Inflation and recession are scary. These terms inherently mean uncertainty for your business and your lifestyle. They’re also viewed quite differently depending on your age.
That’s why Scorpion surveyed 1,000 consumers to discover their thoughts during the inflation spike. From this data, we also gleaned some insight into what you can do to weather the storm and come out stronger than ever before.
Join us as we discuss:
- The right strategies for surviving a recession
- How different generations view the current inflation problem
- Where to leverage a recession for your company’s success
Generational views on inflation and why we think they differ
Whenever a recession takes hold, fear and uncertainty often affect how people spend their money. As a result, how they feel about luxury and service spending can shift, and many consumers hold just a little tighter to their pocketbooks.
Unfortunately, for many businesses, this is bad news. But, with the right approach, you can come out stronger than before. The first step in deciding your strategy is understanding how consumers think and feel about the current inflation problem.
Scorpion’s 2022 Inflation Report found several different takes on inflation, each rooted in generations. Gen Z and millennials often had behaviors that varied from Gen X and baby boomers.
For example, Gen Z and millennials were three times more likely to say that they were better off financially this year than in previous, as compared to Gen X and baby boomers. We think this is due to one major factor — retirement.
Currently, retirement plans are down 20-30%. While this may not be an immediate concern to younger generations, this immediately affects Gen X and baby boomers. “Younger generations have another 30 years to make up for the drop,” says Joe. “Gen X and baby boomers are feeling the pinch. This is their income.”
We believe that this immediate pressure on Gen X and baby boomers is the reason the data reflects that the same populations are two times more likely to postpone hiring services.
“Gen Z and millennials are two times more likely to spend on luxuries — dining out, travel — than Gen X and baby boomers.” — Joe Martin
Another reason why Gen Z and millennials may be more likely to spend on luxuries is rooted in the uncertainty of the past decade. “It's been a roller coaster, and that affects our feelings about spending money,” Andrew says. “I'm still going to buy something luxurious or go on a trip because who knows when the next crazy thing will happen, and I’ll be stuck at home for another two years?”
The best strategies for surviving a recession as a business
A recession means many companies will struggle, and a few will prevail. While it may not be easy, a few strategies can increase your chances of success.
Monthly loyalty plans
Many businesses have implemented coupon or monthly loyalty programs where they offer a discount for return customers. These plans increase the odds of recurring income. For example, if a customer utilizes a service for three months, they can earn a 20% discount on the fourth or a free add-on service — whatever fits the needs and abilities of your business while also offering incentives to your customers.
Subscription models
Like loyalty plans, these models allow customers to sign up for recurring services, therefore implementing regular payments. So whether you offer a discount on services for subscribers or another incentive, these models also promise recurring revenue.
Invest in marketing
Customers are always likely to compare service providers to find the best value. But, in times of greater inflation and uncertainty, they are more likely to invest significantly more time in research. They are also more likely to attempt DIY before hiring a service provider if they do not find value quickly.
Make sure you show up online, have good reviews, and provide genuine value. “Invest in making sure your business is showing up,” Joe says.
Leveraging a recession for your company’s success
Most Americans expect a few more years before inflation returns to normal. Unfortunately, for businesses, this means waiting it out is not an option. Fortunately, there are several ways that you can leverage the way that people think about spending money during a recession to build a better business and keep the upper hand.
Prove your expertise with free informational materials
With tighter budgets, many customers are turning to DIY. While this may make it more challenging to close an initial service sale, it does offer the opportunity to prove your expertise. Consider publishing free information that guides your customers through DIY projects, and you can gain customer loyalty before they shop for a service.
“If you're a home services business, you can put out a ton of information on how you can help people with regular things that they don't necessarily need to hire you for. That can show your expertise and bring them back later if something goes wrong.” — Andrew Adams
Offer pricing breakdowns and explain what’s necessary
According to the report, 50% of people want to know how your business is working to mitigate inflation. 42% expect a breakdown of costs and services. In short — people want to know what they spend their money on.
Additionally, 37% of people need clarity when differentiating between essential and optional services.
Consider increasing transparency by providing a breakdown of costs to validate service pricing to increase customer satisfaction and trust.
Provide an experience
The current economy has kicked up the competition. As a result, many businesses are offering steep discounts. However, businesses can sometimes forget something absolutely essential to customer satisfaction and loyalty — experience.
Give your customers options. Train technicians to upsell and offer quotes for potential future services. Offer niceties that don’t necessarily cost much more but have intrinsic value. Take every opportunity to make sure your customers feel valued and have a great experience.
“If you've invested in the right places and partners and you’re connecting with customers, then you're going to come out stronger, and you'll have less competition than before.” — Joe Martin
Navigating a recession is never easy. But, by utilizing the data collected and presented in Scorpion’s 2022 Inflation Report, your business can come out stronger than ever.
Read Scorpion’s full survey findings at:
