Nearly two in three (65%) marketers have had their budgets cut in line with rising costs across the business they work for, while 69% believe brand switching is becoming more commonplace, according to new research from Ello Group.
The cost of living crisis has also resulted in consumers being forced to cut back, with the data confirming 40% have had to scale back their spending recently, due to their disposable income being reduced. Almost one in five (17%) have also switched supermarkets to save on rising food prices.
The nationwide research, comprising a survey of 1,000 consumers plus a survey of 500 marketers, also explored the challenges marketers are facing in the current cost-conscious climate. Despite almost three-quarters (71%) admitting customer loyalty is more challenging than ever before, budgets continue to be cut.
In response to the current situation, almost two-thirds (64%) of marketers say the brands they work for have also put a bigger focus on supporting customers during the current cost of living crisis.
Michael Kalli, managing director of Ello, commented: “Customer retention is a constantly evolving space with the factors impacting whether or not a someone sticks with a brand frequently changing. We know rising costs are impacting brand loyalty and some consumers feel they have no option but to shop around as their disposable incomes get squeezed even tighter.
“Many marketers and brands feel like they’re fighting a losing battle, trying to meet customer expectations while navigating budget cuts which is expectedly having a detrimental impact on loyalty and retention. There are however ways in which marketers can tailor their customer retention strategies during these turbulent times we’ve found ourselves in.”
On the challenges marketers are facing currently, the research also revealed:
- Two-thirds (66%) of marketers say rising prices have impacted customer loyalty in the brands they work for
- 70% of marketers say reducing budgets have made it more challenging to create impactful campaigns that resonate with their target audience/consumers
- 69% of marketers feel their job has become more challenging in recent months, due to tightening budgets and bigger expectations
- Close to half (43%) of consumers say brands should be absorbing rising prices to support their customers and 68% of marketers very much agree, admitting it’s important for brands to be absorbing some of the rising costs throughout supply chains
To add further fuel to the fire, the data also shines a light on the various areas consumers are scaling back/switching brands, uncovering:
- 41% of consumers are spending less on out of home experiences, such as eating out, due to the rising cost of living
- 40% are having to cut costs elsewhere, due to rising energy prices
- Nearly a quarter (24%) have cancelled subscriptions recently, due to the rising cost of living
- A third (33%) can’t afford to spend on experiences with friends/family, due to the rising cost of living
- 15% are considering switching supermarkets in response to rising food prices
- 16% have switched energy supplier in the past 12-months, due to rising prices
- Almost a third (29%) say their energy is now unaffordable
- 14% have switched mobile provider in the past 12-months
Kalli said: “Consumers have been left with no choice but to scale back where they’re spending their hard-earned cash – and in some cases switch from the brands they know and love. Many are struggling and, while absorbing costs throughout supply chains isn’t always feasible for some brands, there are other avenues businesses can explore to add value and help make cost savings in other areas of their customer’s lives.
“All in all, it’s essential brands showcase they understand the wants and needs of their customers if they want to maintain meaningful connections with them, particularly in the current landscape.”
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