Rewarding through headwinds: Grow your customer base during inflation with promotions

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, cover:

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:

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

During inflationary periods, brands have two major concerns:

Loyalty and promotional features are able to address both concerns because they help businesses better serve consumers while maintaining margins. There are multiple options you can leverage including:

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. 

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:

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. 

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. 

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. 

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

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, meaning you should: