How to build customer loyalty in an inflationary economy

Ahh, prediction time. We’re all wanting a bit of certainty because it’s crazy out there. I’ll leave it to people far smarter than me to predict what the economy will look like, but there’s one thing for certain — if you’re selling non-essential items to the lower half of Australian income earners, your customer loyalty will be tested over the coming year.

Lots of purchases are being re-evaluated by households across the country as the economy (or even just the talk of the economy) breaks our habits. It’ll play out through subscription cancellations, substitutions and delaying purchases. Health insurance plans with extras will drop down to hospital coverage. The replacement TV might become a 2024 purchase. But that quality product or service that makes your life easier or more enjoyable — that will stay.

Because when it comes to tests of loyalty — it’s great products and great services that will hold up. This means listening to the needs and concerns of your customers, communicating openly, and being transparent about any changes or challenges your business may face.

Hopefully, you’ve been recording your NPS over time and have a fair idea of how you’re performing in your customers’ eyes. Better yet, you know how that stacks up across your industry.

If not, take stock of where you’re at. Loyalty comes through quality and value, so your aim is to have a higher perceived value than what you’re charging.

Even if you’re selling to high-income earners who don’t seem as impacted by the cost of living rises, take any opportunity you can to keep at the top of your game. If unemployment rises, you might be faced with start-up competition as the economy starts growing again. Don’t give your customers a reason to switch.

It’s never as doom and gloom as we fear, but that doesn’t mean that it won’t be tricky or take a few casualties along the way.

Many businesses will turn to tactics like rewards programs, customer loyalty points and constant discounting to test loyalty, but it’s the ones who truly deliver much-loved products and services that will come out of 2023 with the best results. That means they’ll continue to innovate, adapt and evolve to meet changing market conditions and customer expectations and will focus on building strong, lasting relationships with customers and delivering value that truly resonates.

The economy may be uncertain, but customer loyalty doesn’t have to be. By focusing on delivering great products and services, building relationships with your customers, and staying adaptable, your business can weather any storm that comes its way. So stay focused, stay positive, and keep your eyes on the horizon. The future is bright for those who are willing to work for it.

Mike Halligan is the Co-Founder and CEO at Scratch Dog Food, an Australian-made and owned company that makes and delivers fresh and healthy dry food for dogs, and the best mate of his young pup Mello.