Loyalty programs take brands ahead irrespective of market scenarios


Loyalty programs take brands ahead irrespective of market scenarios
Loyalty programs take brands ahead irrespective of market scenarios
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Generally, customer behavior drives market trends, but during an economic depression, the customer keeps a check on their spending. Nevertheless, customers stop spending; they just become choosy. Customers choose the brands they love, follow or feel connected to. In such times, loyalty programs are a win-win strategy for customers and brands. Nearly 73% of US customers believe loyalty programs are part of their plan during tough times. 

The past economic fluctuations have actionable insights into what helped brands offset the impact of the market. For example, more than 62% of businesses agree that loyalty programs helped them engage customers during the pandemic. 

Let’s find out what enabled brands to continue growing despite economic depressions. 

  • The great depression of 1929

During the great depression, which erupted due to the stock market crash, a famous loyalty program called “Box Tops” was introduced by Betty Crocker. Redeemable box tops were put on every package, and once customers collected a certain number of box tops, they could use the same for discounts on the next purchase. The success of this program led to many brands starting their loyalty program.

  • The recession of the 1980s

Before the internet revolution, American Airlines started the loyalty program during the worst economic downturn of the 1980s. Customers could join the loyalty program only when they shared their names and other details. Today, its’ simplified AAdvantage loyalty program gives members many ways to earn statuses, such as by flying, using an AAdvantage credit card, or spending on everyday activities with an AAdvantage partner.

  • The economic crisis of 2007-09
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The economic depression of 2007 was sudden and quick. To achieve stability and sustainability at the same time, Starbucks started its loyalty program in April 2008. The change in leadership extended this loyalty program to gather customer feedback making users a central part of their strategy. Starbucks has 27.4 million loyalty program members growing consistently, contributing to more than 50% of its in-store revenue. 

  • The COVID pandemic

The most unexpected and globally spread economic misery came during the 2020 pandemic. Still, Panera Bread’s loyalty program “MyPanera” got around 600,000 new members with its subscription-based model. The loyalty program was started in 2020 and continues to be the most successful strategy for Panera Bread. 

Customer behavior during economic challenges is different from normal times. Brands need to be empathetic to understand and act in challenging situations. Not knowing your customers is the most significant setback for any brand. For example, a loyalty program member may redeem points for hoverboards in normal times while opting for household items in tough times. Understanding customers’ needs and behavior makes the brand capable of delivering expected experiences.

In Starbuck’s loyalty program, customers need to order through the mobile app to earn loyalty points. These moves helped the coffee giant use deep data analytics and enable marketers to delight customers. Also, in 2022, brands like Kroger & Shell partnered to ease the strain on customers’ pockets. 

The reason behind the popularity of loyalty programs among marketers is they help brands save money. The cost of acquisition is 5 times higher than retaining a customer. At the same time, an increase of 5% in loyal customers can boost revenue by 25%. These stats lure marketers into spending budgets on retention & delighting loyal customers. 

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However, the changes in customer behavior in the past couple of years are unprecedented. The pace of digitization has outplayed marketers. Customers are using omnichannel mediums, expecting real-time rewards redemption, ignoring generic communication & exploring new technology. Without any surprise, 80% of customers prefer to buy with brands delivering personalized experiences. To ace the present & future, marketers need to upgrade their loyalty program to match customer expectations. Below are tactics marketers use with loyalty programs to combat economic slumps. 

  1. Helping customers with rewards that lighten their budget

Chipotle focus on helping customers with freebies like burritos & guacamole. Customers try every way which helps them save, and this tactic generates essential appeal to purchase again. Also, Mcdonald’s, Papa John’s & Starbucks mention the rewards customers can get while joining the program. This clarity instills confidence in customer’s minds and encourages them to stay active in the loyalty program. 75% of loyalty program members are ready to switch brands when offered better rewards. 

  1. Emotional connection ignites long-lasting loyalty.

Empathy has a profound impact on customer relationships. Customers might forget points in their wallets but not the brand that helped them with rewards essential for their daily lifestyle. Accor, a European hospitality brand, extended the expiry date of loyalty points for its members. Also, members can use loyalty points in restaurants of Accor Hotels even without staying overnight. 

  1. Personalization is the core of a solid customer relationship.

Tough times push brands to focus only on the most crucial part – their customers. With millions of emails trashed due to generic messaging, customers now expect personalization everywhere. From rewards, emails, and shopping journeys to recommendations, customers want brands to know their behavior and build unique experiences. Nearly 72% of customers purchased more than expected when they received personalized product recommendations. 

  1. Partner up with brands to encourage engagement
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When utilized accurately, loyalty programs are saviors from market fluctuations. Alliance with a brand for rewards can help brands engage more customers and attract new audience segments without additional investment. Target and Ulta prove this is true through their lucrative, points-earning partnership. Members can merge their Target & Ultamate rewards accounts to unlock more significant rewards. Earning points also gets easier for members. Shopping at Target’s store rewards them access to Ulta’s program. 

Loyalty programs bring steady & established growth. Every economic crisis has given way to an iconic & ever-lasting loyalty program proving their importance. Also, every such loyalty program was future-ready. For example, American Airlines started collecting user data before the internet & Starbucks was the first brand to launch a mobile-based loyalty program.

Today, marketers have resources never accessible before. Especially knowledge about customer behavior is priceless. All they need is a holistic approach while building the loyalty program. Brands must bring a data-driven approach, robust technology platform & strategic consultation together to achieve success irrespective of the market scenario. 


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