According to the U.S. Confidence Board Confidence Index, consumer confidence rose this past April and again in May. Released monthly and based on a probability-design random sample by Nielsen, the Consumer Confidence Survey results are considered a barometer of the economy's health.
The confidence survey relays consumer expectations for business, employment and income for the next six months. Consumer confidence, or a lack of it, can profoundly affect your business, believes Caleb Silver, editor-in-chief of Investopedia, a financial information website.
"The consumer confidence index conveys the mood of consumers during a particular time period," says Silver. "If those surveyed are feeling confident, that mood can empower them to make purchases they've been considering."
Positive Consumer Confidence Can Drive Sales
Consumer confidence is the "lifeblood of all business," believes Mike Stewart, founder of Mike Stewart Personal Real Estate Corporation.
"When the consumer confidence index is high, customers are comfortable making purchases," says Stewart. "On the other hand, when the consumer confidence level dips, customers question their job security and the market forecast and tend to guard their assets more cautiously."
During periods of high consumer confidence, consumers are more willing to indulge in purchases despite existing financial liabilities, adds Christine Alemany, CEO of the branding and marketing company TBGA.
"When consumers have a positive outlook on the economy, they spend more and are less likely to trade down, such as buying cheaper brands," says Alemany. "On the other hand, people spend less when consumer confidence is low."
As the CEO of RockHer, a direct-to-consumer luxury brand, Jim Vernon takes consumer confidence very seriously.
"Our clients run the gamut, from everyday Americans looking for the best value for their money in engagement rings to high-end consumers asking for commissioned rare and expensive pieces," he says. "When consumer confidence is on the rise, we've found that customers are more likely to make big life decisions and big purchases."
Making the Most of High Consumer Confidence
Of course, an upswing in consumer confidence and its ability to make consumers open their pocketbooks is something to celebrate. Now is a great time to upsell and push luxury and discretionary items.
However, the savvy business owner knows to take advantage of more than the increased business that an uptick in consumer confidence brings. The positive attitude of consumers allows you to build an even stronger business model. This allows your company to withstand the inevitable dips in consumer confidence and tougher economic times that eventually occur.
Here are six steps for capitalizing on consumer confidence in order to build a more robust company.
1. Nurture customer loyalty.
With consumer spirits high, take the opportunity to cultivate customer loyalty: Engage with customers through social media outlets and via email and video.
Such customer-centric tactics offer your clients opportunities to connect with your customer service team in meaningful ways. When the market does dip, your customers will already have a sense of commitment and community with your company.
2. Focus on quality and value.
High consumer confidence can offer the chance for increased work, but Joe Palumbo, president of Lakeshore Guys, always keeps an eye on quality.
"Even when consumer confidence is high, I avoid spreading myself and my employees too thin," says Palumbo, whose company restores and protects shorelines. "Rather, I focus on offering a premium, higher-touch version of my services. This attracts more of the kind of clients who can still afford my services when consumer confidence and the economy dip."
When consumer confidence is high is the perfect time to ramp up your marketing. Additional marketing at this time obviously allows you to take advantage of increased business.
—Mike Stewart, founder, Mike Stewart Personal Real Estate Corporation
Customers appreciate it when you safeguard their money and focus on value, adds Vernon.
"One of the biggest lessons my company learned in the Great Recession is that there is no excuse to waste the consumer's money, no matter how high consumer confidence rises," says Vernon. "Our mantra is to always provide customers with the best value for their hard-earned money."
3. Utilize personalization.
"While consumer confidence is high and customers are in an acceptance mode is an ideal time to explore launching new brands and products that fit the needs of your customers," says Stephen Collins, CEO at Monetate, a company that produces personalization software for consumer brands.
Conversely, such personalization will help you retain customers when consumer confidence eventually dips.
"Personalization is about delivering the best customer experience," says Collins. "This can mean keeping customers up-to-date on new offerings until they're ready to purchase from you again. The brands that focus on personalization can gain a tremendous advantage over the competition when consumer confidence lowers."
4. Build brand reputation to drive confidence.
"Times of high consumer confidence and improved revenue are ideal for investing in research and development to improve the quality of your products and services," says Alemany. "Investing in R&D will pay off when the economy and confidence dips. Your customers will continue to buy from you because they'll be confident in your brand."
5. Invest in customer service.
Just because consumer confidence is high, doesn't mean you should become complacent, believes Andrea Santo, founder of Lakeview Dental Of Coral Springs.
"When an upswing in consumer confidence occurs, we stay true to our core value of ensuring high customer satisfaction," says Santo. "By reinvesting resources into providing supreme customer service, we ensure that we're covered if the economy and confidence should dip."
6. Expand your network.
"When consumer confidence is high is the perfect time to ramp up your marketing," says Stewart. "Additional marketing at this time obviously allows you to take advantage of increased business. Doing so also helps safeguard your business during the eventual lulls that any market experiences."
Stewart has found that ramping up marketing during times of high consumer confidence builds valuable trust with his clients and referral partners that benefits him when times get tough.
"I've noticed that when the market softens a bit, my expanded network keeps my plate full when others may be scratching their heads as to why the phone isn't ringing," he says.
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