Tips to Help Businesses Survive During a Customer Spending Freeze

A new year means many customers are making new budgets alongside new resolutions to spend less in the coming year. This kind of spending freeze can impact your business - are you ready?


January 3, 2024


Insights, Global

Businesses rely on customer spending to stay afloat. The more customers spend, the more successful the business becomes. While spending is inevitable, being mindful of how much and when to spend is also important. When people become more conscientious with their money, they demonstrate good resource stewardship. In the United Kingdom, customers are currently taking steps to do just that.

There are many reasons why implementing a spending freeze could be a wise decision. Paying down debt, saving money, and building wealth are among some conceivable reasons customers want to be more intentional about their purchasing habits. A spending freeze can help increase discipline and prevent impulsive purchases that often lead to regret and buyer’s remorse. In the UK alone, people spend a whopping $3.9 billion every month on impulsive purchases, with an average amount of $32.69 spent per purchase. This trend is not limited to online shopping but is also evident while shopping in-store. In fact, a third of UK shoppers admitted that they are more likely to make impulsive purchases when shopping in-store.

The 2023 Barclays UK Consumer Spend Report revealed that consumers were tightening their belts as the expensive festive period approached to afford their energy bills throughout autumn and winter. Cutting back on spending has become a reality for many as the cost of living continues to rise and inflation takes its toll. Even though the UK’s inflation rate decreased in September and August of 2023, it still stands at 4.6%. This means that customers are feeling the squeeze, which is the primary reason for their spending freeze. However, what happens when a business’s target customers have deliberately chosen to limit their spending? Here are five ways companies can stay chill during a customer spending freeze.


#1. Show the value of your product

During times of economic uncertainty, it is essential to prove the worth of a product to potential customers. Sales teams must emphasize the value of the product in question, highlighting its practical use and necessity rather than being seen as a luxury item. By doing so, customers can be reassured that their investment is worthwhile and necessary, encouraging them to make a purchase.


#2. Focus on sales promos

Customers are always looking for ways to save money. These savings can help them cope with inflation and give them the freedom to spend a little more. However, when they are forced to freeze their spending, they have to make sacrifices. Occasionally, they can indulge in small purchases and still feel good about it, as long as they can justify the expense based on their accumulated savings.


#3. Ask for the sale by asking about their budget

One way to ask for the sale is by enquiring if an item falls within the customer’s budget or price range. This helps you determine if the customer is likely to make a purchase. If the product is outside their budget, the sales representative can focus on building a strong relationship with the customer, keeping them informed about future sales or price drops. This approach fosters trust, and the customer will appreciate your efforts to put their needs first. Remember, the objective is not to pressure or negotiate but to establish a positive and long-lasting relationship with your customers and brand.


#4. Focus on your prospective customers

If a business’s current target customer base is experiencing a spending freeze, consider targeting a broader audience to convert potential clients. By expanding the customer base and looking beyond your existing customers, your company can strategically introduce your products to a new wave of customers to sustain your business during an economic downturn. This could lead to a different demographic that can offer fresh feedback and may increase sales.

For businesses to succeed financially, they need to take a proactive and strategic approach while also showing empathy towards their customers’ struggles. The ups and downs of the business-customer relationship are inevitable, but both parties must be aware of the fluctuations and remain loyal to one another. This loyalty should apply to both customers and businesses alike.

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