People are feeling the effects of inflation. Many resources are predicting that inflation will impact how shoppers behave and buy this holiday season.
Whether you’re seeing your customers’ shopping habits change due to inflation or not, these tips will help your business thrive this upcoming holiday shopping season.
At the end of the day, you’re not in business to trick or pressure people into buying from you. So only implement practices that feel right for you, your business, and your customers.
1 – Provide more value
Brainstorm ways you can increase the perceived value you provide, while only increasing your expenses by a small amount.
A simple and cost effective way to add more value is to offer exceptional customer service.
This may mean:
- Answering emails quickly
- Shipping orders quickly
- Taking time with each shopper to answer all their questions and help them pick out the perfect gift
- Send a personalized message to a shopper after they purchase online (communicate turnaround time and shipping times)
- Include a handwritten thank you note/card with each purchase
- Listen to shoppers’/customers’ needs and feedback (and act on that feedback…if it makes sense for your business.)
- Correct issues quickly and with compassion
- Show customers you care even after a sale is complete (e.g. check in after a purchase to ensure they’re happy)
If budget allows, you may also find ways to spend a little more money in places that will help add more value.
For example, you might:
- Buy gift-wrapping materials at wholesale prices so it costs you very little and you can offer free gift-wrapping and tagging.
- Include a small gift with purchase on all orders, or orders over X amount.
- Update your packaging or branding to give your products a high-end vibe.
- Improve website design, craft show display, and/or product photography.
2 – Start early
This report suggests consumers are starting their holiday shopping early (as in, they started in August). They may be spreading out gift spending among several months instead of dealing with big bills in December.
So don’t wait to get your holiday-appropriate products listed in your Etsy shop, on your website, or on your craft show table.
Holiday products don’t necessarily need to be front and centre (some consumers are turned off by companies that market holiday products too early), but they should be available to capture those early shoppers.
3 – Update your return/exchange policy
When money is tight, one of the worries that stops consumers from spending is being stuck with a purchase they’re unhappy with.
If it makes sense for your business and products, consider being a little more generous with your return/exchange policy.
That may mean extending the timeframe exchanges/returns will be accepted within, allowing exchanges or offering a gift card/credit for a return, or offering full money back returns.
If exchanges/returns won’t work for your business, you may consider a satisfaction “guarantee”.
For example, if you make customized products that can’t be returned, you may offer one free revision if a customer is unhappy with their customized piece.
4 – Have options gift-giving budgets
According to this report, lower-income shoppers are planning to spend less on gifts while higher-income shoppers plan to simply reduce the number of people on their gift-giving list.
Both types of shoppers plan to save, but in different ways.
Keep this in mind when product planning and gift bundling.
Some consumers don’t necessarily want to spend less on each gift. They want to find truly special gifts for the people who are most important in their lives.
So don’t take your higher-priced products off the table.
Offer your regular priced/“luxury”/high-end products, while introducing some lower-priced options.
You may simply take your regular products and create them with lower-priced materials, in smaller sizes, or with fewer features.
- a jewelry maker may offer their 24k gold designs in gold plated options.
- A soap maker may offer their products in smaller sizes
- A bag maker may offer bags with few pockets or finishing details
Explore ways to appeal to different budgets this holiday season. This article may help:
5 – Offer payment options
Allow customers to pay for their purchase in installments.
If you sell on Etsy, you may be able to set this up using Klarna. It’s not available to sellers in all countries, but you can find more information here: https://help.etsy.com/hc/en-us/articles/360000343228-How-to-Accept-Installment-Payments-in-Your-Shop?segment=selling
If you don’t sell on Etsy but have an account with a payment processing platform such as Stripe or Square, you can offer buy now, pay later options:
6 – Market to existing customers
Consumers who have already purchased from you, know and trust your business, and will be more comfortable buying from you than someone who’s never heard of your business.
Depending on how big your customer list is, consider sending a personalized email or holiday card to each customer.
If your customer list is too big to send a personalized message/card to each person, you may send a general newsletter to your entire customer list.
Your email and/or greeting card might:
- Thank them for supporting your small business
- Let them know about the great gift options you have for sale
- Share a coupon or discount code they can redeem at a craft show or online
- You may even share a small update (e.g. plans to introduce a new product next year, getting your products into new retail locations, launching a website, etc.)
7 – Help shoppers see your vision
When consumers are holding onto their money more tightly, it becomes even more important for you to tell a story with your product collections, product photography, and/or product display.
Help shoppers see that your products make great gifts, who they’re perfect for, what they go great with, etc.
At a craft show, that may be:
- Adding holiday props to your craft show table, such as a small Christmas tree, Christmas lights, using wrapped presents as risers/props, etc.
- Displaying items that aren’t for sale, but that give shoppers ideas on what they can add to a gift to make it bigger/more expensive. For example, a vendor selling bath products may add a bath tray, loofah, or bottle of wine and chocolates as props and as products that can be added to a purchase to expand a gift.
- Use signage such as “Stocking stuffers under $20”, “Perfect gift for the Dad who has everything”, “White Elephant gifts”, etc.
Online that may be:
- Adding holiday props to photos
- Photographing a recipient with a product (e.g. show a child opening a gift if you sell children’s products)
- Updating product names and descriptions to explain who the items are perfect for.
8 – Offer discounts
Depending on how much your business is feeling the pressure of inflation, you may or may not be able to offer discounts.
Make sure you’re profiting from each sale, even with a discount.
If profits are already tight, the best way to offer discounts is to bundle products at a slightly discounted price.
This increases your average units per transaction (here are other ways to increase your units per transaction) which increases your overall revenue (as long as the bundles include more items than your average units per transaction).
Although you’re selling the items for slightly less than you typically would, you’re selling more items than you typically would.
If you’re going to run a sale or promotion, be sure to set a time limit and clearly communicate it. For example, “This craft show only, these items are X% off”. This creates urgency, which encourages people to buy.
9 – Reduce profits to reduce prices
Rather than running a sale or offering a discount on a select bundle of products, you may reduce your prices across the board.
You need to be sure you’re making some profit with each sale (here’s how to properly price your handmade products).
But if your current profit margins allow you to drop your prices slightly, customers will appreciate you taking a bit of a cut to pass savings on to them.
A reduction in profits per sale may not end up hurting you in the long run.
Although you may profit less on each sale, your lower prices may help you make more sales. So collectively, your profits stay the same or even increase.
It may be a good idea to communicate your reduced prices to customers. Let them know it’s not a sale or a permanent price drop, but rather a temporary reduction on product pricing to help your customers during these times.
10 – Reduce overhead costs to reduce prices
If your material costs have increased due to inflation, it doesn’t necessarily mean you must raise your prices or reduce your profits.
If you can cut costs in other areas of your business, you may be able to keep prices the same, or even reduce them, to encourage more buying.
Look at everything you spend money on for your business and explore ways to reduce costs.
- Reduce how many trips you make to the post office to ship orders and update your shipping policies (e.g. orders go out every Monday and Friday).
- Get rid of subscriptions you don’t need
- Find cheaper suppliers and service providers (e.g. a cheaper shipping service, cheaper office supplies, buying materials in bulk, etc.)
- Don’t accept every craft show invitation; choose the best events for your business
Don’t forget about time-saving measures. Eliminate tasks that are time wasters and that don’t give you a return on investment (you may start with these common time and money wasters) and find ways to streamline your production (How To Lower Production Costs to Increase Profits ).
I hope this article helps you have a successful holiday season!
Hey, I’m Erin 🙂 I write about small business and craft show techniques I’ve learned from being a small business owner for almost 2 decades, selling at dozens of craft shows, and earning a diploma in Visual Communication Design. I hope you find my advice helpful!