Consumer inflation is at its highest in the past 42 years. With recession fears on everyone's mind, industries like food and commodities are already getting impacted by a reduction in foot traffic and more conservative spending.
As a business owner in the food, hospitality, or entertainment industries, there is no more important time than now to think of ways to retain your customer and recession-proof your business. And while it's easy to immediately consider what costs to cut, what you should really be asking yourself is where you can invest.
Discounting is NOT the answer
With inflation and food costs at record highs, spending money on dining and entertainment is likely first to gets cut from the budget. But discounting your product or service to attract customers today could lose you more customers tomorrow.
Apart from possible price wars with your competitors (which won't end well), the biggest risk is that it could lead to a long-term negative perception of your product. Customers pay for products or services based on their perceived value of the product. But discounts can call into question the product’s original value.
Discounts also primarily attract value-minded consumers. Sure, during an uncertain economic climate more consumers will be hunting for deals, but under stable circumstances, some of those same consumers will return to their regular spending tier. That means you've now attracted value consumers who will not be happy when you eventually increase prices again—and you've likely lost your target consumer who's moved on to brands that are more aligned to their original price point.
Instead of giving consumers the same product or service for less, consider giving them more for the same cost—making their dollar feel like it goes further.
Low lift ways to elevate the customer experience
During an unstable economy, consumers will either cut luxuries completely or downgrade them. Families who regularly go to dinner at full-service restaurants might go to fast-casual restaurants instead. Those who love weekend trips to the movie theater might try a dollar theater or digital rental.
Adding value to the customer experience now is a great way to try to keep current customers from churning (by giving them more). It also helps new customers feel positive about choosing a budget-friendly option they may not have otherwise.
Giving customers more during a potential recession may sound crazy, but there are relatively inexpensive things you can do that add value.
Modified table service
If you own or operate a quick-service restaurant (QSR), consider offering modified table service on Friday and Saturday nights. This is a relatively small disruption that won't require much more than potentially staffing an extra employee for those few shifts. But this small upgrade makes the dining experience a bit more special for your customers.
Host a family night
Times like these can be hard on families. Consider hosting a free kids night at your restaurant or throw in a free treat with any kids movie ticket. Providing extra perks for kids (which is often on the cheaper end), will make it easier for parents to choose your business when looking for ways to entertain their children.
Rally your employees
Ever wondered why Starbucks baristas ask for your name while taking your order? Starbucks first introduced this system in 2012 to make the in-store experience more personalized and friendly. It has now grown to be something that everyone attributes to the brand and makes it a leader in the coffee shop space.
During stressful times, these small moments of personalization and delight can go a long way. Train your employees to ask about customers' days, give compliments, or crack jokes. Customers are always more likely to go to a business with happy, helpful, fun employees, than a place where the employees are memorable for the wrong reasons.
Keep customers engaged
Add low-cost elements to your business that keep customers hanging out longer. This could come in the form of trivia nights where winners stand to win gift cards or even just bragging rights.
Having several board games available in your lobby or restaurant, accessible to all customers, can also help liven up the atmosphere. These don’t have to be costly. Simple card games such as Uno and Monopoly Deal go a long way. Such games will also set your business apart from others, with the additional entertainment value which can be a huge plus, especially for friends who are looking to socialize.
A little more goes a long way
Customer experience is going to be increasingly important, especially with a recession on everyone's minds. Whether or not one hits, taking steps now to recession-proof your business by elevating the customer experience will keep your brand at the top of consumers' minds if their budgets do get tight.