How to Counter the Rising Cost of Living While Building Deeper Connections With Your Customers
Historic levels of inflation and price rises across the board in all sectors are taking their toll on the psyche of potential as well as existing customers. There’s a general sense of pessimism with consumer confidence falling. It’s the not knowing what’s yet to come that has shoppers reassessing their finances, making it more important than ever for retailers to ensure they are creating genuine connections with their customers to maintain and build better engagement and increase their lifetime value.
Despite the uncertainty of inflationary times, what’s interesting is that while the numbers of shoppers making purchases at many businesses have been impacted by the rising cost of living, there are categories and types of products that are less susceptible to the rising and falling tide of higher prices and wavering consumer confidence.
One example is pet ecommerce. During the pandemic, there was a notable rise in pet adoptions as people who normally spent extended hours away from their homes were now largely home for the day, and consequently able to properly care for a new cat or dog.
Neither inflation nor a reduced shopping budget is going to negate the fact that a pet owner must still properly care for their loved one - pet food, medicines, and even items such as shampoo, will for the most part, be impervious to the economic ups and downs of the time.
And even for those verticals or sectors where there is less of a built-in need for items, ecommerce brands can undertake some simple strategies to cultivate connections and increase lifetime value with existing as well as new customers. Here are a few:
The first action stores must undertake is an assessment of what items are most popular. Which of their products is most likely to continue to be essential? One key is reviewing inventory to evaluate shopping trends – what’s being sold and what is sitting on the stockroom floor.
Brands can then target their loyalty programs to make the purchase of those products more attractive.
Attaching bonus points for specific purchases, offering double points promotions, and even using free gift rewards such as samples of products can help encourage shopping and keep existing customers happy to return with the prospect of more loyalty offerings in their future.
These methods can also help you retain customers without participating in a race to the bottom on pricing.
Peak Trading Shopping will Remain a Priority
The peak trading periods and special occasions will not go away because inflation is at a historic high. People will still want to buy gifts for loved ones, no matter if doing so costs more this year.
Brands and merchants can take this opportunity to build connections with customers by aligning loyalty program promotions with calendar events such as Mother's Day, the start of the summer, Father's Day, Halloween, Hannukah, Christmas and more.
The bottom line is people will always be shopping for gifts around specific occasions and brands must take advantage of that knowledge, planning specific loyalty promotions to go along with the day.
Providing top tier members with early access to sales at these times or opening access to double or triple point promotions for loyalty program members will keep shoppers returning to redeem the value of the loyalty offerings while shopping for more gifts.
Gifts can also open up a new referral and acquisition channel as more recipients become exposed to your brand and products.
Bundle it up
Another strategy to consider for maintaining brand loyalty is opening access for loyalty program members to bundled products. The term “the more the merrier” applies here because as loyalty program members access bundled items, they can also be given extra points to incentivise executing and finalising these types of purchases.
The intended outcome is to sell more products in one go, achieving a higher average order value, even if the products have been discounted to do so.
Again, the hit of adrenaline this optimised purchase will bring will likely entice the loyalty program member to return and purchase one or more of the items in the original bundle to maintain the overall effect of how the products worked together.
Loyalty Lowers the Return Rate
When the price for items is on the increase, people take more time to consider their purchases. They ask themselves; do they need it or do they simply want it?
As such, shoppers in inflationary times may be more likely to return their purchases due to an increased sense of regret on arrival, (the product is not how they envisioned it or even if they may have just kept the item at one time, they are now more inclined to seek out a return and refund).
Loyalty programs can come into play to avert this behaviour by only offering free returns to their top tier program members. Members will be made to feel like VIPs, and the costs incurred for returns will help keep non-members from buying and returning – an obvious business benefit and helpful in keeping tabs on a store’s sales.
Move the Inventory
As overall purchases recede with rising costs and inflation, some brands may see the movement of their inventory slowdown in some areas. Loyalty programs can help here, too.
For those long term program members, provide a 'bestseller' area where discounts and bonus points are offered if purchases are made from a specific collection. Couple these purchases with no-cost delivery to maintain loyalty.
In inflationary times, creating genuine connections with existing as well as new customers is the key to maintaining business momentum and sales.
Increasingly, utilising loyalty programs, and onboarding new customers to those programs can keep customers engaged, move inventory, maintain sales and keep a business growing even during uncertain times.