Customer trust tumbling amidst economic turmoil - how can brands respond?by
Almost a third of UK customers say rising costs are impacting their trust in brands. But with inflation and the recession preventing cost-cutting, what can brands do to win back their customers’ trust?
A survey of UK-based consumers has revealed that customer trust is eroding due to the rising costs brought about by inflation.
Conducted by the Ello Group, 1,000 consumers and 500 marketers were surveyed to uncover everything from what they feel brands are getting right, to where they’re going wrong; as well as highlighting the sectors that consumers feel perform well when it comes to making meaningful connections with them.
The report found that 22% of respondents admitted that trust in the brands they usually buy from had declined, with almost a third (30%) of consumers saying that rising costs are impacting their trust in brands.
Unfortunately for the brands, this is not a case of bark without bite. One in five consumers revealed that they have switched supermarket, energy supplier, or mobile phone provider in the last 12-months.
Whilst the report does not provide insights on precisely why these consumers switched brands, cost is undoubtedly one of the major factors in their decision, with Chief Commercial Officer at Ello Group, Michael Kalli, arguing that:
“Products and service preferences were once the main drivers, whereas today’s customers are happy to shop around for the cheapest option.”
This viewpoint is also shared by the marketers surveyed, with 77% believing that price is more important than anything else. Moreover, when outlining the biggest challenges they are currently facing, they referenced rising costs in the top three.
The report also revealed that marketers do not believe this is to be a short-term issue, with respondents predicting that reductions in consumer spending due to the rising cost of living, will be the largest industry disruptor over the next five years.
However, whilst cost appears to be the biggest eroder of customer trust, the quality of service and experience provided is still a big concern for consumers, with 32% of those surveyed listing good customer service as one of the leading factors influencing their trust in brands.
This concern becomes magnified when considered alongside the fact that less than a fifth (18%) of respondents said they are happy with the customer service they receive from their current provider across the finance/banking, insurance, utilities, telecoms/mobile, and retail sectors.
What can brands do?
With the cost of living crisis impacting most households, it is unsurprising that customers are looking to the brands they usually buy from to offer solutions that alleviate their pressures.
Chief amongst the ways in which consumers expect brands to support them is by absorbing the rising costs, rather than passing them on to the customer.
Consumers are demanding that brands absorb the rising costs.
Interestingly, this issue arose in a separate piece of research conducted by Ello earlier this year. On reflecting on those findings, Anwar Sultan, Chief Digital and Strategy Officer of Ello Group, commented:
“Cost of living also impacts cost of goods for businesses, so it’s not always easy for businesses to just pass on savings to their customers. But, what they can do is be very very transparent on what cost increases look like and how they’re made up. Also, if price is going to be such a key factor, businesses should be thinking about how they’re going to add value to their customers in different ways.”
As Sultan mentions, cutting into already decreasing profit margins is not an option for many brands. Instead, one of the most effective ways brands can retain the trust of their customers is by elevating the existing customer experience.
To achieve this, brands should focus on increasing the amount of personalised service they can offer their customers. This is supported by recent research from Adobe, which revealed that 72% of consumers say poor personalisation decreases their trust in brands, with more than one-third saying it significantly harms their trust.
72% of consumers say poor personalisation decreases their trust in brands.
Improving your brand’s loyalty programme is another cost-effective way to improve customer trust, with a customer loyalty study conducted by KPMG claiming that 75% of consumers would switch brands for a better loyalty programme.
Whilst, on the surface, these measures may not appear to be able to do much to tackle the bigger issue of cost risings – they do have the benefit of being within your control.
The immediate future may look very grim, but when we do eventually get to the other side of this economic turmoil, those brands who made improvements in their customer service and customer experience departments will be in a far better position than those who sought to make unsustainable, short-term price cuts.