Key points
- Pitcher Partners Business Radar report shows business leaders have high confidence despite economic uncertainty
- Customer relationships are not highlighted as key driver to business success
- As rising living costs curb spending, understanding customer behaviours critical for business success
As businesses navigate the impact of the rising cost of living on operations, it’s important to foster strong customer connections. Understanding changes in customer expectations will be a cornerstone of corporate success as customers tighten their belts and businesses re-examine their spending priorities amid economic uncertainty.
Ignoring customer issues and/or not having mechanisms in place to measure customer health and satisfaction risks a business becoming obsolete. In a rapidly evolving world, it is critical to build connection and keep pace with customers and their behaviour.
Business confidence is high despite economic outlook
Pitcher Partners’ latest Business Radar report shows confidence is high for mid-market business leaders. Asked how confident they feel in the future success of their business, the average score of respondents was 7.7 out of 10 – a figure not only higher than 2022, but higher than the last survey prior to the pandemic. However they are not blind to the gathering economic challenges. The World Bank predicts economic growth will slow sharply this year, and inflation has hit a 32-year high while the cost of living has spiked more than at any time since 1987. Radar respondents noted inflation and the rising cost of living as the top external factors that will impact business operations. An overwhelming 90% of respondents cited the rising cost of living as having a negative impact, while 82% cited inflation, which could have a serious affect on customer behaviour and business decisions.
The importance of customer listening
Despite the impact data, respondents did not highlight customer relationships as a key driver to success, unlike the previous year where it was listed as the top driver. Business leaders continue to prioritise employee culture, flexible work arrangements, and cash flow management. However, it’s important to recognise that keeping strong customer connections cannot come at the expense of attracting and keeping employees.
To better understand how the cost of living is affecting customer behaviour and business relationships, mechanisms must be in place to gauge how customer expectations are changing. It’s important to ask the right questions when collecting customer feedback, ensure that feedback informs actions and business decisions, and then communicate changes back to customers. Analytics tools can help identify pinch points in sales or conversion processes, and satisfaction metrics such as customer health scores can be used to create stronger relationships.
What to do next
Different industries will be impacted differently by the current economic pressures. Businesses offering perceived ‘nice-to-haves’ may feel the pinch of the cost-of-living crisis. For example, hospitality, travel, and luxury consumables may see changes in customer behaviour. Creating positive emotional connections with customers can help make them less price sensitive, but these connections are hard to keep amid a continually changing world.
To future proof your business, focus on building systems and processes that create a better understanding of customer expectations and use this information to inform business decisions.
