Marketing Strategies For A Cost Of Living Crisis
Increasing prices and stagnant wages sound like a recipe for disaster, right? Well fear not, The Good Marketer has navigated dozens and dozens of SMEs through tough times—fear of Covid-19, multiple lockdowns and most recently, the cost of living crisis—and we want to sum up our insights for you in this blog. We’ll go over how the cost of living crisis is likely to affect your business and marketing and also what you can do to keep the competitive edge over your competition.
How The Rising Costs Of Living Will Impact Retailers
Do you want the good news or the bad news?… We always like to get the bad news out of the way first, so here it comes. A study conducted by the Office For National Statistics found that a minimum of 26% of Britons have declared they’ve spent less online since the beginning of the cost of living crisis and a further 28% will spend less in what remains of the year. The 35-44 and 55-64 age groups will be affected the most, seeing the biggest drop in spending. A whopping 49% of people spend just over £50 a month online, while a minuscule 17% spend over £100 a month online. This last statistic is especially important if you have a high average order value; dissimilar to the destruction of a food chain, a cost of living crisis affects the high-ticket luxury items first.
Now the good news… A study conducted by Attest found that more than 46% of Britons buy items online at least once a week, people are shopping online with high regularity so by selling and advertising in the digital space, you’re already in the right place to connect with your audience and influence them to purchase. Furthermore, not all age groups are tightening their belt straps; young people (aged 18-24) expect they’ll increase their online spending in 2023. In short, do consumers have less money to spend? Yes. Is it all doom and gloom? No. Are there any opportunities to continue marketing and scaling your business? Absolutely.
How To Create A Strategy For A Cost Of Living Crisis
1. Emphasise Value For Money
So, a recent report shows that through this cost-of-living crisis, the #1 factor that will influence Britons’ decision to purchase is (unsurprisingly): value for money. What does that mean for you? Taking a value-driven approach to your cost-of-living marketing campaign could be the key to maintaining your business growth. Here’s an example: We’ve been working with a food subscription business (Out Of The Box Food) for 6 months now. They charge a premium price for their product and were struggling to see sales.
Once we got our hands on the account—among other things—we made it our mission to make it clear that: “Yes, we are charging a premium price… But we’re selling a very premium product!” All the meals are chef-prepared, and the chefs are either trained by Michelin star chefs or Gordon Bloody Ramsay. Plus, there is a huge variety of meals suitable for all diets, delivered straight to your door. If I’ve done my job right, you’re now thinking about getting your hands on those premium meals and not the premium price!
Close your eyes and think about your product; what could you add to it to make it better value for money? One client of ours that sells cooking ingredients has started including recipe cards to increase the value for money of each product, what could you include? Another sporting client is focused on building an online community around their platform which you can only access if you are a paying member, could you do this? Have a think and start adding value to your product.
2. Discounts, Discounts, Discounts
The time has come to discuss the D word. Many business owners don’t want to run offers because they’re scared of losing out on profit or don’t want to devalue their product in the eyes of the consumer. However, during a cost-of-living crisis, the biggest barrier to purchase is limited disposable income. We’ve seen massive success across all our clients in offering varied discounts across Paid Social and PPC campaigns.
It is true that you’ll technically be missing out on x amount on that first order, BUT more importantly, you have to consider: Would you have got that sale without the discount? (If the answer is no, then you’re at least getting that sale and acquiring some profit and a new customer). Secondly, you’re much more likely to get a second and third (and so on) purchase from a prospect who has already purchased than you are from getting a purchase from a brand-new prospect. This is your ultimate goal, use an appealing discount to get a first purchase and then focus on retention and repeat sales.
3. Take A Look At The Data
So as I’m sure many of you reading are already experiencing, sales across most industries have been stagnant and difficult to scale. I’m telling you this because while we should always be aspiring to grow sales month on month, it’s important to keep your expectations realistic and not get discouraged when you see that demoralising little red arrow next to your “total sales” statistic on Shopify!
And now what I expect from you… We have a saying in marketing, similar to “there’s no such thing as bad publicity”. We also like to say, “there’s no such thing as bad data”. If you notice your sales go down compared to last month—that isn’t bad data—use your data and new insights to influence your marketing next month.
Has your returning customer rate gone down? Have your total orders gone up but the average order value has gone down? Has your website traffic increased/decreased? What about your conversion rate, has it decreased? This is all incredibly valuable data—even if every important metric has decreased—it’s telling you what optimisations to make to your digital marketing strategy and website to improve sales and meet your targets.
These insights can help you develop a cost of living marketing campaign informed by an understanding of the needs of consumers in this economic climate.
Despite what you might think, it’s not all doom and gloom in a cost of living crisis. People are still spending their money online and if you take the right approach to your cost of living marketing, you can still maintain a steady revenue stream. Your approach will depend on your offering, but we suggest emphasising your value for money and, as always, what makes you a better option than your competitors.