It’s safe to say that most of the world was unprepared to deal with a prolonged pandemic. While many people have started experiencing a pervading feeling of apathy, we are still left to deal with the economic and financial implications of the Covid-19 pandemic. Service interruptions and supply line disruptions were expected.
However, no one could predict the extent of its real impact on inflation and its effect on customers. A fine example of this is the semiconductor shortage and its effects on multiple major industries, including gaming, medicine, and the automotive industry.
Nevertheless, with the discovery of more Covid-19 variants, there is still an overwhelming sense of uncertainty hanging in the air. Added to various daily stressors and the increasing price of consumables, we can only expect these circumstances to worsen the global mental health crisis. Now, the question is how your business can help.
There are ways everyday consumers can stay ahead of inflation, but under current conditions, many still need a lift up. This guide will examine what practices businesses can implement to assist customers during heavy inflation. We’ll explore how you can retain your customers and make new ones by applying a few clever mitigation strategies.
Retaining customers during periods of inflation and other tough times
Applying a customer-first approach isn’t a purely altruistic endeavor. Taking a more compassionate and humanistic approach will ensure that your brand is transfixed in your customers’ memory. Thus, it’s clever marketing as much as it is magnanimity.
Integrating this ethos into your core values and core purpose will help your business maintain growth and stay relevant during these very unpredictable times. However, there are a few things you need to do before you can implement a successful customer-first strategy.
Re-examine your customer base and their relationship to your brand
“The only constant in life is change.”—Heraclitus
You may be certain that you still understand your customer base. But as we’ve highlighted in the introduction, these are uncertain times. The pandemic has changed customer behaviour and expectations.
First, we need to figure out how these factors have changed and impacted your business. We can start by analyzing key data, such as shopping habits, customer wealth, shopping channels, customer priorities, etc. It’s important to examine how the pandemic has influenced this data.
A good way to use this data is to analyze how the pandemic has influenced customers’ saving and investment behaviour. Take into account how a Bankrate study found that 25% of respondents indicated they have no emergency savings. This provides a perfect opportunity for financial institutions to market high-yield savings accounts to their customers. Nevertheless, this suggestion is only one example of how new information can influence a brand’s customer strategy.
Other observed changes in behaviour include more customers shopping at discount stores, an increase in credit card usage, and more customers buying in bulk. Just as with the previous savings account example, businesses can use this data to refine their own customer-first strategies to offset the negative effects of inflation.
Nevertheless, there are a few questions you need to ask yourself when doing so. These may include:
- Is our customer strategy still relevant?
- Should we alter our marketing strategy to entice more price-sensitive consumers?
- What promotions can we run to attract more customers and keep current ones?
- How can we make our brand more socially relevant? Should we be involved in more charitable causes or host competitions?
- How do we appeal to our customers’ evolved needs and desires?
Once you formulate and answer these questions, you’ll have the foundation for an excellent customer-first approach.
Apply price tiers
Your prices may be a part of your brand identity. A good way to maintain your reputation while retaining and appealing to more customers during periods of inflation is to add more price options. This strategy will prevent you from alienating previous repeat customers who may have suffered a loss of income due to the pandemic.
Adding more nuance to your services and packages will also save you money. Producing or shelving smaller bundles may be less expensive. Furthermore, you can market your older, more expensive packages as premium options. This will appeal to wealthier customers in search of some exclusivity.
Large retailers that sell a variety of products need to identify items consumers gravitate to the most during these times. Once you discover which category of products you need to focus on, you can add more products with more diverse price options. For instance, if you know that customers typically buy more bread during these times, add cheaper alternatives such as half loaves of bread.
Retail and consumer packaged companies aren’t the only businesses that can benefit from diversifying their packages and offers. For instance, many insurance companies have started including joint life insurance packages where couples can earn discounts (and/or other incentives) when they apply for life insurance at the same time.
Place focus on consumers’ price perceptions
When price wars break out in retail, it’s usually due to four reasons:
- A rise in price transparency
- A sharp increase in consumer choice
- Fewer switching costs between various options
- A rise in the number of discount options in the market
During these price wars, companies collectively invest billions into price investments. However, consumers oftentimes don’t give credit to companies that make these price investments. Consequently, some companies receive way more acknowledgement for their pricing than what is fairly due to them; i.e., their prices aren’t as competitive as customer perception will lead you to believe.
To ensure that your company receives fair returns from its price investments, there are four central areas you can work on to improve price perception:
- Prices should not be democratic. There are areas where you can increase and decrease prices based on which key-value categories (KVC) will make a bigger difference in consumer perception.
- Provide customers with great deals. These can be in the form of promotions, rewards, coupons, loyalty programs, etc. Furthermore, it’s important to balance these deals with everyday low pricing. It will add more to your general shelf pricing.
- Focus on how you communicate your pricing. This can range from signage to marketing and advertising. It’s important to assess what you’re telling your customers about your pricing compared to your competitors.
- Looking at value proposition. You need to identify the standard or value of your products against your brand. For instance, you need to assess if your focus is carrying premium or low-end products. Additionally, it’s highly advisable that you examine the design and appeal of your store. Does it appeal to high-end clients or mid- or lower-end consumers? Finally, it would help if you studied the level of service you’re supplying in addition to your prices.
All of these areas can influence your price perception. Companies that are committed to providing high-end products or experiences will find it difficult to compete with their lowest price competitor—it’s an empty pursuit. They typically never get rewarded for chasing that price perception, despite investing a lot of money into it.
Next, you need to assess what customers in your industry value the most. You can use this to customize your strategy for the price perception you’re pursuing. Implementing these all-encompassing measures alongside your pricing strategy can provide you with an answer to constructing a concrete price perception.
Using technology to close the gap between you and your customers
The Covid-19 pandemic drove digital transformation to new heights. The value of the global digital transformation market in retail was $143.55 billion in 2020; it’s expected to reach $388.51 billion by 2026. These figures shouldn’t be surprising as internet reliance grew during the pandemic. A survey conducted by Pew Research Center found that 90% of Americans claim the internet has been either essential or important to them.
If most of their customer base is online, businesses can’t continue to maintain a limited online presence. This is not to suggest that all retailers must switch to e-commerce. You can implement technology and use the internet in unique and creative ways.
For instance, you can add more digitization to your loyalty programs. If you run a point-based loyalty program, consumers should be able to review their points and what they’re worth using an application or website. Your business should have exclusive mobile applications and websites that users can access using their own private credentials. This also allows you to advertise new products.
You can also encourage your customers to fill out surveys and make recommendations. This allows you to gather consensual consumer data, which you can use to modify and improve upon your strategies accordingly.
Furthermore, digital adoption gives you the chance to sell virtual products and services. A good example of this is how promoters and event planners have found creative ways to monetize virtual events. Digitization also allows you to accept more payment options. Again, thanks to the pandemic, many countries have started pushing for digital payment options.
Bitcoin became one of the highest valued assets of 2020. Digitization enables your business to trade in crypto and digital currencies. Moreover, it gives you more product opportunities. For instance, you can offer services and options for securely storing cryptocurrency for your customers.
It’s important to take advantage of the flexibility and speed that current technology affords us. Mastering it is the fastest way to understand the current consumer zeitgeist. You can then use this information to construct a well-grounded, customer-first strategy to stay afloat when inflation comes knocking.
Keep customers during periods of inflation by adopting a customer-first strategy
Sustainable business models are important. Thus, your customer-first strategy should not be myopic. You need to consider your business’s current position and how it will stand post-pandemic (if the economy should ever stabilize).
To support your customers during periods of heavy inflation, remember that your customers are people first, and thus a humanistic approach is imperative to surviving these volatile times.
3 Key Steps to Inflation-Proof Your Small Business
Two years into the Covid-19 pandemic, small businesses around the world have adapted to unique challenges presented by a new normal. We have gained a better understanding of the trajectory of the economy and the ways small businesses have pivoted to adapt to labor shortages and supply chain issues.
Now, the glaring issue facing the economy has become the compounding effects of global inflation and how to manage cash flow during this period. In fact, 60% of small business owners, according to a study by Business.org, are concerned that high inflation will affect the financial health of their businesses.
Here are three key pieces of advice for entrepreneurs on how to inflation-proof their businesses.
How to inflation-proof your small business
1. Understand what inflation means for your business
An important first step in tackling inflation is understanding exactly how inflation will impact your company. Three simple questions you should ask are:
- What costs are going up? Are these costs materials, labor, rent, marketing?
- Have competitors raised their prices?
- What other trends am I seeing in my industry or market?
If you notice significant increases in operational costs and that your competitors are raising their prices, you know it’s time to put inflationary pricing in place. As a natural response to high rates of inflation, prices for essentials at grocery stores, gas stations, etc. are raised to pass on the cost to the consumer. Your business should be ready to respond in the same way.
The next step is to think proactively, rather than reactively, when evaluating your business operations. After you raise prices for your customers, you can see if you’re in a position to lock in pricing with your manufacturers, vendors, or business partners. Setting long-term agreements can save your business money in the long run, while also adding a level of predictability for your cash flow.
It’s very important to know your numbers: What are your true operating costs? Which ones are fixed no matter your sales volume, and which ones increase with each product sold? Knowing these types of details will empower you to make the right plans for the future. There are many cost-effective tech solutions available today that can help you understand your costs and predict your cash flows.
Inflation will continue to affect the U.S. economy for the foreseeable future, and an emphasis needs to be placed on preparing for the long term wherever possible, in order to strike the right balance to keep your business in a healthy position.
2. Establish healthy working capital
Once you have an understanding of the competitive landscape and cost margins for your business, it’s time to think proactively. With limited cash flow being one of the main ongoing challenges for small businesses, the next step is to secure a line of credit for your business. Smart lending means having access to the money before you need it so that you can quickly smooth out future financial obstacles that may arise.
3. Have a 90-day plan
If you haven’t met with your financial advisor to assess your business plan within the last 90 days, it’s time to set up an appointment. During a period of inflation, it’s important to be deliberate and disciplined in how your business is managed, including readiness for market changes.
A key part of this process is doing a 360-review of your business plan, addressing the specific challenges in the current environment. As supply chain shortages continue, you might need to diversify your supplier base so you have more options in filling inventory needs.
You might also think about staffing and ask yourself how the war for talent affects your business, both short and long term? What is your strategy for hiring and retaining staff to keep a consistent level of productivity?
Steps to inflation-proof your small business now will pay off later
Even as the world recovers from lockdowns and economic obstacles from Covid, we can expect the landscape for small businesses to continue to change.
Taking these steps can help small business leaders tackle the residual effects of the pandemic that stand in the way of making real financial progress, while also using this as an opportunity to sustainably grow their companies.
Petrol prices to stay unchanged, says SAPM Shahbaz Gill
Says this time the govt will bear burden of higher oil prices in international market
The government will not increase the prices of petroleum products at this time, said Shahbaz Gill, Special Assistant to Prime Minister on Political Communication, in a tweet on Monday.
Gill added that Prime Minister Imran Khan has deferred the summary recommending the price-hike.
“The prime minister did not approve the summary to increase petrol price by Rs11 and diesel by Rs14. The prime minister said the government would do its utmost to save the people of Pakistan from inflation. Therefore, the Prime Minister has deferred this summary,” he added.
It had earlier been reported that the petrol price could go up by 5.03% or Rs5.85 per litre, while the price of HSD is likely to be raised by 9.49% or Rs10.72 per litre.
Pakistan’s inflation rate is still under pressure like in other countries due to rise in international commodity prices as well as economic agents’ expectations. The Ministry of Finance released its Monthly Economic Outlook report for January 2022, saying that inflation is high and year-on-year inflation is expected to remain in double digits in the coming month.
High prices have become a major issue for the government that is battling challenges on the external trade front as well. Inflation crept up to 12.3% in December.
Oil in the international market rose more than 1% on Monday to near 7-year highs hit in the previous session, while supply concerns and political tensions in Eastern Europe and the Middle East put prices on track for their biggest monthly gain in almost a year.
Brent crude rose $1.07, or 1.2%, to $91.10 a barrel at 0325 GMT (early Monday morning), after adding 69 cents on Friday.
PM announces Huge Relief Package to tackle Economic Slowdown due to Covid-19 Pandemic
Prime Minister Imran Khan Tuesday announced a huge relief package aimed at providing financial support to the different sectors of economy affected by the economic slowdown unleashed by the coronavirus (COVID-19) all over the globe.
During an interaction with media persons, the prime minister said the government had decided to allocate Rs 200 billion for the labour class, which had been hit hard in the difficult times.
To help the industrial sector and especially the export sector, it was decided to release tax refunds amounting to Rs100 billion, besides, deferring of the interest payment to bolster this sector, he added.
For the small and medium industry, and agriculture sector, another amount of Rs 100 billion was set aside with deferred interest payment, the prime minister said, adding concessional loans would also being extended to the sectors. The government wanted to bring down the input costs for the farmers.
Other packages, he said, included additional amount of 50 billion for the Utility Stores, Rs 280 billion for the wheat procurement, slashing of petrol and diesel prices by Rs15 per liter for which the government would have to bear the burden of Rs75 billion. An amount of Rs100 billion was allocated separately for the emergency situation, he added.
The prime minister said power consumers using 300 units and gas users with Rs 2,000 monthly bills would be facilitated to deposit their bills through three monthly installments. A sum of Rs 50 billion was also allocated for the medical staff. The National Disaster Management Authority would get Rs 25 billion for purchase and procuring of kits, he announced.
Imran Khan said for the vulnerable families who were bearing the brunt of the difficult time, it was decided to allocate an amount of Rs 150 billion for a period of four months.
He said they were also expanding the network of Panagah (shelter houses) where the precautionary measures had been strictly practised.
Besides, he said, it was decided to either completely cut taxes or reduce them on different edible items.
For the construction industry, the government would announce a separate package within days, which, he promised, had never been witnessed in the country’s history. Reiterating that the country could not afford a complete lockdown with the imposition of curfew, the prime minister said the situation in the country so far did not warrant for resorting to that last step.
However, he added, the government would review the situation after a couple of weeks. The provincial governments after the 18th Constitutional Amendment could take their decisions while the role of the Federal Government was only that of an advisory, he replied to a query.
The Federal Government, he said, could only give guidelines but could not direct the provinces against their decisions. The provincial governments could react to a situation, but should also give consideration to the evolving situation.
“God forbids, nobody knows the evolving situation, which might also compel us for the imposition of curfew after two weeks,” he added.
Advisor to the PM on Finance Abdul Hafeez Shaikh, Minister for Food Security Khusru Bakhtiar, Advisor to the PM on Health Dr Zafar Mirza, Special Assistant to the PM on Information and Broadcasting Dr Firdous Ashiq Awan, and NDMA Chairman Lieutenant General Muhammad Afzal were also present on the occasion.
Comparing the situation in Spain, Italy, France and other European countries, the prime minister said with about 900 cases in Pakistan, the government team had been taking cognizance of the evolving situation regularly.
Enforcing a curfew would lead to complete halting of transport, which could badly affect the food and medical supplies.
__PM Imran Khan
Such steps could have strong damaging effects upon the society and economy, especially on the downtrodden or the poor class, who had been living in clusters in the Katchi Abadis.
The prime minister differentiating between the lockdown and curfew also shared his concerns that the evolving situation of the COVID 19 outbreak could stretch over to six months.
“Whatever decisions the government take, I am fully responsible for them. All the economic decisions are being taken with the consensus of my economic team,” he added.
To another question, he regretted that the economic situation had been improving in the country as the macroeconomic indicators witnessed rising, but the COVID 19 outbreak cast unintended consequences upon the economy. The year 2019 had been the most difficult time of his life, he added.
The prime minister, to a question, replied that in case of emergency, the country would require a volunteer force comprising the youth, besides creation of funds. The youth and overseas Pakistanis would be tapped in such like scenario.
Dilating upon the issue of complete lockdown, he further regretted that confusion and impression had been created in the country. Taking wrong decisions at the current critical stage was more dangerous than the spread of coronavirus, he warned.
The prime minister said the government was extra cautious in taking certain steps, which should benefit the country and the nation. During the first National Security Committee meeting, when the country had reported just 21 cases, the gradual lockdown started with the closure of the schools, besides stoppage of public gatherings.
In the past, decisions were taken for the interests of the selected elite class and there were different systems for different classes, he said and regretted that the same response was being also witnessed in the country over the coronavirus.
The prime minister said it was a collective fight of humanity and a single government could not fight it alone.
The public response to the government’s measures like those witnessed in China was vital for achieving the objectives, he stressed and urged the nation to fully cooperate with the government’s calls to control the spread of the Pandemic .
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