Your customers are feeling financial pressures this Christmas – help them feel festive, too
Posted on September 27, 2022 by Megan Goodfield
The ongoing cost of living crisis has been a daily talking point – and a daily source of stress – for millions of Britons. Soaring inflation and energy bills have combined with stagnating wages to create a perfect financial storm.
In its recent report on the crisis, The Office for National Statistics found that 89% of UK adults reported that their living costs had noticeably risen – up from 64% of UK adults, when the same question was asked in November 2021. Increased food pricing was the most commonly reported strain on respondents’ finances, with 94% saying that they’d noticed their weekly shop had become less affordable. Rising energy bills and fuel costs were also cited as major financial pain points by, respectively, 82% and 77% of Britons.
With such a huge proportion of the UK feeling the pressure right now, it’s unsurprising that marketers are increasingly paying close attention to the crisis – and adjusting their approaches accordingly in order to put their customers first.
Kathleen O’Connor is a freelance marketing consultant who oversees campaigns and strategies for several Manchester-based SMEs. “My hospitality clients have noticed that August was their quietest month since post-pandemic reopening. We’ve been discussing it, and looking at why that could be. It’s been unusually warm this summer, a lot of people have been away on holidays that were delayed by the pandemic, and there have been lots of issues with the trains… All those factors will have a negative effect on restaurants. But that’s the ‘optimistic’ view, because if low numbers are due to cost-of-living problems then this is going to be a serious, ongoing issue for the foreseeable future.”
The cost-of-living crisis has particularly affected younger – and therefore generally lower-paid – Britons. A recent report by Deloitte found that Gen Z and millennial workers are using all their monthly incomes on living expenses, with no disposable income left over for mood-boosting, but financially unjustifiable, treats. This daily pressure has led to Gen Zs and millennials citing the cost of living crisis as their number one concern – overtaking climate change, which took the number one spot in Deloitte’s 2021 survey of the same cohort.
“In terms of the hospitality clients I work with,” says Kathleen, “their younger customers are definitely cutting back on ‘treats’ as the cost-of-living crisis starts to bite. So we’re looking to appeal to them by acknowledging their situations in our marketing and saying, ‘Yes, you are going to need to cut back on most treats. You’re maybe not going to be ordering a random Tuesday dinner on Deliveroo, like you used to, just because you can’t be bothered to cook. But it’s important to keep some treats in place, for your day-to-day mental wellbeing. And the occasional meal out can be one of those treats that you ring-fence for yourself.
“It’s about finding a balance. People need to feel like they’re getting a treat, but also that they’re not frittering money away unnecessarily. It’s like the classic example of economic downturns inevitably leading to an increase in lipstick sales. People want a little taster of luxury – they need it to keep their morale up. And a lipstick – or a meal out, or a box of chocolates or whatever – it’s an affordable treat that gives you a little boost without making you feel guilty.”
Kathleen works with Manchester-based charity EatWell MCR, which partners with organisations to provide meals to people sidelined by poverty. While the people helped by EatWell MCR are experiencing tougher everyday challenges than the average Briton, the charity’s ethos mirrors the thinking outlined above: that is, an occasional ‘treat’ is a must-have, not a nice-to-have.
“EatWell MCR meals are prepared by leading local chefs using restaurant-quality ingredients,” explains Kathleen. “These meals are intended to provide more than just nutrition alone. They’re intended to be a treat; a much-needed break from the strain of dealing with difficult situations. Everyone needs that.”
A little treat goes a long way
So what does this mean for marketers looking to introduce incentive schemes or corporate Christmas gifts this festive season? In uncertain economic times, there’s great power in giving customers permission to indulge themselves. Right now, a little treat goes a long way – particularly when it can be enjoyed guilt-free. It gives the customer a much-needed mental and emotional boost, and engenders positive feelings towards the brand responsible.
In fact, gifts can have a greater positive impact than straightforward cash incentives. Consider this research, showcased by Harvard Business Review, which found that gifts improve workplace morale and productivity more than cash bonuses – even when those cash bonuses were of greater monetary value. Workers interviewed for the study reported that receiving a gift went further in making them feel appreciated and ‘seen’. It really is the thought that counts.
With prices and inflation continuing to rise at unprecedented rates, regular treats and fun little luxuries are the first things to get cut from household budgets. When a marketer can step in and reinstate those treats – whether they come in the form of food, drink, or corporate gift cards that open up a world of products – the resulting positive impacts can be remarkable.