How to Successfully Reward your Customers During a Financial Crisis
Who would’ve thought that 2 years later, COVID-19 would still be lingering and impacting our lives? Not just our health but also the financial crisis it has contributed to. This, plus underlying economic trends, means that the economy is falling into a recession. Many businesses are activating their survival mode, but what is the best approach to come out even stronger?
One thing is for sure, neglecting existing customers and focusing on gaining new ones is not the answer. Not only does this mean your existing customers start falling off the bandwagon due to the neglect but also means spending more money on marketing and building new relationships – doesn’t make sense, right?
Focusing on customer retention is critical. Not optional. Not something you should consider. It’s an absolute must! It plays an essential role in profitability, growth and brand perception. Don’t believe us? Look at the stats!
- A 5% increase in customer retention can boost profits by 25% to 95%.
- 82% of companies agree that retention is cheaper than acquisition.
- The probability of selling to an existing customer is between 60% and 70%, whereas for a new customer is only between 5% to 20%.
Focusing on customer retention means looking after your existing customers and showing them your appreciation. After all, without them, your business wouldn’t be what it is today. And what better way to show them your love than by rewarding them for their loyalty to you?
But you need to get your strategy right during these tough times…
Why is rewarding your customers during a recession important?
Rewards contribute toward well-being and quality of life.
75% of customers expect brands to make more of a contribution to their well-being and quality of life. So when times get tough, you need to go above and beyond for your customers to support them, and offering rewards is a great way to do this. You’re giving customers the opportunity to own or experience something they might not be able to afford. These rewards will be associated with your brand and how you support them during the economic crisis.
Rewards can encourage the behaviours you want to see.
During a recession, you want your customers to keep coming back for more, rather than exploring other (maybe cheaper!) options. By rewarding them for behaviours you want to see, such as making a purchase or engaging with content, your customers are more likely to return and repeat these behaviours again. After all, 75% of consumers say they favour companies that offer rewards!
Don’t just take our word for it…
Let’s tell you a story based on a real-life event… 2009 – you might remember this thing called the great recession. When this economic decline began, a client of ours, a leading kitchen appliance manufacturer, was looking for a way to support the kitchen designers and appliance dealers who sold their products on their behalf. The easy option for price-sensitive customers would be to discount but our client knew too well the dangers of discounting. It can damage brand value, quality and long-term profitability. Instead, our client decided to partner with us and create a customer loyalty programme that rewarded kitchen designers and appliance dealers with points for sales and engaging with promotions and content. They used the platform to stay in regular communication with their customers and understand how best they could support and provide value to them during the economic crisis. This led to a partnership with our client that still exists today!
What rewards should you offer?
When we’re experiencing financial trouble, we tend to review our outgoings and make cuts on things that aren’t really a necessity. The thing is what we might consider a necessity could be different for you. Sarah, the Mum of 2 young children is likely to consider feeding her children a necessity, whereas Alex, the 20-year-old builder, might consider having his car a necessity.
A study found that the top three things people continue to buy during an economic crisis fall within these categories…
Maslow’s hierarchy of needs states that a person has to fulfil certain needs in order to feel a sense of achievement and each of these three categories fulfils a different need. Food is a basic need to survive whereas automotive and holidays are a luxury and sell-fulfilment needs. This just shows how unique we all are and how we’re driven and motivated differently.
So when it comes to offering rewards to customers, you need to appeal to your entire database... And that is where a points-based reward programme can help. By allocating points to your customers for achieving desired outcomes, you’re giving them the opportunity to choose their own rewards, something that is personal and meaningful to them. Putting the power in your customer’s hands is far more effective than giving out cold cash or choosing a reward for them. Your customers not only have a choice, but they’ll always associate the reward they choose with your brand, which will encourage them to keep coming back for more.
How to get started with offering the right rewards
Partnering with Incentivesmart will give you the platform to recognise and reward your customers with plenty of choices. The reward catalogue is full of hundreds of items including new gadgets, jewellery, bikes, kids’ toys, fitness equipment, books, aftershaves, perfume, as well as some amazing holidays and experiences, just to name a few things! Learn more about our customer loyalty solution.