Editorial Team
2 min read
Inflation may be slowing down at last, but its after-effects may be with us for a long time to come. The shock of prices rising at such an alarming rate scared consumers. For nearly 30 years, the US enjoyed an unprecedented period of stable prices, with inflation rarely rising above 3%.
In 2021, the assumption of stable prices was shattered as inflation surged to 7%. Moreover, official statistics and public perception are always out of sync. People don’t take that much notice of official figures and are more aware that gasoline has doubled in price and that their monthly paycheck may not be enough to cover expenditure.
The result is that consumers throttle spending on everything from coffee to the weekly carwash. Taken together, this means that lower disposable income, along with the fear and insecurity caused by rising prices, can last a lot longer than inflation itself.
Small businesses are hardest hit because people cut back on the little pleasures of life. So, they eat out or go to the movies less, they cut back on coffee or go longer without a haircut. For business owners on tight margins, the effects can be damaging. To survive and thrive in this hostile environment means working to your strengths, and that means getting more out of your existing customers with a well-run loyalty program.
Reward your loyal customers
One key to surviving an economic downturn is to reward your loyal customers and to reduce spending on trying to acquire new ones. It can cost five to seven times more to acquire a new customer than it does to reward a loyal one, and new customers won through costly discounting can be fickle. If they bought into your freebie, they will likely move on to the next discount offer from a rival once they’ve consumed yours. Instead, reward your best customers for their loyalty to you.
Help your customers reach rewards faster
Your customers are paying more, but getting more points. This means they reach their reward target faster. Loyalty programs work by incentivizing customers to spend more the closer they get to their reward target. So, the faster they get there, the more they will spend with you!
Know your 80/20 rule
About 80% of your revenue will typically come from 20% of your top customers. Identifying and rewarding these customers is a key to business success. Loyalzoo’s Handsfree Marketing engine identifies your VIPs for you and can inject an automatic discount into their order every time they visit.
Nothing beats a loyalty program to help you weather the hard times and position you well for better times to come!
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