Getting loyalty right in tough economic times

Consumers are flocking to loyalty programs as economic conditions tighten. Tailoring your loyalty program can help members during the cost-of-living crisis.

Have you considered how your customer loyalty program can help your members during the ongoing cost-of-living crisis?

As prices continue to rise, consumers everywhere are looking for ways to stretch their budget and that includes turning to loyalty programs to help manage everyday spending amidst tightening budgets.

The Australian Loyalty Association Loyalty 2022 Annual Insights Report notes the cost-of-living crisis has brought into focus the value of loyalty programs for members as they look to the programs for help. That’s seen regular discounts become the most preferred program benefit as consumers increasingly seek assistance with utilitarian needs.

Brands are responding. Some of Australia’s biggest retail giants, including Myer, Coles and Woolworths, are bolstering their loyalty programs and increasing personalisation to capitalise on demand, with many reporting significant growth in their programs since the start of the pandemic.

And while a second month of slowing inflation growth in February may have some suggesting the cost of living crisis has passed its peak, that’s certainly not being felt on the street yet, with every week bringing new stories on the struggles faced by everyday Australians.

Economic downturns, including the recession of the 1990s and 2008 global financial crisis, have often translated into growth for loyalty and reward programs, allowing consumers to cash in points to save money on both essentials and the little luxuries they can no longer otherwise afford.

In a time of macroeconomic pressure, businesses are in a unique position to demonstrate the value they can provide in making their customers’ money go further.

It isn’t all altruistic, of course. An increased focus on loyalty programs during tough economic times makes business sense – it is, after all, easier to retain a customer than to acquire a new one and supporting members and providing them with a way to save money in the current macroeconomic environment can bolster their relationship with you and provide emotional loyalty. Afterall, we’re more likely to remember the companies who did good by us in our times of need.

Companies that have invested in their loyalty program during the good times are now reaping the rewards in the tough times.

In its Australian Consumer Loyalty Survey, McKinsey says high-performing loyalty programs have real potential to offset the challenges of the current uncertain environment. It says companies with strong loyalty programs can expect higher sales and greater bang for their customer acquisition bucks, with customers in those programs spending more, churning less and more likely to recommend the brand to others.

Getting loyalty right during the cost-of-living crisis

It’s easy to argue that loyalty programs and their data, have never been more valuable. Tweaking your offers with a mix of transactional and non-transactional activities and benefits, and measuring the success of monetary rewards against experiential benefits can up your rewards program play.

A digital platform, providing rich customer data and insight, including a more granular view of the impact of the cost-of-living crisis on spending habits, enables you to deliver enhanced personalisation, providing offers and rewards that are relevant and meaningful to your customers in these rapidly changing times.

According to research from Boston Consulting Group, 80 percent of consumers say they’re more likely to do business with companies which offer personalised experiences, and they’re prepared to share personal data to get those personalised offers and discounts.

Gratifii’s highly-configurable Mosaic customer enterprise engagement platform makes it easy to tailor your loyalty programs and adjust them as the times change – because while loyalty and reward programs are used in good and bad times, adapting them to reflect market conditions will ensure customers remain loyal and keep spending with you.

It’s not too late if your brand doesn’t have a well-designed and managed loyalty program already in place – and it’s never too late to fine-tune your offering to maximise its success.

If you’re interested in hearing more about how Gratifii can help your business – and your members – request a demo now.

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