In Times of Hardship, Rewards Can Inflate Your Customers
The cost of U.S. goods was nearly 8.5% higher in March 2022 from March 2021, according to the Consumer Price Index, and by the end of the year, the price of groceries alone is expected to climb an additional 3% to 4%. Those price hikes vary by product: Bacon prices were up 17% in February, while a bag of ground Starbucks beans cost 10.5% more.
So consumers are doing what consumers do when prices climb: Scratching discretionary items off their lists, trading down on brands (from coffee to airlines) and strictly rationing what they have in their pantries and bathrooms until replenishing. And they’re bummed. Higher prices deflate consumer confidence. So retailers have a unique opportunity to inflate their confidence by making them feel like more valuable reward members.
Inflate the Purchasing Value of Rewards
Shoppers are already looking toward reward programs as cash-saving options. More consumers seek cash-back reward programs during times of high inflation expressly to have more spending money, American Banker reports. Reward program operators that are not already buying into the rewards-as-economic-relief opportunity need to hustle. Once members recognize the best value-proposition programs, they will be hard to distract. Here are six ideas.
- “Here ya go” member shipping. Now that free shipping is widely demanded (66% of consumers expect it on all online orders), people are seeking even more for nothing. This is a practical matter, as much as a value-based one. Because shoppers are price-comparing, they are spending more time researching goods and, frequently, making last-minute purchase decisions. Once they make that decision, a faster shipping time can out-value a buck or two on price. Clip and save: In the customer’s mind, longer shopping requires faster shipping. Make faster shipping a membership perk, for higher enrollment and activity.
- I want it now savings. Financial rewards such as gift certificates, coupons and “clock’s ticking” discounts are more likely to be used, and used quickly. If members receive offers to save money on products similar to others they have tried – another brand of organic cereal or a “next season” pair of walking shoes – they could view them as investment opportunities. Clip and save: Time-limited reward gift certificates, too, can justify spending at the moment. But program operators should ensure these certificates are delivered via the channels members prefer – 40% of consumers said they would be more encouraged to complete a purchase if sent a text that included a countdown to when a sale expires.
- Free stuff – and double stuff. A free warranty on walking shoes, a discount toward the restaurant check – these types of benefits usually are more valuable to the recipient than they cost the merchant. And then there are the perks that cost virtually nothing, such as making members the first to know about new products, menu items, special events (as well as event reminders) and sales. Members-only bonus-point days also are an effective way to prompt purchases. Clip and save: Look into category overstocks for ideas on goods that can become freebies. If offering bonus points, make them exclusive – the footwear chain DSW and Nordstrom both allow members to choose double or triple points days a few times a year.
- To be right-sized. To manage spending, more consumers are eyeballing those price-per-ounce details and buying economy sizes (where it makes sense). There’s even a free online cost calculator to break down the price of anything from rice to hard drive terabytes. But “bulking up” isn’t always convenient, particularly for those with limited storage space. It also could result in the merchant having an overstock of mid-sized products. Clip and save: Companies can send targeted offers for discounts on specific-sized goods that are building up in inventory, say 32-ounce bottles of dishwasher liquid. The promotion should specify the lower price per ounce with the discount, in comparison to economy size.
- Miles, and miles, and miles. Nearly 30% of frequent flyer members plan to use credit card points or miles to book their next trip, according to study by Citi and The Harris Poll. This likelihood is not just due to rising prices but also to the desire to get outta town after the pandemic. Airlines have been on top of this, offering low-mile reward trips to get all of those pandemic-era points off their balance sheets. Clip and save: Hotels, rental car companies and even destination stores can borrow from the airline industry’s playbook and offer their own limited-time, low-point offers. Hotels can send members low-redemption rooms on especially slow dates and rental car companies can suggest members use their points at partner fuel stations, to reduce pump pain.
- “I wish to be entertained” extras. Despite their desire to travel, a significant percentage of consumers are being forced to trade down on their recreation – 40% said they would cancel a vacation, and 52% would dine out less, if higher prices persist. The restaurant industry is poised to step in, especially as more quick-serve and fast-casual chains introduce, reboot or expand their reward programs. Clip and save: Low-cost memberships that provide access to inexpensive but much-enjoyed bites will go far. The fast-casual chain On the Border offers subscriptions to the “Queso Club,” which promises 365 days of free queso to members who sign up in store, redeem a free dessert and pay a $1 membership fee on top of the purchase of a bowl of queso.
Reward Programs Have the Power to Pump Confidence
Companies won’t be able to prevent their customers from scratching every discretionary and even non-discretionary purchase off their lists. But companies do have the resources to help their customers feel less stressed about the purchases they do make.
Rewards programs are supposed to represent loyalty, remember, and this is the time to prove you have it – if you want to retain it for the good times.
Jenn McMillen, nationally renowned as the architect of GameStop’s PowerUp Rewards, is Founder and Chief Accelerant of Incendio, a firm that builds and fixes marketing, consumer engagement, loyalty and CRM programs. Incendio provides a nimble, flexible and technology-agnostic approach without the big-agency cost structure and is a trusted partner of some of the biggest brands in the U.S. Jenn is also a frequent contributor to TheCustomer.
Photo by Amy Shamblen on Unsplash