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Around the world, in every corner of the economy, businesses are struggling to predict and adapt to the consequences of inflation. For months now, prices have been rising at rates not seen in decades. The increases were complicated by supply chain issues, a lingering pandemic and other forms of global instability.
Jerome Powell, chairman of the Federal Reserve, issued a statement on May 4, saying the Federal Reserve will continue to support the central bank’s decision to keep raising interest rates to fight inflation for the rest of this year – a strong indicator that inflation could be with us for the foreseeable future.
Related: 4 Ways Startups Can Beat Inflation
Small business, big impact
According to data from the National Federation of Independent Businesses, small business owners are very concerned about the impact of inflation. In April, the group’s small business optimism index remained stable at 93.2. Obviously better than a drop, the number is well below the 48-year average of 98.
The NFIB also reported data showing that small business owners aren’t convinced things will improve anytime soon. In April, the percentage of owners expecting better operating conditions over the next six months fell to the lowest level recorded in the survey’s 48-year history. Asked about the cause of this pessimism, 32% identified rising prices as their biggest challenge.
While there’s no short-term solution to inflation, small business owners can take steps to help offset rising costs, the most obvious being to raise their own prices. For many small businesses, this is easier said than done. An April survey of small business owners by CNBC and SurveyMonkey found that 75% of respondents saw their costs increase, but only 40% increased prices.
For a small business, consistency is key to building customer loyalty, and even a small price hike can potentially have a significant impact on a customer base. When it becomes necessary to raise prices, the best thing a business owner can do is be direct and honest with their customers.
Everyone is aware that costs are rising and supply chains are stretched. Communicating to customers the rationale for a price increase, in as much detail as possible, will reduce the likelihood that they will feel caught off guard by the change. This level of communication can also deepen a customer relationship and give the impression that companies are doing all they can to navigate the current economic turmoil. Informing customers in advance of price changes also goes a long way to fostering trust, the key to building this relationship. Just as any small business owner would appreciate clarity on supplier rate hikes, customers will be grateful for the warning and honesty, if not happy to hear the news.
Related: How to Calm Financial Panic During Inflation Spurts
Use CRM to stabilize the ship
However, managing this delicate communication with customers can be a big task for a small business owner who is likely wearing many hats. Customer relationship management (CRM) software is the perfect tool for managing a portfolio of customers, sorting them into relevant groups, and tracking previous interactions.
Taking full advantage of a CRM solution can help small businesses deepen their personal relationships with their customers. Even if months (or years) have passed since the last direct interaction with a customer, these tools provide everything a small business needs to know to better re-engage. A CRM solution is also a great tool for keeping track of the little things that matter a lot to foster customer relationships, like birthdays and anniversaries.
Small business owners are busy and when costs rise, marketing can become a secondary priority. Combining CRM with marketing automation helps a business create valuable leads and stay in touch with customers in an automated and intelligent way. Targeted emails reminding customers of service or price changes keep them informed, and the integration of a CRM platform makes these messages very personal and authentic.
Related: Inflation is a Different Beast for Entrepreneurs. Here’s how to protect yourself.
Weathering the Inflation Storm
In difficult times, small businesses are almost always the hardest hit. As costs continue to rise in the face of geopolitical and economic uncertainty, entrepreneurs need to be scrappy and creative as they strive to increase revenue and lower costs. It starts with delivering an exceptional customer service experience – being attentive, supportive, direct, communicative and honest.
Even before the pandemic, 96% of consumers said customer service was critical to their choice of brand loyalty, with 75% of consumers willing to spend more on a product from a company that offers good customer support and quality. transparency. Building a good customer relationship is the fastest way for small businesses to generate positive word-of-mouth and positive online reviews – which, in the end, could be the difference between sinking and swimming for many. small businesses in competitive markets.
Focusing on customer relationships and experiences, while remaining transparent, with the goal of increasing customer loyalty and creating a positive buzz around a brand will be essential for small businesses navigating these difficult times. Leverage available technology to personalize any price change and better target sensitive messages.
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