Whether the United States is now in a recession has been the subject of much political posturing and debate. Regardless of how any of us feels about labels or technical definitions, the U.S. economy has shrunk two consecutive quarters amid soaring inflation and higher interest rates. A silver lining is that unemployment remains low, but this may just be emblematic of a shallow labor pool, the consequence of factors like the Great Resignation and the pandemic. After all, many potential workers have taken themselves out of the traditional job market and become independent contractors in search of flexible work. (See our post on Understanding the Labor Pool for more details.)
The Pain is Everywhere
Everyone is feeling the pressure on their wallets. Yelp, the crowd-sourced consumer review website, has published its Economic Average report, Q2 2022 this month that tackles this very issue. There are a number of interesting findings within it, especially the dramatic rise of consumers noticing rising sticker prices: “mentions of inflationary language in Yelp reviews have increased 28% compared to the same period in 2021 and 33% compared to Q2 2020—with inflation mentions increasing faster than ever before.” Some industries are harder hit than others, with restaurants seeing a 47% surge of comments like these in the last two years, and hotels and travel at a staggering 63%!
The Scourge of Shrinkflation, Too
But it’s not just higher prices that are vexing consumers: “consumers are also seeing the size or quantity of their goods shrink—a phenomenon that’s also reflected in Yelp. For the first time ever consumers are mentioning “shrinkflation” in Yelp reviews. In Q2 2022, consumers are talking about shrinkflation-related experiences most commonly at restaurants serving more affordable offerings like hot dogs, hamburgers, pizza, followed by seafood restaurants, Italian food, and Chinese food.” Talk about adding insult to injury.
Time to Make a Stand
Rising costs are a reality, and no business can afford to just keep prices the same while still offering the same quantity and quality as before, nor can they pretend that they’re not facing short staffing, which leads to longer wait times and slower service overall. So, what can any of us do?
For one, don’t give in to the allure of shrinkflation. Skimping on your consumers is only going to insult them, as is clearly evidenced by those Yelp reviews. It’s a cheat anyway, an attempt to disguise the fact that prices have increased by giving people less for their money and hoping they won’t notice. People are noticing.
If prices on your goods or services have to go up and people have to wait longer due to short staffing, then that’s a painful reality—but at least it’s an honest one. The good news is that there are ways to cushion the blow, to make your customers still feel like your business is worthy of their dollars:
The Customer Experience
Those of you who’ve been keeping up with our blogs all these years will hear our familiar refrain about offering topnotch customer service, high-quality products, and employing a well-trained and content workforce. We’re going to keep beating that drum because it’s still the best—maybe the only effective—answer for combating all the external pressures businesses face. Think about it: whether you’re staring down the threat of competition from big-box or chain stores, or trying to match the convenience of online retailers, or even trying to survive the complications of a global pandemic combined with short-staffing and supply-chain complications, the answer’s always the same. Always.
Offer a better experience.
Seriously, what else could you do? The alternative is to do what so many other flailing businesses are doing: insult customers by offering them declining quality and a half-hearted shrug when asked why everything has gone downhill. —In the meantime, smarter businesses will double down on their fundamentals and enjoy long-term loyalty from their customers and the attendant profits that come with that. They will not only survive but also thrive during these tough years.
Seems like an obvious choice.
Where Success Really Comes From
Yes, investing in the Customer Experience means a lot of hard work. Nothing worth anything comes easy anyway, so let’s all admit to ourselves that there’s a process here and we have to work hard to succeed. If you want a well-trained staff, they have to be trained. If you want high-quality products, you have to get feedback and keep iterating on it until you get it right. In short, if you want to overcome the challenges ahead, you have to make this your top priority, starting now.
Once you face these problems head on, you’ll realize success has almost everything to do with what’s going on behind your doors and almost nothing to do with what’s going on outside them. We can despair about the economic woes all day long, and nothing will come of complaints.
Instead, recognize that there is still opportunity out there. Consider that consumer spending is still strong, according to Visa CFO Vasant Prabhu: “Since January [of this year], the U.S. consumer has been spending at roughly the same pace relative to 2019.” If you’re ready to seize that opportunity, to put in the work necessary to succeed, now is the time for you to head over to our contact form and drop us a line. Let’s have a conversation about what challenges your business is facing, and how we can work together to face and ultimately overcome them. With our world-class customer experience tools, you can find the antidote to inflation, shrinkflation, competition, and whatever else comes your way.
Let’s start fighting back.
