Last week, consumers in the United States woke up to a grim statistic from the US Bureau of Labor Statistics’ Consumer Price Index: Consumer prices rose 7.9% in February, the highest rate of annual inflation in 40 years. This rise is not unexpected if you’ve read the news headlines over the past couple of months. With uneven pandemic recovery, continued strain on global supply chains, and the Russian invasion of Ukraine in late February, economists have been warning of a high-voltage shock to consumers’ wallets for a while.
Understandably, consumers are worried. Gas prices are hitting record highs, the price of kitchen staples such as milk and eggs have increased 15% since February 2021, and many experts warn that it will likely get worse before it gets better.
So what can brands do to help? After the social, political, economic, and health/safety concerns of the past couple of years, many brands have learned that a loyalty program is an essential tool to keep customers comfortable through times of uncertainty. The inflation crisis is no different. Brands should lean on loyalty to:
- Offer financial savings. We know that consumers want a variety of rewards from loyalty programs, but financial rewards (e.g., instant discounts, loyalty points, reward certificates) are top of mind for most consumers. Brands should make sure that customers know what options they have to redeem financial rewards on essential products that are more expensive today.
- Retain savvy customers. Customers’ willingness to experiment with new brands is at an all-time high. And with inflation, they won’t be afraid to switch brands if a cheaper option comes along. Use your loyalty program to engage customers with referrals, gamification, or experiential rewards that mitigate the chance of them breaking up with you.
- Emotionally engage customers. Building emotional connections with customers must be a critical component of your loyalty strategy. Forrester’s data shows that when consumers feel appreciated by a brand, 76% of them say they’ll keep doing business with the brand. Show your appreciation for your customers through these challenging times with personalized messages and offers that reflect your commitment to your customers’ well-being.
We have a lot to say on the changing role of loyalty programs, so stay tuned for new research in the next couple of months. In the meantime, feel free to set up an inquiry or guidance session.