Although inflation affects everyone, the degree to which it impacts people is “very personal,” says Courtney Hilbert, senior director of analytics at Merkle.
Understanding which customers are most negatively impacted by inflation (as opposed to moderately impacted or merely annoyed) should inform a brand’s communication strategy.
By the fall of 2021, the question of how to address inflation was top of mind for clients, which gave Merkle the idea to build what it calls an inflation resilience dashboard.
The public dashboard, which went live in May 2022, gives viewers a snapshot of how different communities experience inflation. Clients can use what they learn to develop a more nuanced, inflation-aware media and communications strategy that demonstrates to consumers that a brand “understands them and is ready to meet them where they are and help them during this time,” Hilbert said.
While wealthier communities are, on average, able to better withstand the pressures of inflation, a community’s generational makeup matters, too. In addition to factors such as cost of living, job type, salaries, household income and discretionary spend, one’s life stage is a major determinant of how much a person is affected by consumer price index (CPI), according to Hilbert.
CPI is the government’s standard method for measuring inflation.
In general, people at either end of the age spectrum have been hit hardest by inflation. Seniors and older baby boomers are feeling financially squeezed because they’re either retired or near retirement. And Gen Z has been graduating into a shaky economic climate and often can’t afford to move out of their parents’ homes due to high rents and soaring interest rates.
Hilbert spoke with AdExchanger about Merkle’s new tool and the impacts of inflation.
AdExchanger: How can clients use the inflation dashboard?
COURTNEY HILBERT: If I put on my corporate retailing hat, where do I want to situate my inventory? This [dashboard] could be helpful for identifying pockets of the country that are going to be more ready to consume different inventory.
It’s key to think about pricing and promotion opportunities being targeted on the offers I put into the marketplace based on community sensitivity to inflation. Some areas will be able to withstand inflationary pressures better than others.
We’ve been preaching in marketing for more than a decade about personalization – personalizing our communication, our offers, our content – and I believe it’s never been more relevant than today.
It’s all about connecting with customers using first-party data and third-party data with the view of inflationary impact to better customize and personalize our communications and tactics across our different customer segments.
How might messaging differ based on a customer’s resilience to inflation?
If I’m hypothetical retailer XYZ, I’d probably use my loyalty platform to offer customers targeted offers based on their behaviors.
If I have a customer who overindexes on their ability to withstand inflation, I might target them with offers that are more about long-term benefit. You earn a reward after multiple trips. It’s about relationship building, engagement and brand affinity.
But for someone else in my loyalty program, who is really being impacted by inflation, I might target a more value-oriented offer, such as discounting their initial purchase or discounting on multiple purchases.
A customer who is being pinched by inflation can still participate and engage with my brand.
What data is the dashboard pulling from?
The dashboard is a rolled-up look at a community, and we define community at a county level.
We have proprietary data through our DataSource platform, which covers about 95% of the US population. Part of that data comes from different data vendors to get a household-level view, which we anonymize at a county level.
We also use publicly held cost-of-living data that anyone can get, whether it’s from the FRED [Federal Reserve Economic Data] database or from census data. The CPI [consumer price index] is from the Bureau of Labor Statistics.
We’ve tried to have a more broad, holistic view on data, using a blend of both public and privately held data to get to these measures.
Any advice for companies dealing with the challenges of inflation?
They need to be looking forward. We can’t overreact in this moment. We need to continue to lean in and build relationships with our customers. This is an easy time for customers to disengage from our brand because they have to make choices.
Think about identifying our most loyal customers in a way that’s more affinity-oriented, ensuring that we still have a healthy customer file when we do come out of this hyperinflationary timeframe and these choppy economic waters.
And we do that know that, historically, we will get through it.
What do you see as the future of the inflation resilience dashboard?
It’s on the docket for us to iterate. Do we want to layer in any kind of customer persona? Do we want to start to talk about the impacts of recession? Recession is the next topic of conversation. Do we want to layer in interest rates or mortgage or anything that’s more of a fluid number?
It comes down to what decisions we’re trying to help influence, which have to do with making sure we’re thinking about the impact of the current economic climate on our customers, both our direct clients and our clients’ customers.
From a partnership perspective, our goal will be to ask: What is the next big question?
This interview has been edited and condensed.
