Can Your Company Resist Shrinkflation?

August 2023

You’ve heard of inflation, stagflation, disinflation and deflation in economic terms, but how about shrinkflation? You may not have heard of it, but unfortunately you’ve probably experienced it.

Shrinkflation refers to a practice where the size or quantity of a product or service is reduced while its price remains the same or even increases. This can be a strategy to offset rising costs or maintain profit margins. While shrinkflation is commonly associated with consumer goods, it can also occur in professional services.

In the context of professional services, shrinkflation typically involves a reduction in the scope or quality of the service being provided, while the fees charged for the service remain unchanged or may even rise. This can be seen in various industries where service companies offer less to their clients without a corresponding decrease in price.

So, how does a service company resist resorting to shrinkflation? Here’s how we do it at Moores Rowland Indonesia, what we call, “The Moores Rowland Way.”

We are open and honest with our clients about any changes in service quantity or quality, and clearly communicate any adjustments and the reasons behind them. We help customers understand the economic factors that may necessitate price adjustments and update them about industry trends or rising costs. Transparently sharing this information allows our clients to see the bigger picture and appreciate the challenges we all face. Honesty builds trust and fosters customer loyalty.

We provide more value for our clients through competitive pricing, evaluating costs carefully and finding innovative ways to manage expenses using new technologies without compromising the quality or quantity of our services. We explore ways to optimize costs and find cost-saving opportunities in various areas of our operations.

At Moores Rowland, customer feedback and involvement is important to us. We value our client base and actively listen to their opinions. We provide exceptional customer service and experiences with a focus on creating a positive emotional connection with our clients. We want them to feel valued. Involving clients in the decision-making process we feel keeps them loyal and also helps minimize any potential disruptions if service changes are made. Communication and clarity between us and our clients helps mitigate the potential for shrinkflation and maintain a mutually beneficial relationship.

Our effective cost management strategy allows us to resist resorting to shrinkflation. Your strategies to resist shrinkflation as a service provider or a client may vary depending on your industry, service, and target market. Either way, as a service provider it's essential to carefully assess the situation, balance the needs of your business with those of your clients, and maintain open lines of communication.

Shrinkflation in professional services is not universal, and many service providers like Moores Rowland maintain high standards and continue to deliver exceptional value to their clients. However, as a client you must remain vigilant and ensure you are receiving the level of service you expect and pay for.

The strategies I mention here are just a few of the ways we resist shrinkflation at Moores Rowland. And we would gladly share more strategies with you. 

**James Kallman is the CEO of Moores Rowland Indonesia. 30 years ago he started a campaign in Indonesia called, “The Client is King.” He meant it then and he means it now. It’s in his DNA.