Rewarding through headwinds: grow your customer base during inflation using promotions

How promotions enable brands to grow customer base during inflation


Sep 14, 2022

Reza Javanian

Mohammadreza Javanian

Editorial Content Writer

Time to read icon

6 minutes to read

With inflation rising, and showing no sign of abating in the near future, businesses are looking for ways to set prices high enough to maintain their margins, but low enough to avoid weakening their relationship with customers.

The widening gap between surging prices and dwindling cash in buyers’ pockets can sour customer relationships.

One of the most effective ways to increase prices without losing customers’ trust is the timely use of appropriate promotions. Meaningful incentives are capable of addressing pain points of consumers while preserving margins for the business.

In this blog post, we’ll see how inflation affects consumer behavior and what promotions can be most effective in cushioning the inflationary impact on the relationship between a business and its customer base. 

Inflation and consumer behavior

With inflation running in the U.S. at 8.6%, its fastest pace in 40 years and hitting a record high of 8.9% in the eurozone, people have already started to change their shopping habits.

According to CNN, more than 8 in 10 American consumers are planning to rethink or even reduce their product spending in the next three to six months. 

Recent figures released by Statista further illustrate the change in consumer behavior. According to these reports:

  • The leading obstacle affecting shoppers in Germany has been the rising prices for everyday grocery products.

  • Nearly four in ten consumers in the United States were planning cuts to domestic travel due to inflation. 37% of surveyed Australians stated the same.

  • 96% of American consumers have noticed that prices for goods and/or services have gone up in 2022. Inflated prices had been observed most when buying gasoline and when shopping for groceries.

All reports and surveys clearly indicate that inflation has nudged consumers toward changing their shopping behavior. 

Promotions to the rescue

During inflationary periods, brands have two major concerns:

  • Maintaining profitability in the wake of increasing operational costs

  • Letting consumers know they care about their well-being

Promotional features are able to address both concerns because they help businesses better serve consumers, while maintaining margins. 

Loyalty programs

From the revival of cross-vendor loyalty cards in Canada to the unprecedented surge in supermarket loyalty schemes in Spain, consumers are already increasingly relying on loyalty programs and other promotional features to fight rising costs.

When customers see a brand cares about them in difficult times, they will definitely turn into brand loyalists once things get back to normal. 

This is an opportunity for brands to foster customer loyalty through meaningful rewards such as inclusive discounts and rewards that address top concerns of their customers.

Loyalty schemes can be ideal mechanisms for showing how rapidly a company is capable of reacting to what is happening out there.

There are very interesting real-life examples of adjusting a loyalty program to an outside factor that is constantly fluctuating. Here’s a list of loyalty campaigns inspired by contextual developments:

  • Walmart has launched a loyalty program for Walmart+ members in the form of gasoline discounts. The giant retailer has announced Walmart+ members will receive an immediate discount of up to 10 cents on every gallon of fuel they purchase at participating stations. It is an effective promotional strategy to engage with customers even when they’re not directly buying from your brands. Walmart is running the campaign in Exxon and Mobil, Walmart and Murphy and Sam’s Club gas stations.

  • The convenient store owner, GPM Investments, is also offering their customers gasoline promotions. The Richmond-based company’s loyalty program members can receive exclusive limited-time offers to save money at the pump. The “100 Days of Summer” kicked off on May 18. It is debuting GPM’s "Buy More, Stack More, Save More" perk, which allows loyalty members to save on fuel by "stacking" savings of up to $1 off their next fuel purchase, for up to 20 gallons of fuel.

  • In Malaysia, Lotus's Stores has realized consumers’ concern with rising prices, offering 60% to 90% discounts on branded goods to loyal customers. On top of that, the retail giant is offering consumers pre-Covid prices for 500 types of products across all its 64 stores.

Product bundling

Product bundling is offering several individual goods and services as a combined package. 

One of the major benefits of bundling is creating personalized customer experiences because it allows customers to select products from base bundles based on their needs and preferences. This can be used as a cross-sell or up-sell opportunity while also giving the customer the feeling that they are getting a good deal. 

Product bundling is a good way to move inventory or increase cashflow in the short term — both key considerations in tough trading environments.

With solutions such as Talon.One bundling feature you can move from generic to personalized bundles, providing bundling options that are completely unique to a single user by including a user ID as a condition in your Rules.

This feature is especially useful for brands in sectors like skincare, since they are selling a ritual more than an individual product. By expanding the offering, with targeted and impactful cross-selling, they can help move more inventory while simultaneously building customer loyalty. 

Buy more save more

A clever way to get around wallet anxiety is to try a ‘buy more save more’ campaign. Here you can give your customers the freedom to create their own bundles and receive higher discounts the more they buy. 

American clothing store chain Eddie Bauer used Talon.One to run a ‘buy more save more’ campaign. The campaign was a hit with customers and led to positive results. 

Angela Gow, Director of Digital Merchandising and Email at Eddie Bauer, said: “The ‘buy more save more’ campaign, which Talon.One enabled us to run, was a huge success. The offer led to 135% increase in units per order over non-‘buy more and save more’ orders and 772 basis points surge in margin for ‘buy more and save more’ orders vs. standard orders.”

Eddie Bauer's buy more save more campaign

Final takeaways: Understanding your customers is key

In general, there’s three ways in which customers can respond to higher prices:

  • Substituting discount products for premium — for example, buying own brand cereal instead of Kellogg's. 

  • Reduced consumption — eating half a bowl instead of a full bowl each morning.

  • Changing consumption patterns — buying porridge instead.

Understanding your customers better will help you predict what kind of promotions they will respond to best. Don’t rely on your assumptions and previous customer analysis data because during turbulent times for the global economy, your customers’ motivations might have changed. If your customer mix contains a large number of people who are highly brand- or category-flexible, there might be a huge level of variance.

  • Discard existing customer segmentation assumptions and segment by product usage, behavior and price sensitivity.

  • Talk to consumers directly to understand their pain points, their changing attitudes and behavior in response to price inflation.

  • Quantify these shifts and develop product and pricing strategies that balance the need to maintain both profitability and market share.

  • Lag behind competitors on price increases. This can have the same effect as offering a discount.

To learn more about how to benefit from promotions to mitigate the negative effects of supply chain chaos, inflation and other adverse contextual factors on your relationship with customers, read our white paper, “Loyalty & Promotions in Supply Chain Crunch Era.”

Monthly Newsletter

Every month, I share an insights newsletter with thousands of marketers.

bullet point check

Promotion tips

bullet point check

Industry insights

bullet point check

Case Studies

Newsletter author

David Hartery

Content Lead at Talon.One

Talon.One Logo
The World's Most Powerful Promotion Engine

Wiener Strasse 10
10999 Berlin


41 Church Street
B3 2RT Birmingham
United Kingdom


One Boston Place, Suite 2600
02108 Boston, MA
United States


1 Scotts Road, #21-10 Shaw Centre
228208 Singapore

Capterra LogoG2 LogoMach Alliance Logo
© 2022 Talon.One GmbH. All rights reserved