EMCS Tax and Advisory Director Silvan Mifsud on Monday urged businesses to be more transparent with their customers, stating that those which fail to do so will ultimately lose customer trust.

This came as part of the latest entry in his blog “A Business Blog for SMEs & Family Businesses,” in which he focused on the importance of maintaining customer loyalty during an inflationary period. This is especially the case since consumer sentiment has shifted in a post-COVID-19 pandemic inflationary world, with factors like communication, transparency, and credibility becoming of “vital importance.”

Mr Mifsud, who has a financial background and has a number of years of managerial experience, has worked in various areas over the years, including those tied to international client management, budgeting, B2B marketing, and international negotiations, among others. He has served as Director of Advisory Services at EMCS Tax and Advisory for more than five years, and is also a Council Member at The Malta Chamber of Commerce, Enterprise and Industry.

In recent weeks, Government has sought to combat inflation in Malta through a “historic agreement” with supermarkets to reduce the price of basic foodstuffs by 15 per cent. Consumers had been calling for greater control on prices for the last couple of years, particularly given mounting cost-of-living challenges. Some of these calls were also answered as two of Malta's largest retailers recently engaged in an online price battle, which resulted in consumers benefitting from a significant drop in the prices of particular products.

In the blog post, Mr Mifsud stated that many businesses are facing situations where customer expectations are increasing during times of inflation and economic uncertainty.

“Research indicates that a common mistake done by businesses is the lack of realisation of how customers expect more openness and transparency in periods of high inflation, rather than less,” he continued.

He added that as business fail to be transparent with their customers, over time they will “lose customer trust.” Mr Mifsud also clarified that building the trust of customers is “always challenging,” especially during times of high inflation, as has been experienced by the Eurozone, including Malta, over recent months.

He pointed out that multiple studies have indicated that across the globe, customers are “more and more blaming corporate greed for the state of inflation.”

Therefore, he called upon businesses to work to become more transparent, as unless they do so, this sentiment among customers will most likely grow, “which in turn makes businesses’ position weak and hence an easy target for politicians.”

Transparency also involves businesses openly acknowledging the negative impacts of inflation. Mr Mifsud notes that as businesses acknowledge the downstream effects of inflation, they can “address customers’ concerns, validate their price perceptions, and address their worries so that they feel secure enough to make purchases again.”

While doing so may evoke a sense of vulnerability, when this is perceived as genuine, this transparency “encourages trust and begins to build customer loyalty,” he added.

“Businesses that avoid transparency, or worst still lie, about the reasons for price increases, will face an uphill battle to regain lost trust,” Mr Mifsud continued.

To read Mr Mifsud’s full blog post, click here.