There is no denying the impact inflation has been having on businesses, governments and households globally over the last year. It has been an especially challenging time for company CEOs and business leaders who may lack the experience of leading a company during inflationary times.
I have experienced times like this before and have helped mid-market businesses survive and thrive during similar market upheaval. I was a C-suit manager during the 1987 crash, a General Manager during the 1997 Asia Crisis, and a business coach and mentor during the 2003 – 2004 economic downturn.
Recently, I collaborated with several businesses coaches to create the whitepaper, 7 Actionable Tactics to Counter Inflationary Threat, for Gravitas Impact Premium Coaches. Here, we share remedies to help mid-market businesses through. In this month’s blog, I wanted to expand on the first two tactics in more detail.
Activate price increases based on sound reasoning.
It is a natural reaction to hyperinflation to increase prices to maintain margins, but with it comes the risk of alienating customers as they seek to preserve their budget by reducing spending.
Before you activate a price increase, you should clearly understand the real value you provide to your customers. This begins with a clear understanding of the Problem to Solve for your Core Customer.
If you don’t already have a clear understanding of who your core customer is, it is vital that you invest resources into knowing who they are now and ensure that you are meeting all of their needs before increasing prices across the board.
Why? Your core customer’s assign real economic value to what you have to offer and buying at your price is a positive action for them. They will continue to make purchases of your product at the optimal price point that generates you profit.
Businesses that deliver real value through their products and/or services will have pricing power that allows them to increase prices without losing market share.
For a deep dive into developing customer personas for establishing who your core customer is, I would recommend that you read The Inside Advantage: The Strategy That Unlocks the Hidden Growth in Your Business by Robert H. Bloom.
When you are ready to increase your prices, actively and fearlessly communicate with your core customers. Share the reasons why you have made pricing changes and accentuate that you are doing so to maintain the quality of service that is important to them.
Strengthen customer service, communication, and product/service differentiation
The cost of your product/service is only one of the values consumers consider when purchasing your product. And, during times of inflationary pressure, they are more likely to compare your product/service with others to ensure in their minds that they are receiving the best value for their money. Think about offering value-added ideas beyond your current services.
Now is the time to strengthen your relationship with your core customer through exceptional customer service, increasing your frequency of communication with them Ensure that you educate your team on the necessities of delivering unrivaled service to customers. Your customers should feel appreciated and know how much you value them.
Competitive differentiation is key during inflationary times. You should take the opportunity to highlight your point of difference through key messages and reinforce your brand promise to them. Your brand promise indicates what anyone who deals with your company can expect from you and includes a key factor that differentiates you from the rest in your market space. When developing your brand promise, you need to focus on three things:
- Identifying your core customer needs
- Aligning your systems and people to be able to deliver
- Being able to measure its impact accurately.
I would also recommend reading my blog, Your Brand Promise is Not a Marketing Slogan, for further information on what your brand promise should contain.
Knowing who your core customers are and how to create a brand purpose are also discussed in more detail in Chapter three of the Gravitas Impact Monography – Radical Alignment to a Core Strategy, which I co-authored with Hans Schulte.
