South Africa is in the midst of an inflation hike, and local businesses are doing whatever they can to maintain their customer bases and keep relationships strong. It is important during economic unrest to build brand loyalty and remind your customers about the ways in which your product or service enriches their lives. So how can you retain customers during times of inflation? We have some ideas.
Where things currently stand
It's not pretty out there: South Africa is in the midst of a recent inflation increase of 7.1% year-on-year, even though most people thought prices would go down slightly in March. Statistics South Africa reported that the monthly change in the consumer price index was 1% in March. This was the most significant monthly increase since July 2022, when inflation was thought to have reached its peak. The rise in inflation was again caused by higher food prices, which went up again in March, reaching 14% year-on-year, the highest level in 14 years. In February, when food prices increased by 13.6% year-over-year, they were also the biggest cause of inflation. In March, food prices were 2.4 percentage points of the yearly rate of inflation, which was 7.1%. The Thomson Reuters expectation was that inflation would drop from 7% in February to about 6.9% year over year. That's the bad news, but the good news is that there are things your business can do to mediate this stress.
When prices increase, build brand loyalty
As customers feel the pinch, it's essential to build your brand loyalty. This can be done in various ways:
1. Deals on products or freebies
Even though it might seem counterintuitive to try to stop prices from going up by giving deals, customers want to feel like their money is well spent. Especially when there is inflation and money doesn't buy as much as it used to. Offering discounts or freebies will help encourage brand loyalty during times of inflation. Even if your business can't give as many discounts or freebies, look for ways to save money without hurting your bottom line. Plan carefully when it comes to holiday or season-based advertising. Do some research to find out how the seasons affect people's buying habits, and put the events that matter most to your customers at the top of your list.
2. Customer loyalty programs
Most customers feel that in addition to product promotions, loyalty or rewards programs would make them choose one brand over another during times of inflation. This makes sense since these kinds of programs give customers a reason to buy from the store again and again. Customers who stick with your business are rewarded through loyalty programs. When prices are high, buyers probably have to make hard choices about which brands to stick with. Customers are more likely to stay with you if you show them you value them. As a pro tip, try making your rewards program digital. And keep it easy. Even the well-known loyalty punch cards (where you buy ten things and get one free) now have digital versions that you can add to your website or mobile app.
3. Maintain high quality
Product quality greatly affects how loyal people are to a brand, even when prices go up. Even though prices are going up, consumers are more likely to stick with brands that have a high-quality offering. In times like these, it's only natural for a business owner to look for ways to cut costs. But don't let that get in the way of making sure your goods are still offering your customer value.
Trying out different pricing structures and packaging choices is another way to try to keep prices low for consumers while still meeting quality requirements. Both methods let you sell different kinds of products at different prices. Before making any big decisions, you should look into how price changes will affect your bottom line.
Make packs of things that people need
When inflation rates are high, people can't buy as much as they could before because they don't have as much money. This is why you should bundle your goods and services. By bundling, you can give more for the same price, which can help build brand loyalty when prices are going up. With this approach, customers can buy more than one item or service for less than if they bought each one separately. When you bundle your goods and services together, you can also make your business run more smoothly and save money. This is because you'll be able to buy things in large quantities and then sell them as a package. During times of inflation, this can help businesses make more money.
The bottom line
While inflation changes the spending habits of consumers, they still need to buy things, and these 'things' might as well be from you. So during tough conditions, show your customers why your product or service matters in their lives. With these specific brand loyalty-strengthening tactics, you will be in a better position to build your business in spite of the pinch. Remember, if you need quick access to working capital to spearhead your brand-building strategy, contact Merchant Capital today.