How to maintain customer loyalty through promotions in the time of rising inflation

Inflation in the US hit 8.6% in 2023, the highest level in 40 years, while it hit a record 8.9% for the EU in the euro region. Inflation in Ukraine peaked at 26.6% in 2022, but according to the NBU, it will gradually drop to 10.6% in 2023 and 8.5% in 2019. 

As a response to the crisis in the cost of living, people are acting differently and aggressively seeking out sales and discounts. Some people simply purchase products on sale, while others are ready for a decline in quality of life brought on by economic instability. 

People are becoming more picky about their purchases as a result of the general price increase. Statistics show that consumers are first giving up on streaming services, exercise, and music, and then they start exploring for cheaper alternatives. These are often done in the following ways: 43% loyalty points and digital coupons, 38% cashback services, 67% free delivery, and 31% price comparison are the top choices. Three techniques are used by consumers to react to major price increases:

• replace premium products with own-brand products;
• reduce consumption – refuse some products altogether;
• change the structure of consumption – replace some products with others.

Surveys and analytics support this. CNN reports that approximately eight out of ten American customers want to modify or perhaps cut back on their grocery list in the near future. According to a research by WSLStrategic Retail, 45% more consumers now pick reduced goods than they did the year before. 71% of shoppers base their purchases on price, according to a RetailMeNot poll. It comes before allegiance. These figures compel businesses to take action and give customers advantages that outweigh price hikes.  

Loyalty marketing is anticipated to expand by 12% year through 2027 as more businesses make investments in digital technologies that increase the precision of analytics. This will lessen the impact that inflation will have on retailers.

Inappropriate focus on price discounts 

According to reports and surveys, consumer behavior has changed as a result of inflation. Since the start of the summer, about 25% of FMCG (fast moving consumer goods) products have been purchased on special offers. Retailers can boost their sales in this way. Supermarkets continue to run discount campaigns and give loyal customers preferential prices. The UK is where this tendency is most noticeable, where supermarkets compete to offer the highest deals. Thus, retailers are competing to keep their market share. Retailers should spend money on marketing specials and discounts, especially during the holidays, to increase sales. Therefore, 7 in 10 British shoppers want more holiday incentives from retailers. 

Discounts are more in demand from customers. 

This tactic, though, can be dangerous for brands. The Long and the Short of It co-author Le Binet points out that an increase in sales brought on by marketing alone is really a mirage. Mark Ritson, a columnist for Marketing Week, stressed that price promotions seriously harm brand equity, consumer loyalty, and business profitability. 

Strategies for promoting that work 

Since there are currently no signs that inflation will slow down, businesses must strike a balance between pricing products at a high margin while keeping customer relations from suffering. Brands must do two things in a world of growing inflation: show consumers why they matter and build audience loyalty; and continue to be profitable despite rising operational costs. 

At various points in the funnel, consumers looking for exceptional offers are an audience that may be drawn in and turned into devoted patrons. Give them more justifications for doing business with you. It’s critical to provide people with what they want: high-quality goods at competitive prices.

Loyalty programs

One solution that can address both issues is a loyalty program. To fight growing prices, consumers are depending more and more on loyalty programs. Customers need to know that a company values them, strives to provide better customer service, and offers genuine incentives in the form of deals and discounts. By doing this, businesses show that they can react fast to outside forces. 

Regardless of prices, a consumer that is truly loyal will stick with a business. However, loyalty will be legitimately called into question if high prices surpass other value components like service, customer care, and special offers.

Examples of this concept:

• The Walmart+ loyalty program, where users receive an immediate discount of up to 10 cents off each gallon of fuel when they buy it at partner gas stations of Exxon, Mobil, Walmart, Murphy, and Sam’s Club.
• The Malaysian Lotus chain of stores has offered regular customers 60% to 90% discounts on branded goods, as well as dockside prices for 500 categories of goods in all stores.

Special deals

Due to promotions, more than 50% of consumers select more expensive or new products. Therefore, in addition to saving customers money, retailers’ special offers should introduce new brands or items. The right timing of promotions will allow price increases without losing customers. Price incentives will eliminate customer pain points while maintaining business profitability. 

Utilize all digital platforms to launch promotions and limited-time deals that inform clients about other companies or products. They encourage shoppers who have started a savings quest to swap out products for equivalent ones rather than switching their preferred retailer. 

To automate advertising campaigns, boost conversion rates, and shorten the sales cycle, use first-person data. Companies will be able to optimize their marketing expenses with this strategy. For instance, push notifications can be tailored for particular consumer groups while taking into account their interests and preferences as they are free, unlike normal SMS.

Product packages

Bundles of several goods or services make up special deals for frequent customers or members of loyalty programs. Because they may select the things that will be included in these packages, this offers them a more personalized shopping experience. Retailers may give customers a sense of a deal in this way, boost short-term sales, and move inventory. 

You may obtain the most precise information about customer interests and preferences by switching from generic to personalized bundles and allowing program participants to put products together into a bundle on their own. Cross-selling and targeted sales are two ways to increase the scope of offers. Customer loyalty is positively impacted by all of this. 

Spend more and save more

“Buy more, save more” promotional offers are a hit with consumers. Brand loyalty will rise if you allow customers to design their own bundles to receive greater savings. When compared to orders without such an offer, the number of items per order rises by 130–140 percent.

Give customers more than is customary

Provide knowledgeable information to customers. Remember that consumers are surrounded by a barrage of marketing messages. They will be grateful for useful information regarding goods or services that will aid them in making decisions because they want to spend their money on truly excellent stuff. These could include professional evaluations, product set recommendations, new product catalogs, push notifications, etc. Anything that increases consumer awareness of the retailer’s selection of products will be beneficial. This will contribute to a rise in brand loyalty and trust. 

Consider the entire amount that consumers have spent. Customers may be encouraged by specific requirements for getting additional prizes or offers. For example, make delivery free or shorten the delivery time for those who order for a certain amount. 

Choosing the most engaging promos for your clients will be possible if you have a solid understanding of them. but on qualitative analysis rather than on presumptions. Segmenting consumers based on their behavior, price sensitivity, and product loyalty will help you achieve this. Utilize the feedback you get from clients to better understand their views toward price increases, their pain points, and their coping mechanisms.

Use effective tools for working with promotions and special offers, and contact digital loyalty professionals.

Frequent travellers might accumulate points (miles) and redeem them for benefits like free upgrades, extra services, and tickets. As time went on, rivals did the same. This was the beginning of an increase in the demand for loyalty programs, which moved to other businesses like retail, banking, and hotels.

Since then, standard transactional loyalty programs have been utilised to accomplish business objectives such raising the frequency of repeat purchases, customer lifetime value, and loyalty. These programs provide incentives aimed at making services and products more appealing and creating reward-based relationships with clients. 

Customers are enticed to spend money in a particular store (or chain) to maximise their rewards. In essence, brands use discounts and gifts to buy repeat purchases. However, over time, traditional loyalty programmes have their drawbacks:

• there is no emotional connection, programme participants receive only gifts for registration, an initial discount and earn points;
• tactical rewards focus the customer solely on the race to use the points earned;
• any difficulties with the exchange of points reduce the value of the brand in the eyes of the customer;
• consumers have dozens of loyalty cards from different supermarkets and juggle them every week in search of the best deals.

Both young and seasoned customers are seeking deeper connections with brands than just simple incentives, and that’s the reason why. More than merely loyalty programs, consumers desire. They desire memorable brand interactions that are tailored to their interests and way of life. Rarely are these needs and an emotional component met by transactional programs.

Remember that:

• 73% of consumers participate in two or more loyalty programmes, but show minimal activity in them. 
• unused points accumulate and are not spent, inflation reduces the practical value of rewards, and a mass marketing approach makes loyalty less personalised;
• consumers are overwhelmed by too many offers from brands, which breeds brittle loyalty and causes frequent changes in preferences;
• users in the millennial generation and members of Generation Z are 50% more likely than older customers to give up on traditional loyalty programs owing to disengagement;
• only 63% of consumers feel that programs more strongly connect them to a brand than tactical rewards;
• major merchants, airlines, and hotel organisations recently drastically tightened the restrictions for redeeming points.

The younger generation has the greatest purchasing power. Millennials and Generation Z in particular are concerned with finding common values with the brand, building an emotional connection and constructive relationships. This requires a review of loyalty programmes. Creating more attractive incentives and personalised experiences will help strengthen relationships. Customers should feel unique and valuable.

Benefits of moving to digital loyalty

Shopping malls are evolving from being merely locations to buy things to becoming destinations for experiences. Stores are also providing entertainment services instead of just being places to make essential purchases. As a result, marketers should work to digitise the purchasing process, reconsider their objectives, and increase audience interaction. Another innovative strategy for drawing customers into physical establishments is through digital loyalty programs.

Digital loyalty programs give customers rewards for their consistent support, growing the base of devoted customers who actively market the brand and make repeat purchases. Retailers pick and exploit a unique trait to separate out from the competition and build an emotional connection with customers. The incorporation of social factors, special incentives, and rewards all help to make this possible. The latter ought to align with the values of the customers. This is especially successful in luring millennials, as 84% of this group participates in humanitarian endeavours. Companies regularly use “green miles,” “trees for every order,” “rewards for a healthier lifestyle,” “charity donations,” and other incentives.

At the same time, the days of actual gift cards are quickly disappearing. Mobile loyalty programs are forever altering the way we communicate with clients. These are user-friendly and practical programs that let users get personalised offers, exclusive discounts, news, and other benefits in addition to earning points. Viewing an offer and making a purchase merely require a few touches on the smartphone screen. 

Business owners can reach more of their audience by providing them with a mobile loyalty program. They may promote return visits and sales by making personalised offers, sending push notifications, and more. Users may log their receipts, accumulate points, get exclusive deals, and access many other features. Customers can also benefit from the app’s offline functionality and user-friendly UI. 

Retailers can generate individualised offers using the information provided by loyalty programs regarding consumer preferences. Additionally, it implies that the chain or supermarket will stock more goods that consumers prefer and fewer goods they dislike. Large retailers can forecast demand and improve inventory management as a result. 

You may tailor your CRM marketing by using the rich data on client purchasing behaviour collected by a digital loyalty program. It increases feelings of gratitude, forges a solid bond between the audience and the company, and lowers the rate of lost clients. In general, individuals that pick modern tools over antiquated ways have an advantage in the marketplace. 

Loyalty gold rush in retail

True client loyalty is built more on knowing their demands, being innovative, providing high-quality personalization, and providing systematic service than it is on rewards. Retailers are being forced by the era of mindful consumption to refocus on client retention through sophisticated, individualised reward programs. Retailers must draw customers even when they are not in the market for anything. They must close the gap between what brands deliver and what customers demand from loyalty.

1. The consumer experience need to be simple. A quick and seamless engagement in the brand’s physical stores and online environment is one of the primary needs. Customers are impatient and short on time. Any barriers that are removed at each level of the client experience will result in a devoted following. 
2. Update the loyalty program. Traditional programs only offer little point accumulation and discounts. Customers will be more loyal to companies that provide customised terms and unique benefits.  
3. True personalisation. Using consumer purchasing habits data is not enough to create true personalisation. It is important to build personalised communication by strengthening customer relationships, carefully selecting content in terms of timing and content. Every customer is unique and brands should keep this in mind when building their approach. Those who take the risk to create such a strategy will be able to win back lost customers and strengthen relationships with existing ones. 
4. Continuity and openness in the application of social influence. Customers notice when a business acts inconsistently with its claims or exhibits misleading values. Only those that communicate with clients in a real and sincere manner will be able to use social responsibility. 

Retail loyalty is still alive. It is in the process of rebirth, in contrast to what some experts believe, and needs to be improved. Businesses and brands that shift away from algorithms that are only concerned with transactions and sales and instead focus on understanding each customer’s behaviour, preferences, and requirements will be able to forge enduring connections with them.