Inflation has reached 7% in recent months, which according to the Consumer Price Index, is the highest inflation rate since 1982. It’s no wonder more than 80% of business owners are worried.
To combat business decline and understand what’s most important to consumers right now, Scorpion surveyed 1,000 Americans to find out how their spending habits have shifted and how their purchasing behavior has affected businesses. Using the survey results, we’ll go over major generational differences in approaching inflation, who’s saving or spending in this economy, and what your business can do to meet the demands of today’s consumers.
How to Win Over Different Generations
Baby Boomers and Gen X
Baby Boomers and Gen X showed more price sensitivity than younger age groups. The older community identified keeping costs low (as much as possible during inflation) as one of their main concerns. In fact, 52% of Gen X and Baby Boomers would trust a business more if they explained how they were keeping costs low compared to only 35% of Millennials and Gen Z. Forty-six percent of older respondents also wanted transparency in pricing, a leading factor in building trust with a business.
In the words of one homeowner from New Mexico, they’d like businesses to “acknowledge the state of finances and attempt to relay to customers that businesses are doing everything they can to keep costs down, while still providing good customer service.”
Gen Z and Millennials
Younger consumers were a little more concerned about the impact and customer experience of a business. Millennials and Gen Z are 50% likelier than older generations to trust a business if it provided content around how they’re being more community-conscious. And younger consumers are 60% more likely than older generations to trust businesses that demonstrated brand values.
What They Do Have in Common?
A desire to have flexible payment options. Forty-three percent of all age groups said a business could build their trust by offering flexible payment or financing options. This would be a huge help for customers who still want to afford a product or service, even during high inflation. And by offering flexible payment options, you’re demonstrating to the customer that you understand their needs and are putting them before your bottom line.
The Weight of Inflation on Baby Boomers and Gen X
Spending habits of this age group can be tricky to pin down as everyone’s situation is different. Some Baby Boomers are retired and living on fixed incomes. Members of Gen X most likely have to care for both kids and aging parents, while meeting the financial demands of an inflationary economy. According to a report from the Inflation Impact Survey, 88% of Gen X are struggling. And it shows with their cutback in discretionary spending, opting instead to keep putting money away for emergencies or a rainy day.
How to Appeal to Them
When polled with a series of trust-building strategies, Baby Boomers and Gen X responded the most positively to businesses that explained how they are keeping costs low and are transparent about pricing. If you can provide this in your content, you’re more likely to build trust with these age groups.
Content About Keeping Costs Low
Nationwide taco provider Del Taco isn’t afraid of the challenge of inflation. Unlike some fast-food competitors such as McDonald’s and Burger King, rather than shrinking or eliminating their value menu, they’re beefing it up. Launching their empathic campaign “We Get It”, Del Taco introduced their “20 under $2” menu with the messaging, ‘we get it, prices are rising astronomically everywhere you look, but you can still count on good food at great value.’ Watch their ‘20 Under $2’ commercial here. Del Taco’s attempt to provide some good news in a world of bad can go a long way for people who want to see businesses keep their costs low.
Content About Being Transparent About Pricing
Mélanie Masarin, Founder and Chief Executive of non-alcoholic apéritif maker, Ghia, sent out an email to customers when raising prices became the final option to stay afloat, but she took no pleasure in the announcement. As she told the New York Times, “I was very nervous to hit send. I didn’t want people to think it was corporate greed. We waited to increase prices until we absolutely couldn’t anymore.” In her email, which you can read here, she explains why they had to increase prices, what they’re doing to maintain the value, and perks for customers who continue shopping with them.
While it may have been risky to publicize the increase in price, according to our survey, consumers are likely to appreciate the candor and will trust companies like Ghia more. So even if price increases put products out of reach for some consumers, the brand equity built with the audience may pay dividends when they’re able or ready to buy down the road.
Marketing professor at the Wharton School of the University of Pennsylvania, Z. John Zhang, put it this way, “By showing customers that you’re going to be honest, you’re building your relationship with them. You’re saying, ‘we’re all going through this together.”
Spending on Experiences: Enter Gen Z and Millennials
Gen Z and Millennials have either newly entered the workforce or are more firmly establishing their careers. Both groups have been hit with price shifts during inflation, but are less worried about it than the older generation. Gen Z and Millennials are 3x more likely to say they’re better off financially this year compared to Gen X and Baby Boomers (38% vs. 13%), most likely due to student loan forgiveness/deferments, lower financial responsibilities than older generations, and a hot labor market in recent months around the nation.
How to Appeal to Them
Millennials and their younger counterparts are looking for experiences rather than stuff. Both groups are conscious spenders, but are willing to pay extra for authenticity and care in their purchases. So how do you win their trust? According to our report, they’re more likely than older generations to support businesses that are mission-oriented and care about their community.
Content about How You Provide More Value
A clothing brand with a conscience, Everlane addresses both impact and inflation. Not only does it appeal to younger generations with its pledge to ‘clean up a dirty industry’ with its carbon commitment, but it also launched a ‘Priced Like It’s 2019’ campaign to tackle high prices and straightforward messaging: “$6 a gallon gas. $7 lattes. 100% increase in the use of the word unprecedented. Inflation is real and, as a team of fellow humans who are also feeling all the feelings, we get it, and we’ve got you.”
Their commitment to providing more affordable price options, paired with the foundation of bettering our world, is the perfect way to appeal to these consumers during this inflationary period.
Content about How You Add Value to Your Community
SoulCycle has been riding through the hearts of younger consumers since 2006. This company is famous for raising millions for nonprofits such as natural disaster reliefs, local schools, cancer research, and animal rights. Not only does the Philanthropy section of their website provide an insightful look at their past and present efforts, but they also lay out their future plans to give back. For example, they’ve set a goal to be using all recycled material for activewear by 2023. If this goal, like so many successful ones from the past, is met, that would be one more important way to appeal to their target audience.
High inflation can cause a small business to reach rocky footing, but if you’re able to provide transparency, financing options, and great customer service, you’ll likely have a higher chance of success during this turbulent time. If you’d like to read more about our research report about inflation and how it affects small businesses, click here.
Ready to read part 2? Click here to find out how to build trust for the future, even during high inflation.