When facing a recession, brands often hesitate to focus on developing brand loyalty, assuming that consumers will be primarily driven by lower prices.
The Power of Loyalty Programs During Economic Downturn
However, history has shown that loyalty programs can be particularly successful during economic downturns, as they offer customers both value and connection while enabling brands to gather data to better target them.
Photo: Stiddle
Recent research from Havas found that although 59% of people are cutting back on spending, 63% say their expectations of brands have increased when it comes to the value and meaning they bring to their lives. As such, brands need to think more creatively and forge more strategic partnerships to reach customers in times of need and communicate with them on a more personalized level.
Boots Advantage card
Boots, the British retailer owned by Walgreens, has been particularly successful in this regard, having launched the Boots Advantage card in 1997. The loyalty program offers shoppers points in return for money spent in-store and has amassed over 15 million users over its 25-year lifespan.
Boots recently revamped the program, offering fewer points per pound but giving discounts on more items and 10% off Boots’ private label products. The “Price Advantage” campaign launched last year, which offers exclusive pricing and personalized discounts to shoppers based on their purchasing habits, has been performing very well, according to Pete Markey, chief marketing officer at Boots.
Photo: AdAge
Similarly, other retailers such as Tesco and Asda in the U.K. and Walmart+ in the U.S. have overhauled their loyalty programs, offering immediate discounts to subscribers, while Lidl has reimagined its “Lidl Plus” mobile app with scratch card prizes and other features.
By listening to their customers and recognizing and rewarding their loyalty with action, brands can adapt their reward schemes to meet changing consumer demands and keep up with the ever-increasing cost of living.
Brand loyalty and financial pressure
As consumers continue to feel financial pressure in 2023, retailers will need to work harder to keep their business. Reward cards are a vital tool for attracting and retaining shoppers, with nine out of 10 people already owning at least one loyalty card.
Photo: Creatopy
With household budgets squeezed by higher interest rates and record grocery inflation, retailers need to ensure their reward schemes sit at the heart of their marketing campaigns. By doing so, they can continue to build brand loyalty, drive sales, and gather important data to target their customers with more relevant offers.
