How Businesses Can Rethink Their Rewards Programs in the Age of Inflation

Loyalty programs greet us at every turn, from online and in-store retail to delivery apps and services, restaurants and even the credit cards we use to make purchases. It’s quite possible to participate in several programs every time we spend money. They play a role in attracting new customers but primarily seek to hook in return shoppers.

These programs have become much more sophisticated and effective as mobile technology, the power of data analytics and the digitalization of commerce have given immense insight into consumer needs and desires. Being able to tap into these insights to deliver personalized offerings is key to meeting consumer expectations, as a recent PwC survey found 82% of respondents are willing to share personal information for improved experiences. 

Historically, loyalty programs have been simple incentives of reciprocity—buy one, get one free, earn currency for using a specific payment type. However, loyalty is also an opportunity for a brand to create an impression and tell its story to customers. 

We are in the midst of a tectonic market shift, where the loyalty industry has a tremendous opportunity to reinvent itself and continue to influence consumer behavior while increasing brand awareness. While economic headwinds may make businesses reevaluate the return on investment of their loyalty programs, investing in them can level up sales despite macro trends in the market.

Engaging through loyalty 

Inflation remains high across the U.S. and the rest of the world, and we’re already seeing headlines about businesses modifying their loyalty programs to save money or invest it elsewhere. It’s common to see loyalty programs follow what’s happening in the economy: When times are hard, businesses, like consumers, tighten their belts where they can.

However, this is precisely the moment when businesses should think carefully about the true value of their rewards program—just as customers are looking to stretch their dollars more than ever, the companies that can help them do that stand to grow their share of spend with that customer. This is perfect timing to focus on new customer acquisition using loyalty tools. 

Rather than scaling back or sunsetting a loyalty program, businesses should evaluate new models for loyalty. Engagement does not have to be a cash-back or points-based scheme and deliver monetary, tangible value for every engagement. Instead, providing financial literacy or convenience can be enough to keep customers engaged with your brand. Spending that money to create unique experiences or special early access events for loyalty members will only build buzz and brand reputation and attract new consumers.

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