“Trauma” can easily be used to describe nearly every aspect of the COVID-19 pandemic. From the tragic loss of life and lingering health issues to significant shifts in social discourse, political systems, and the global economy, the world is traumatized. And today, as both people and businesses navigated the ebb and flow of changing mandates and regulations, we’re all watching as inflation — a key aftereffect of trauma — grows.
This steady increase is concerning but is nothing new. The United States saw inflation in the late 1940s as the country transitioned out of wartime production from World War II. We felt it again in the 1970s (oil shocks) and more recently around 2008 (rising gas prices). Inflation is the economic result of national traumas, such as war, depressions, oil embargoes, and, as we’re all learning, pandemics. You could argue the current inflation is different. It’s global, its trigger is a microscopic threat, and there’s a significant lack of unity regarding how to navigate the turmoil. You could also argue that it’s not nearly as bad as those prior examples. However, these arguments are nothing more than speculation.
That’s not what you need. It’s not what customers want. And waiting for answers isn’t going to help. So, rather than playing a guessing game, it’s time to accept what we don’t know and start asking the questions that matter (hint: this involves turning to your customers).
Today’s Inflation is an Educated Guessing Game
Predictions from leading economists point to both continued inflation and dropping rates, with compelling arguments on both sides.
Inflation will last a while because…
- Gross Domestic Product (GDP) is slow and cannot mitigate inflationary forces.
- Emotions are low. The “Misery Index” — currently at 10.8% — spiked for the first time since the oil embargo.
- Housing prices are rising for renters and owners.
Or inflation may be transitory because…
- The Consumer Price Index (CPI) is calculated in arrears, uses outdated measurement methods, and undercounts online expenditure.
- The underlying reason for inflation — too much money chasing too few goods — will shrink as the global supply chain heals.
- Technological advances are a deflationary force, and innovation in the tech sector has not slowed.
But here’s the thing: Every historical episode is nuanced. We don’t have a 1:1 comparison. Yes, it’s important to predict and plan, but knowing what your customers need and want from you now is more important.
Stop Waiting for Answers, Start Asking the Right Questions
Definitive answers are unlikely, if not impossible, so start focusing on definitive action. Start identifying what you need to understand about your customers and your place in their world. For this to be effective, you must think big and small and look beyond the numbers. Consumer (B2B and B2C) behaviors are a direct result of how we feel, and the messages and information we received affect those feelings. First, start by understanding your customers’ overall next steps and behaviors:
- In a post-COVID environment, what consumer behaviors are going to be influenced by inflation?
- How does that differ from pre-COVID inflationary consumer behavior?
- What commonalities exist between post-COVID and pre-COVID inflationary consumer behavior?
Then focus on what you can do to help regardless of which inflation prediction comes true:
- What messages reassure skittish consumers to keep them supporting your business?
- In the face of uncertainty, what does your business offer that can help?
- What more do they need from you given the changing landscape?
We think of this as the transition from “what if…” to “so what?”. In other words, it’s important to imagine and plan for both inflation scenarios, but then you need to stop asking “what if…” and start asking “so what are we going to do now?” The only way to answer that question is to listen to your customers.
Sure, some of the answers may change in a year or six months or even less. But predictions on the economy will change, too, and there’s not much you can do about that other than watch, wait, speculate, and worry. We prefer action, especially when all you have to do is ask.
