As Consumers Tighten Wallets, Marketers Can Tighten Customer Relationships
As economic uncertainty persists with no signs of letting up, consumers indicate a tightening of the belt. In response to these spending cutbacks, it's more important than ever for marketers to tighten their relationships with customers
With inflation continuing to run at 40-year high levels, consumers are more careful about getting the most out of their dwindling purchasing power. Any consumers with variable interest rate debt, such as a home equity line, have seen their monthly payments increase in line with the rising interest rates. This trend is expected to continue through the end of the year.
Another reason some consumers are cutting back is that they see the news reports with economists predicting an economic slowdown and job losses for 2023. Consumers are already indicating they plan to tighten their belts during the upcoming holiday shopping season.
Less confidence, less spending
Over one-third of 514 U.S. consumers surveyed* (35%) responded that they will spend less in the 2022 holiday season than in 2021. Half of that (17%) said they will spend more. The results align with confidence about what they will budget for holiday shopping, with 39% “less confident” and 19% “more confident” about holiday spending when comparing 2021 to 2022.
With consumer spending cutbacks, it’s more important than ever for marketers to tighten their relationships with customers to stay loyal to a preferred, deeply trusted brand.
Customer-led marketing still delivers brands an average increase of 33% in customer lifetime value.
The bottom line is that four words sum up how to make deep connects: “start with the customer.” Let your customers lead the conversation and journey as they seek to fulfill their needs.
5 ways to tighten customer relationships
Starting with the customer means making first-party data the first priority.
During a recession, the marketing team’s burden is compounded by the absence of third-party data and the increased stinginess of data. More and more, third-party data will be hidden behind walled gardens like Facebook’s and Google’s. First-party data is the key to creating CX that resonates. A CX personalized for each customer across every touch point makes the customer’s relationship with a brand and product as meaningful as possible.
If a new customer does show up to browse, the next recommendations focus on how to obtain first-party data.
Learn the Voice of the Customer to obtain more first-party data
A good way to gather more customer first party data is to engage in a Voice of the Customer (VOC) program. It is really researching probing customers and web visitors as they interact with your brand. Insight derived can provide an understanding of how each segment of your customer base feels at every stage of the customer experience lifecycle.
The VOC program puts customers’ first, and ultimately drives brand, product, and service improvements for a deep fulfilling customer experience.
Information can be gathered via surveys, chats, focus groups and other methods. Measure the sections of your website that customers engage with most, the content they spend the most time on, information they respond to, product material and other information they request.
Critical to a VOC program is capturing feedback from the right people, at the right time, through the right channel.
A VOC program will also reveal which communication channels your customers prefer. Social media remains one of the best ways to get your consumer feedback on products and services in real-time and build relationships. It’s also an excellent direct way to deliver new product updates and information and services. Use interactions to ask and know each person’s preferred channel within social media. In addition, know if customers prefer interactions with text or email.
Measure the incremental value of every element of marketing campaigns using control groups.
Knowing the voice of the customer and each customer’s preferences are like a lighthouse in guiding marketing campaigns. As you roll out strategies you can learn more about customers. Test, test, and test again to learn and monitor the true impact of every CX touchpoint. Knowing each CX touchpoint’s incremental value becomes a real-time guide to driving the correct prioritization of marketing tactics. A small test enables you to see if a mini-campaign is working before going through the effort of a major campaign.
Understanding lifetime value can be a lifesaver.
Optimize marketing activities, and dial-up marketing focus on lifetime value. Long-term goals win in the long term. A long-term marketing focus is an investment in consumers’ higher likelihood of remaining loyal to the product and brand. This value-over-time strategy makes the brand more resilient to economic changes.
Remember that acquiring a new customer is 5X more expensive than retaining an existing one.
Don’t burn the budget on short-term customer acquisition with a minimal view into attribution (once again, walled gardens). Marketers should use their existing customer base to re-acquire churned customers and increase spending by active ones.
A new era of marketing
Marketers have weathered economic downturns in the past. The Great Recession of 2007-2009 was spurred by the housing bubble in the U.S. It was followed by a protracted recovery. While the current threat is likely a hangover from the pandemic – it comes in a new era of marketing. Today, marketers have unprecedented tools and technology compared to 2007. We can watch and learn from consumers’ online behavior to anticipate their next needs. That is how the best marketers will take this economic hiccup and tighten customer relationships as the economy tightens.
