeze marketing budgets in the hope of sunnier days ahead. It is time to grasp the opportunity to better know your customer, respond to their needs, exceed expectations and set new benchmarks. This requires investment, but not just that. On one hand, it requires innovative thinking, adopting new technologies, and harnessing data. On the other hand, it requires us to go back to basics; know all we can about our customers, be customer obsessed and make our brand indispensable, no matter the external environment.
Grace Sinclair is loyalty strategy director, Scarlett Fielding senior planning manager and Katerina Kyriakides senior manager, strategy and planning, at Merkle
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