The cost of living crisis' impact on brand switching.

However, our latest research has revealed nearly two in three (65%) marketers have also had their budgets cut in line with rising costs across the business they work for, while 69% believe brand switching is becoming more commonplace. It's a pretty impossible situation, especially with pressure continuing to mount. 

The cost of living crisis has caused consumers to tighten their purse strings, and the data confirms it. 40% have had to scale back their spending due to the decrease in disposable income. Almost one in five (17%) have also switched supermarkets to save on rising food prices.  

Our nationwide research, comprising a survey of 1,000 consumers plus 500 marketers, also explored the challenges marketers face in the current cost-conscious climate. Despite almost three-quarters (71%) admitting customer loyalty is more challenging than 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 started to put a bigger focus on supporting customers during the current cost of living crisis. But what else could marketers be doing to help their customers during their time of need to ensure their business doesn't fall victim to the dreaded brand switch?  

Continuing to retain customers during turbulent times.

Customer retention is constantly evolving. The factors impacting whether or not someone sticks with a brand are always changing. We know brand loyalty is taking a high hit because of rising costs, 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. They're trying to meet customer expectations while navigating budget cuts which are expected to negatively impact loyalty and retention. However, there are ways in which marketers can tweak their customer retention strategies during these turbulent times. 

On the challenges marketers are facing currently, our 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. 

• Nearly half (43%) of consumers say brands should absorb rising prices to support their customers, and 68% of marketers agree that brands absorb some of the rising costs throughout supply chains.

Adding further fuel to the fire, our 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 suppliers in the past 12 months due to rising prices. 

• Almost a third (29%) say their energy is now unaffordable.

• 14% have switched mobile providers in the past 12 months.

We know consumers have been left with no choice but to scale back where they spend 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 their customers save in other areas of their lives.  

If brands want to maintain meaningful connections with customers, they've got to show they understand their wants and needs, especially in the current landscape.  

One way to do this is by really capitalising on the data you have readily available to help elevate the customer experience. Taking a data-first approach to truly understand what your customers want and delving into their buying drivers will help you execute an effective customer engagement strategy that'll improve retention, sales and revenue and allow you to add real value. This will lead to meaningful connections and, ultimately, happier customers. 

For more insights and recommendations on navigating the current climate to instil loyalty in a cost-conscious landscape, download our full 'Driving customer connections during challenging times' report here.