How to Navigate Increased Inflation for Your Customers
Unless you’ve been living under a rock, you’ve probably noticed the cost of living is on the rise. According to the Consumer Price Index from the US Bureau of Labor Statistics, prices have increased six percent over the last year. Feeling the weight of this isn’t new either. Since the COVID-19 pandemic started in 2020, consumers have been feeling the effects of increasing costs for everything from groceries to utilities to fuel—just to name a few. As a result, 86% of purchasers are now looking for better value when shopping (Source: Mirakl).
Also affected by the inflation surge are e-commerce businesses that are finding it more and more difficult to keep shoppers happy while maintaining their bottom line. If you’re one of them, you may be struggling with whether to raise your prices (or by how much) in fear of damaging your customer relationships.
So, how do online retailers retain customers AND achieve extra revenue in an environment where prices are on the rise? Is it even possible?
The answer is yes.
Below are nine ways retailers can ride out the inflation accumulation storm while meeting the demands of online shoppers.
1. Communicate openly.
Consumers already know that retailers are charging more, so being direct about it can go a long way. If you do need to increase your prices, be candid about it. Sharing information on any price changes resulting from inflation—rising product or supplier costs, for example— along with any deals that are available is a great way to show your online customers that you’re truthful while continuing to offer discounts wherever you can.
Shoppers will appreciate the honesty, which can help build trust in your brand. In fact, research from Label Insights reveals that 94% of customers remain loyal to a brand that’s transparent.
If you’re wondering how to disclose potential price increases, opt for an email that can be personalized with tailored messaging and offers for each customer. You can also post on social media, which gives you the ability to capture the attention of many online shoppers at once.
Tip: Avoid overexplaining. Shoppers don’t need to know every last detail, like what your profit margins are or other financial matters. Instead, provide them with the facts only and make sure to be empathetic in your approach.
2. Cut Unnecessary Expenses.
Regardless of revenue rain or shine, overhead costs are constant. For e-commerce retailers, this can become especially challenging during an unbearably long economic roller coaster ride. The more cash you can save on the back-end, the better it will be for both you and your customers.
When looking for ways to cut down on costs, examine your expenditures meticulously to identify areas you can reduce spending. This may sound overwhelming, so start with the largest overheads and see if there are any ways to nip these expenses. Some common operating costs to review include:
- Supplier rates
- Vendor agreements
- Packaging costs
- Streamlining tools
- Excess inventory
- Manual tasks
Related: How to Reduce the Impact of Higher Consumer Costs
3. Revisit your pricing strategies.
Inflated prices are obnoxious for both consumers and retailers. Unfortunately, in times like these, it’s a necessary evil that many businesses are forced to partake in.
To appease online shoppers looking for savings, it’s important to adjust your prices accordingly. Ultimately, you’ll want to ensure your customers aren’t paying too much for your products and/or services, while also alleviating your own financial pressures. A good way to achieve this is by expanding your price options. This could include:
- Only raising the cost of the products and services that contribute to the majority of your sales
- Implementing a series of pricing tiers to accommodate various affordability levels
- Increasing prices incrementally over time to cater to shoppers on a tight budget
Tip: Whichever way you decide to adjust your pricing, make sure to consider any production costs or other additional costs in tandem with your customers’ needs to see which products and services offer the most value.
4. Create a loyalty program.
During inflated times, consumers are more selective about how and where they shop. One foolproof strategy to keep customers happy through unpredictable times is by offering, or expanding, your loyalty rewards. Aside from providing an incentive to shop at your store, loyalty programs are a terrific way to help online shoppers save money and offset the effects of rising costs.
If you’re wondering whether investing in a loyalty program is worth the time and effort, consider this: 55% of shoppers say that loyalty or rewards programs influence them to choose one retailer over another during inflation periods. Why? It shows them that you value their business. This goes a long way toward retention. And as a bonus, you’ll be able to pass on savings without jeopardizing all of your e-commerce store’s earnings.
As for how you reward your online customers through your loyalty program, that’s entirely up to you. The most common ways include rewards points, promo or coupon codes, and exclusive member offers. To gain the most traction possible, utilize your email lists, social media pages, and even your e-commerce site’s home page to promote your program.
Related: How to Build Brand Loyalty with E-Commerce Personalization
5. Demonstrate value.
In times of financial strain, it’s common to worry about every dollar we spend. With more consumers being prudent with their budgets, reminding them of how the value your e-commerce store offers could make a big difference between slow sales and repeat purchasers.
Even the most budget-conscious shoppers want to feel like they’re getting something worthwhile. During periods of inflation, people are inclined to shop at retailers that offer the greatest bang for their buck. By consistently showing the value of your products and/ or services, you’ll be able to bolster why your customers selected your online store to begin with.
One of the best ways to demonstrate value is by highlighting the quality of what you sell. Regardless of rising costs, 55% of consumers will remain loyal to brands with high-quality products and services (Source: HubSpot). If your online customers trust in the quality of a product or service, chances are, they’ll be more likely to stick with your store, even if your prices need to go up.
Another great way to show value? Use your product pages and social content to share any unique features of your products or services, along with ways they benefit your online shoppers. And don’t forget about product ratings and reviews either! They can really make a difference to shoppers who rely on social proof for purchasing decisions.
Tip: Highlight any green efforts you’re making, such as sustainable packaging or greener shipping options. Studies show that 77% of shoppers care about a product’s environmental impact, which means the more you show you care too, the happier (and more loyal) your customers will be.
6. Deliver an Extraordinary Customer Experience.
Customer experience has become a huge factor for consumers when deciding where to shop. And in times of inflation, it can be the difference between repeat buyers and frustrated cart ditchers.
Right now, 86% of shoppers are willing to pay more for a great customer experience. That translates to a lot of potential revenue. When strategizing how to provide a remarkable experience, remind yourself that every satisfied shopper is a win for your business. To make that happen, consider these easy fixes:
- Improving your website’s navigation
- Implementing a responsive website design
- Providing better shipping options
- Optimizing your site for mobile users
Of course, one of the best ways to give your customers a reason to come back is through excellent online support. Any time a shopper requires assistance—be it with a question, concern, or anything else—it’s up to you to ensure their needs are being met. The more they feel heard and valued, the less likely they’ll find their way to a competitor.
Start by training your online support team, and enhance that through the use of AI technology like chatbots that can assist your customers during off-hour times. Make sure that your support services are easy to find on your site or app by featuring links prominently, for example in the navigation. It’s also important to ensure all inquiries are being handled quickly. This extends to your social media pages, where shoppers will often leave comments under posts or send private DMs inquiring about a product or service.
Related: 10 Ways to Enhance the E-Commerce Customer Experience
7. Provide flexible payment options.
Any time the economy goes a bit sideways, consumers fret over their finances. Offering flexible payment options can relieve purchasing apprehensions by making it easier for online shoppers to continue buying from your business.
One of the most utilized payment options every e-commerce retailer should offer is Buy Now, Pay Later (BNPL). Besides letting your customers divide the cost of their purchases into instalments, BNPL helps lessen the financial stress associated with buying by making it easier to justify spending. The proof? Nearly 60% of BNPL users admit to using the service to buy unnecessary items. Even more, 45% of the time, BNPL is used to make purchases that don’t fit into a shopper’s budget.
There are many reliable BNPL providers to choose from. Klarna, Sezzle, Affirm, Afterpay, and PayPal Pay-in-4 are just a few that many online retailers are using to ease the burden of rising costs.
Tip: Have physical stores? Adding Buy Online, Pick-Up In-Store (BOPIS) is a popular service that 70% of online customers say improves their shopping experience.
8. Deepen your personalization with AI technology.
Personalization has become a mainstay of daily life, and e-commerce retailers know it’s something online shoppers expect. And if you’re attempting to implement personalization without leveraging data-driven artificial intelligence tools, you’re missing out.
When you use machine learning technology (like Granify!) you’re able to gain a deeper understanding of your customer’s needs and behaviors. This information—search history, interests, purchase history—can then be used to tailor recommendations to meet each shopper’sspecific preferences.
By providing relevant messaging and product recommendations that speak to every online customer’s individual needs—and wants—you’re essentially helping solve their problems; that is, highlighting products or services they’re truly interested in purchasing. In terms of inflation, this is especially valuable because it reduces unnecessary spending for consumers on budget constraints by delivering the right products at the right time. The result is a delightful experience for shoppers and maximum profits for your e-commerce business.
Related: How to Provide Personalization In A World Without Cookies
9. Offer smarter promotions.
Here’s an eye-opening statistic: 62% of consumers say product discounts or freebies would help encourage brand loyalty during times of inflation. That’s a lot of savvy shoppers looking to save money on their purchases.
While tackling growing costs with deals may seem illogical, the reality is that your customers expect some sort of value when spending money right now. The good news is that you don’t need to mark down your entire e-commerce store to propel some excitement. You just have to be clever about what promotions you do offer.
The first, and probably most desired offer shoppers want is free shipping. It’s true, over two-thirds of online consumers deliberately spend enough to qualify for free shipping, which means many are adding more items to their carts to avoid additional costs. If you truly want to delight your customers, offer free shipping, regardless of how they spend. At minimum, set a spending threshold and promote it on your product pages and during checkout.
Other affordable ways to offer discounts include:
- Product bundling, such as “Buy More, Save More”
- BOGO (Buy One, Get One), which is particularly great for high-inventory items
- Loyalty rewards, as mentioned earlier (see #4)
Tip: If you have items that the price has been reduced on, make sure to highlight the potential savings by displaying the old price (which will act as an anchor point to shoppers) and the amount that they save, either as a dollar amount or a percentage.
Take on inflation with confidence.
Through these unpredictable times, keeping your customers happy is key. By putting the recommendations we’ve provided into practice, you’ll be able to keep shoppers coming back, in spite of increasing costs. Yes, it may seem like you’re up against unprecedented inflation, but you have the ability to safeguard your online store’s success. By taking a customer-centric approach, creating more value, and being transparent in your communications, you’ll be able to stave off rising consumer prices and keep your e-commerce business thriving well beyond turbulent times.
Inflate your sales with Granify.
Ready to generate more e-commerce conversions without any additional effort? Granify’s AI technology makes delivering personalized customer experiences seem effortless. Thanks to our seamless integration and minimal need for client developer resources, getting Granify up and running on your site is a breeze.
Talk to one of our experts today to discover how our innovative machine-learning platform can help you delight more shoppers—even at the most challenging of times.
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