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.