As Brexit uncertainty escalates over October, the temptation is to just drop prices and heavily discount to win and retain customers. But this can turn out to be expensive, brand damaging and an inevitable race to the bottom. Stephen King’s much quoted study from the 1990s concluded that advertisers that decreased advertising investment saw a share of market (SOM) decline of 0.2%, whilst those that maintained or increased spend saw SOM jump 0.5%. More recently, Kantar have shown that whilst reducing advertising has little impact on business metrics in the short-term, brands lose market share if brands ‘go dark’ for too long.
Now is the time to be brave, to be bold and protect your brand through assertively paying attention to your existing customers. It’s about being smart and selective with both price and added value. In 2008, Sainsbury’s developed a recessionary strategy to offset higher priced perceptions. Their ‘Feed your Family for £5′ is a good example of providing value in a simple, easy to understand package as opposed to individual product discounting, which is easy to copy. In doing so, the brand is being enhanced not undermined.
So how can brands retain customers during uncertain times ahead?
Much of the skill is around surprising and delighting customers and avoiding being predictable. Even those brands most associated with low price, succeed by offering the unexpected – think about TK Maxx or the central aisle at Aldi as examples of offering the unexpected. The key for recessionary times is to think ahead at what customers truly value in your category beyond low prices, something we call the ‘value universe’
The approach to expanding value for existing customers should differ somewhat between categories. However, as a general guideline it’s about transferring focus from product-based marketing towards more experiential, and everything in between.
So, as we enter 2020, here are some recommendations for brands who want to thrive in uncertain times.
Offer financial value that your customers actually want, not just what the business can fulfil easily. If discounting, signpost that it is temporary to avoid setting new expectations. Think about offering a special price discount on ancillary products that are not your core offering, as this will protect brand reputation, or bundle products together in ways that are relevant to meeting customer needs.
An ongoing recommendation and practice is to use behavioural and purchase data to personalise products and service to your customers’ lives. That’s fine if your data is clean and GDPR compliant. However, personalisation doesn’t necessarily mean developing complex segmentation and targeting strategies. It might be as simple as offering face-to-face service or providing something extra for highest value customers.
Go beyond the rational
Remember, your customer base will comprise both Leave and Remain supporters, so its important to stay apolitical and demonstrate empathy and understanding during these uncertain times. Firstly, create messaging and take on a tone-of-voice that is in keeping with Brexit worries. It’s fine to stay aspirational but avoid asking them to stretch themselves too much. Secondly, think about offerings designed to address their Brexit fears. Take your customers on a journey with opportunities to cross-sell or upsell your products and services over time. It makes it easier for them to budget and is a way to maintain their relationship with your brand.
Build a sense of belonging
Basic needs such as belongingness and security are more important in times of recession. Help customers feel they are part of a community that enjoys or consumes your brand. This does not have to be limited to social media followings. Communications that show other customers benefiting or using your brand, create social proof and reinforce the vital aspects emotional connection in building brand loyalty.
If there’s one thing the UK has learnt since 2016, it’s that life goes on despite the uncertainty over Brexit. There may be some rough times ahead for as we enter the new decade. However, brands and businesses still need to plan and progress. The most successful will be those who protect their brand from the forces of lowering prices and continue to find new ways to engage both existing and new customers.