It’s hard to turn on the television or read your daily news updates without seeing a segment addressing rising inflation rates. Several key factors have created a perfect storm for inflation rates nearly reaching a 40-year high; the pandemic, the conflict in Ukraine, high energy costs, supply chain disruptions, and heightened consumer demand have all contributed to price increases across every industry. From the gas pump to the grocery aisle to the housing market, consumers are nervously watching prices increase and business owners are feeling the pressure of raising their prices and cutting costs, while still trying to keep their customers happy and loyal.
Interestingly, not all consumers are feeling the sting. Depending on income level, consumers are finding themselves in differing financial positions coming out of the pandemic. Higher-earners who have been able to save on travel, commuting, and entertainment during the pandemic are in a much better position financially than lower-wage employees and those who were unable to work or had extra expenses during the pandemic like childcare and care for elderly parents or family members. Those groups of consumers that were already struggling are finding themselves even more and more concerned about price increases.
Business owners need to be agile and able to pivot to their customers’ changing needs in these uncertain times. Now more than ever, it’s crucial to understand your customer segments and how the fluctuating economic conditions influence their everyday lives. Brands must focus on managing their business in ways that align with shifting consumer lifestyles and expectations.
And while some consumer demands are changing, some remain constant. Consumers are more willing to pay increases for certain products and services than others. For example, many are driving miles out of the way for the cheapest cost per gallon of gas in town, but are unwilling to switch the brand of coffee they drink in the morning or change Fido’s dog food brand. All consumers have a few brands or products that they are more emotionally connected to and are willing to spend more for those than others. It’s important for companies to have a clear understanding of where their customers are willing to spend more.
Certain shopping experiences and brand qualities are also seen as more valuable to today’s consumers and considered to be worth a premium. A recent Forbes survey of US consumers found that 58% would pay more for great customer service. But this finding varies by generation, with 62% of Millennials and 60% of Gen-Z customers willing to spend more versus just 46% of Baby Boomers. This is why it’s important to consider age and other demographic factors when considering your business strategy.
You may think you know your customers and have their behaviors nailed down, but do you know when and where they are willing to sacrifice their favorite brands, products, and services during record times of inflation? It's time to reevaluate and possibly reconsider your customer segments and how you market to them in these uncertain times. Vennli helps you identify real-time, voice-of-the-customer insights that improve audience segmentation and messaging strategy to drive growth. Let's get started!