Cost of living crisis:
Building Consumer Trust During Economic Hardship
This is the third article in our Cost of Living series: a collection of blog articles examining the impact and implications of the cost of living crisis. Read our first and second articles to learn more.
The Lack of Consumer Trust and Need for Reassurance
Hard economic times continue to dominate headlines. It’s no surprise that consumers are all-consumed by the impact of the rising cost of living on their own finances. Even less surprising is that this crisis has pushed consumer trust in brands to an all-time low. So, how can brands regain the trust of consumers in times like this?
Wall Street Journal: “With inflation not letting up, shoppers cut back on staples. Consumers are buying detergent, diapers in smaller quantities and switching to store brands.”
MetrixLab’s Cost of Living Study
MetrixLab launched a large-scale study across 11 global markets to uncover the impact of the cost of living crisis on consumers. A key finding was on changing consumer behavior: for example, in the Netherlands and the UK, we see a greater tendency for consumers to opt for the cheapest brands available.
In the previous blogs in our Cost of Living series, we discussed how brands can respond to changing consumer behaviors and adopt eco-friendly practices without increasing prices for consumers. Today, we’re focusing on how brands can build trust among consumers, especially during times when consumers are turning a skeptical eye towards brands. Let’s dive into the key takeaways from our study on this front.
Consumers Are Less Willing to Take Risks on New Brands
More than 50% of participants are “less willing to try new products” and prefer sticking to the products they already trust. In other words, right now, consumers are risk-averse when it comes to new brands.
What does this mean for brands? For starters, it means that being considerate of consumers who are struggling financially must be a priority. For example, supermarket retailer Tesco updated their famous tagline, “Every little helps” to “Right now, every little helps.” This change has made their reputation soar, particularly during unstable economic times. This motto – coming from a trusty, well-known brand – has garnered a great deal of affinity among consumers. It speaks directly to the struggle consumers are facing, especially considering that 72% reported that they are “more careful with money” and “only make purchases that are essential” for them or their families.
Older Generations Prioritize Value Over Price
The Cost-of-Living study also revealed a key difference between older and younger consumers.
Older generations (55 years+) are significantly more optimistic in their outlook than their younger counterparts. They seek brands that promote value, whereas younger adults are looking for the cheapest brands.
Consumers who are at least 55 years old trust brands that provide value, meaning their price are fair for the quality of their products. Younger consumers, on the other hand, trust brands that offer cheaper prices. What this tells us is that there is no one-size-fits-all approach to gaining the trust of consumers. Rather, brands must be agile, study their consumers’ behaviors, and experiment with different ways of connecting with their consumers.
This is especially important to do in today’s economic state. In fact, research on previous recessions shows that brands that don’t adapt and stick to their current plans lose momentum. On the bright side, brands that successfully navigate a recession build a stronger future, especially once the economy recovers and consumers’ regular spending patterns return.
Defining Brand Trust
Trust has always been integral to brand success but what does it actually entail? In our experience with helping brands grow, we’ve learned that trust requires keeping price and quality steady. It also means offering reassurance about safety, especially considering the Covid-19 pandemic and other adverse global developments that are still fresh in consumers’ minds.
But here’s the thing. Data from our Cost-of-Living study also reveals complications in brands’ ability to build that trust:
- More than three quarters of consumers globally feel that some companies are cashing in on the recession.
- One third of the study’s participants understand that cost increases need to be absorbed by someone; however, there are personal limits to that understanding.
Keeping their prices consistent despite the current situation
Assure me that their products continue to meet hygiene/health & safety standards
Suggest ways to help me save money
Focus on delivering the same quality products I can trust
Consumers desire price consistency…
…while having the same product quality. This expectation is especially visible among respondents from China (49%) and Spain (46%).
Many respondents would like brands to introduce ways to save money.
Consumers desire to have the same safety standards despite the crisis. This expectation is expressed especially by Brazilian (56%) and Spanish (47%) respondents.
What Consumers Want from Brands Right Now
Consumers are adapting their behavior to save money, but they also expect practical support from brands.
How Brands Can Provide Practical Support to Consumers
As brand leaders, there are several ways you can support consumers:
- Know your customers’ specific behaviors. Study your website traffic, in-store traffic, and social media engagement. Who is interacting with your brand the most? This will help you determine where to focus your marketing efforts.
- Stay in touch with your consumers. For example, send them weekly emails with useful, uplifting, non-salesy content. This will keep your brand top of mind for them.
- Restructure your offers to make them more affordable. Consumers are willing to accept bulk offers and value packs, for example.
I am more careful with money and only make purchases that are essential for me/my family
I’m making an effort to use money-saving coupons / promo codes when I shop
I’m shopping across different stores to get the best deals
% agree strongly/slightly with statement (Global)
Unleash your creativity and identify ways in which your brand can help consumers manage during this time while still keeping them in your community. For additional tips on supporting consumers during fragile times, check out our blog Delivering value is key for brands in a fragile economy.
Key Takeaway on Building Trust Among Consumers
Overall, if a brand does more to help and support consumers, consumers will feel seen and will therefore be more likely to trust you. Brand leaders must help consumers feel supported as they navigate this time. Doing so sets you up for success in a recovered economy, long-term brand equity, and a robust sense of trust among consumers.
Consumers are dealing with uncertain times–war, climate change, inflation–and their daily lives are being affected.
We took a deep dive into consumer behavior in our comprehensive Cost of Living study. 5,600 consumers in 11 markets were polled and interviewed to help us better understand their thoughts, feelings, and needs in this period of uncertainty.
Data from the study shows us that above all else, there is no clear-cut story or one-size-fits-all approach that brands can use to appeal to buyers. Rather, the data is varied based on market, category, age group, and other factors.
However, it is crucial that brand leaders carefully study the behavior of their target market and adapt their marketing tactics accordingly. Brands that can navigate these tough economic times well will build a stronger future for themselves and for their market.
We offer you these insights on three key-topics: behavioral changes, trust and sustainability.