How can brands connect when customers are spending less?
The BRC (British Retail Consortium) has reported that in February, UK consumers cut back sharply on their spending, despite strong sales of jewellery and fragrances for Valentine’s Day.
So how can brands build stronger customer relations and what strategies could they adopt to navigate the cost-of-living crisis? There is a vast range of strategies companies can adopt to engage with their customers but in this week’s newsletter, Director, Georgios Giamaloglou explores three of the more interesting approaches.
1. Place customer needs first
It is crucial that businesses sync with the current economic environment and demonstrate that they understand their customers.
This poses a huge moment of opportunity for brands to show up as authentic, meaningful and consistent with their image and values. Empathy should be the starting point for any marketing campaign and sales strategy that is delivered during this time.
Barclays have created a new site called ‘Barclays Money Worries Hub’ where customers can find simple advice around managing their finances. Barclays are bringing market-leading content together with guided advice for those under financial pressure – who might find help in changing spending habits or manage their money differently to help make ends meet.
The bank is also running free budgeting workshops hosted by Money Mentors, offering confidential and practical guidance on financial planning to help customers track and feel more in control of their spending.
The strength of this counterintuitive campaign is that it explicitly places customers’ needs before those of the business.
2. Provide targeted help
According to a survey of 4,000 adults by Shopmium, 8 out of 10 (77%) shoppers in the UK have already taken action to reduce their grocery spend, with a further 10% planning to cut it down imminently.
But affordability means different things for different customer groups. Brands therefore need to provide variability of products or services targeted to different audiences, so that the brand offers something to everyone.
In May, Iceland became the first UK supermarket to offer a special discount for over-60s: those who are 60 years old and older can get 10% off their shop, with no minimum spend, every Tuesday. The initiative was launched in response to the finding by Age UK that three-quarters of older people in the UK (9.4 million) are worried about the rising cost of living.
To maintain margins with better-off audiences, the challenge will be to remind customers that companies are adding value beyond price. Value could be around quality, sustainability, provenance or making a positive impact on the local community.
3. Reward customer interaction
In the past, customers used loyalty schemes to reduce the cost of certain items or as top ups for occasional treats. Today customers are keen to sign up to programmes which include not only relevant offers but also provide rewarding experiences not necessarily related to their spending.
As spending gets squeezed these types of wider interaction provide ways to tide schemes and keep customers in touch. Some of these could be:
- Personalised offers and discounts based on shopping habits
- Connection of the scheme with good causes
- Giving customers multiple ways to earn rewards, it doesn’t have to be all about spending
- A digital experience, to make it simple and easy to use as well as improving the customer journey
The M&S Sparks loyalty scheme is a great example. Customers receive rewards for non-transaction-based activities like writing reviews and recycling their clothes. The program is highly personalised, showing customers how “the more you collect, the more M&S will get to know you, and the more M&S can treat you – to offers, events, and other exclusives you’ll love”. M&S also donates to their customers’ preferred charity every time they shop, “because what matters to you matters to us”.
The strength of the M&S loyalty scheme is that element of interaction and connection with their customers, without them feeling that they must spend to be rewarded.
The cost-of-living crisis is a wake-up call for businesses to shift their perspective and approach. They must find new ways to meet the needs of consumers during this time.
They need to focus on creating a loyal customer base that will stay with them throughout the current financial turbulence.
If you are looking for someone to help your company drive customer engagement, please do get in touch.