The UK is experiencing its worst inflation in forty years. In a perfect storm of price hikes, rising interest rates, and stagnating wages, many of us are facing existential fears about our financial futures.
Everyone is talking about the cost-of-living crisis, from economists and politicians to pundits and brands. But the talk is already wearing thin for UK consumers.
Large brands are often perceived as benefitting from inflation or even driving it. Meanwhile, consumers see corporate net margins rise to record highs, creating frustration among the public and leading to an “Us vs. Them” mentality.
During times of crisis, brands generally rely on empathetic messaging, but this tactic is losing its appeal, especially as some are getting it very wrong.
Ovo Energy’s recent ad (see headline image) suggesting that consumers “snuggle their pets more closely to stay warm” comes to mind. It might have been going for quaint but it ended up coming across as condescending.
The “U” word
What many brands fail to understand is that many UK consumers are in a period of unprecedented uncertainty and this requires a new kind of customer insight and response.
Increasingly brands that have come out of the pandemic seem to know their customers less well than they did before, despite a wealth of observed marketing, browsing and purchase data.
According to Paul English, MD of Ogilvy Consulting: “Today’s consumer plight needs to be seen through new lenses. Brands need to understand the palpable sense of dread consumers are feeling about the future.”
They might also be feeling antagonised by the callous “we’re all in it together” messaging and half-hearted price promotions. Paul and his Ogilvy cohorts believe that the application of natural language analysis and cognitive segmentation is the answer, as it will help marketers understand the human drivers behind the data. And is there really any point in analysing data if there’s no understanding behind the drivers?
Particularly at lower income levels, behavioural insights have proven critical when it comes to understanding what consumers really need. Generally speaking, these are the audiences that are less open to new experiences, have a greater belief in fate and are highly sensitive to the concept of things being “out of control.”
These are the drivers that brands need to be focusing on if they want to steer this currently chastised and woefully misunderstood sector through this crisis.
As well as understanding and empathy, however, they are going to need to take action to inspire consumers to do the things they perceive as doable and beneficial to them and they’ll need to cultivate evergreen experiences rooted in genuine value. That’s how to create consumer trust in a cost of living crisis.
The high cost of living
The brands that come through this crisis with their integrity and customer bases intact will be those who have been seen to make a tangible material difference to consumers. It’s by moving beyond traditional promotions and messaging strategies to embrace value-based innovation that brands will deliver meaningful and authentic impact for their consumers.