Many businesses are facing on a daily basis, in times of inflation and economic uncertainty, the situation of having customer expectations increase. Research indicates that a common mistake done by businesses is the lack of realisation of how customers expect more openness and transparency in periods of high inflation, rather than less. Conversely, businesses that fail to be more transparent will ultimately lose customer trust. Let us be clear. Building trust with customers is always challenging. This becomes more so during times of high inflation. One customer sentiment research after another, across the globe, shows that customers are more and more blaming corporate greed for the state of inflation. Thus, unless businesses work to become more transparent, it is likely that such sentiment will grow, which in turn makes business’s position weak and hence an easy target for politicians.

Let us rewind the tape a bit and gain an understanding as to how consumer sentiment shifted in a post pandemic inflationary world. Research has shown that communication, transparency and credibility have now become of vital importance. On one hand, the link between consumer trust and credibility has become stronger as those businesses or brands that have consistently delivered quality services are likely are faring better during inflationary periods.

Communication, transparency and credibility are vital. With so many fast-paced changes happening in our financial landscape — and supply chains that respond to political tensions — businesses that proactively communicate, even and especially about negative changes, will build trust. Consumer trust is closely linked to existing reputation, too; businesses and brands that have consistently delivered quality services are likely to fare better during inflationary periods. Although the annual inflation rate is now dropping, businesses should still address these concerns by adapting strategies and maintaining transparent communication, as inflation continues to impact consumer spending.

Meanwhile, consumers have not stopped caring about value. Price sensitivity has also increased with inflation. As the cost of goods rises, consumer purchasing power shrinks. In turn, people are exercising more scrutiny with their purchases, turning to practices like meticulously comparing prices for the same or similar products across different shops or online platforms to ensure they get the best possible value. Additionally, they are turning to budgeting more rigorously to manage their expenses.

This leaves an opening for those businesses or brands that enhance value through added benefits or elevated quality. The brands that do this benefit from the perception of offering fairer prices and are more likely to gain trust.

This brings me a full circle from where I started. As I said at the beginning, expectations on businesses increase during a high inflation period. Businesses and their brands need to engage in proactive communication while transparently navigating the challenges of inflation alongside consumers. The greatest mistake is ignoring the impact that inflation. Doing so will erode customer trust. By having businesses acknowledging the downstream effects of inflation, businesses can address customers’ concerns, validate their price perceptions and address their worries so that they feel secure enough to make purchases again. This is why, for example, continuous market research on consumer sentiment and consumer purchasing trends in periods of high inflation, becomes more important.

Acknowledging inflation demonstrates transparency and honesty. Honestly expressing how inflation is impacting business shows vulnerability. When this is perceived as genuine, this transparency encourages trust and begins to build customer loyalty. On the other hand, businesses that fail or refuse to deal openly with the realities of inflation risk losing customers altogether, as customers will easily perceive that profiteering is taking place, thus having them feel exploited at a vulnerable time. Businesses that avoid transparency, or worst still lie, about the reasons for price increases will face an uphill battle to regain lost trust.

This brings me to the one million dollar question. How can businesses and their brands build trust with customers during times of high inflation? I will be answering this question, in a detailed way, during the upcoming workshop session to be held on Thursday 8th February. Click HERE for more details and to REGISTER