11 July 2023 – As the cost-of-living crisis reduces the budgets of consumers, it can become difficult for small businesses to hold on to their customers. A loyalty programme can help build a loyal customer base.
With inflation remaining stubbornly high and interest rates rising, many consumers see their budgets shrink. More than half are buying less as a result.
This directly impacts many small businesses, who already have to deal with high running costs. Whether to pass on these costs to their customers or not can be a difficult decision to make, as it could drive them away.
A well-thought-out loyalty programme could be the answer, giving small businesses a tool to engage with their customers and keep them loyal to their business during tough economic times.
52% Of Consumers Spend Less Due To High Inflation
Data from a survey conducted by insights and analytics marketing company Deployteq shows that 52% of consumers spend less money due to the cost-of-living crisis.
The survey polled more than 2,000 customers about how high inflation has changed the way they interact with marketing emails. The majority (52%) replied that they made a conscious decision to buy less.
This shouldn’t come as a surprise, given that food prices alone have risen by 16.9% in 2022, according to figures by the Office of National Statistics (ONS). In May 2023, food price inflation stood at 18.4%, a slight fall from the previous month (19.1%).
Not everyone is buying less, however. According to Deployteq’s survey, 28% of respondents said they actively look through their emails to find discounts to reduce the amounts they spend.
20% have unsubscribed from marketing emails to reduce the temptation and spend less. 15% have said that inflation has not affected the way they engage with marketing emails.
14% of survey respondents have said they subscribed to more newsletters to get more discounts on products they want to buy.
This shows that the majority of consumers are trying to reduce the amount of money they are spending. Either by buying less or by getting discounts on the things they want to buy. Younger age groups are more likely to try and get discounts.
A third of Gen Z and millennials search their emails for discounts and promotional codes. Across all age groups, 74% of customers have said that they look for discounts as a loyalty perk.
This is a clear indicator that loyalty programmes which offer discounts will attract most customers.
A Good Loyalty Programme Can Make The Difference
Research by marketing firm Marigold has found that 77% of UK consumers frequently buy from the same company, but don’t see themselves as loyal to that brand. 62% are even prepared to pay more for a product from their favourite brand.
This shows that it pays for small businesses to build up a loyal customer base. And 63% think that a loyalty scheme is important or critically important. More and more people take part in such programmes, with 49% of UK consumers saying they are now more likely to engage with one than last year.
But to benefit from an increase in customers, small businesses need to create a loyalty programme that gives their customers what they want. The vast majority (70%) said they wanted discounts. That’s 11% higher than consumers from the rest of the world.
66% want points or rewards from a loyalty programme. 30% said they were looking for exclusive or early access to products. 24% of UK consumers want personalised, recommended products based on their preferences.
Brands communicating with them on the channels they prefer is important for 19% of UK consumers. 15% want sweepstakes and contests as part of a loyalty scheme.
Only 11% want to feel part of the brand’s community. Brand recognition is only important for 8% of consumers in the UK.
To build a loyalty programme that retains customers, a small business needs to ensure that their scheme is data-led.
Data should be a central driver for brands and marketing teams, catering to customer desires to deliver greater customer experience, especially during a cost of living crisis where customer loyalty programs are vital for businesses.Pauline Buil, Marketing Director for Deployteq
While UK consumers are mostly looking for discounts, 24% have said they want personalised recommendations. Sending out personalised emails can be time-consuming if done manually.
However, this is an area where AI can be incredibly helpful. By using technology to create personalised communications, small businesses can stand out from the rest.
Data-driven insights are crucial to both marketing and retail, helping direct the use of automated technology to create personalised campaigns at a pace that truly engages customers and increases brand loyalty and business growth.Simon Ward, CEO of Inspired Thinking Group
Especially in an economic difficult situation like the UK is at the moment, small businesses should look into creating a good loyalty programme. This will help them to attract and retain customers during the cost-of-living crisis and beyond.