We all have to get a little more scrappy when faced with economic downturns, and yet many consumers will make some interesting trade-offs to remain loyal to their go-to brands. They might cut back on travel, new electronics or even monthly subscriptions like the gym or their Netflix account, but they’ll still buy household goods like toothpaste and dish soap, for instance, but not just any old brand.
While this isn’t necessarily true for everyone, there are trends that come and go during these tough economic times, and I always go back to the Lipstick Index. The basic idea is that while consumers may splurge on small luxuries or indulgences like cosmetics, they deprioritize other expenses that don’t make them feel as good or boost their mood.
From a business perspective, this largely rings true as certain industries weather economic storms much better than others — namely consumer packaged goods (CPG), grocery stores, discount retailers, beauty and alcohol. No big surprise there but what is interesting is how consumers will remain fiercely loyal to those brands — and retailers — that provide them with a sense of comfort or well-being even if it means cutting out other, "less rewarding" necessities.
The Value of Consistency
The current economic downturn is much different than it was in 2008 as advancements in technology have shaped new experiences and different ways to engage with brands through things like social media and ecommerce platforms. The pandemic obviously accelerated these behaviors but it also forced brands to pivot and keep consumers engaged with things like at-home, AR shopping experiences and other digital offerings.
These experiences are all part of the customer journey/customer experience (CX), and I would argue that the brands weathering the economic storm the best were already committed to creating a solid CX. Consistency is key in this context by providing frictionless experiences across all digital touchpoints but also a consistent sense of satisfaction, familiarity and loyalty tied to in-person shopping experiences.
For instance, I have a friend that won’t shop anywhere but Whole Foods and even with rising prices and more affordable options out there, she has remained completely loyal. It’s not about the prices, she once told me, it’s all about the experience she has every time she walks in there — it’s comforting, consistent and familiar.
In other words, people not only expect ease and convenience, they put a lot of value on how a brand makes them feel. A recent report from Deloitte further supports this idea citing that consumers who have positive experiences with a brand will spend 140% more with that company.
Related Article: Drive Growth by Improving Your Customer Experience Strategy
If You Build it, Will They Stay?
The truth is the millennials and the younger generations have become a society of very loyal customers who choose to purchase from a brand based on factors like experiences. The younger generations have become a society that isn’t just focused on the customer experience, but also the brand experience or values. So it’s fair to say customer experience isn’t just about how slick your company’s App or the online presence is, but it’s the entire experience with your brand from brand values, walking the talk around energy, governance and sustainability and how convenient and pleasant you make exchanges with consumers.
So with all of this in mind what are the key factors that the most successful brands share to keep customers coming back even in down times?
- Holistic Approach: They understand you shouldn’t separate brand experience from customer experience. The way a company onboards employees to the values it expounds all have an impact on the outward customer experience. From the first touchpoint, before even an initial purchase is made, the emphasis on a positive customer experience will define future levels of engagement from the customer.
- Value: They know the value they provide to their customers and know them so well through the use of data and communications that they are able to continue to provide added value to customers that only increase loyalty. Being able to differentiate from competitors regarding experience can play as equally as an important decision-factor as price.
- Technology: Enterprise sales and marketing teams always talk about being where your customer is. The most successful brands have mastered the technology balance for customers. They’ve created an experience that allows them to be where customers want them to be without it feeling invasive.
All of this has made many organizations today realize the importance of having a C-level executive who is solely focused on this CX experience. Those that do have strategic plans for all kinds of climates and are able to easily adapt their approaches based on the changing times, consumer needs and wants.
With a dedicated executive, teams can focus on turning customer experiences into increased revenue, retention and better future communications with customers.
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