The past few years have been incredibly difficult for small-business owners who have worked tirelessly to withstand a loss of revenue brought on by the pandemic. Now, Australian small businesses are battling a 20-year high inflation rate, forcing them to consider whether they should absorb the costs or pass the increase onto customers. While it’s essential for small-business owners to look at where they can offset costs, it’s even more important to proactively communicate any changes with customers during this time.
This puts many small businesses in a tough position, choosing between whether to cut from their operational or marketing budgets. But when communication between the company and its customers is halted, it hurts retention efforts and makes it more challenging to attract new customers in the long haul.
Here are the top tips for smaller businesses to effectively communicate inflation pressures to their customers during this challenging time.
Tell customers why
With the pressure of inflation compounded by supply chain disruptions, some small businesses may have no choice but to increase their prices. And while it’s not easy to communicate this news to both new and existing customers, transparent communication will be a guiding force in ensuring customers remain satisfied.
Authentic and honest communication matters and marketing managers/small-business owners should tell customers like it is. If you’re raising prices, explain exactly why. Many customers understand that inflation and supply chain shortages are impacting businesses and as a result, many are expecting the prices of their favourite products to increase. If you explain that this is a price increase as a result of inflation, versus vague communication about price adjustments with no clear indication as to why, customers will fear that more price increases are on the way and it will be difficult to level-set expectations.
Maintain consistent communication
As small businesses look at where they offset increases, the first thing to get cut from the budget is often marketing spend. Unfortunately, that inadvertently halts communication between the company and its customers, hurting retention efforts and making it more difficult to attract new ones in the future.
However, with the latest technology advancements democratising AI and providing small business marketers with the insights that were once only available for large enterprises, small businesses can better optimise their budgets to ensure they’re getting the best return on their investment.
Data-driven insights can also tell which content is performing the best and the most optimal times to publish specific content, so small businesses not only know how to communicate price increases but also when is the best time to do it.
Build brand advocates by communicating value proposition
With inflation and supply chain challenges expected to last into 2023, it’s more critical now than ever to focus on your brand. By focusing your value proposition as a brand rather than price, you build a much more defensible strategy than your competitors. When you position your product or service with more perceived value, you have more wiggle room with your pricing strategy. Utilising brand advocates to deliver your message is also a very important part of that process.
While communicating price increases is certainly an unpleasant task, those who do so effectively will make customers feel like valued partners. Provide customers with advance notice and allow them to reach out with any concerns, and you may just win some more along the way.