Rewards programs shore up customer loyalty in tough times

With inflation soaring, half of Americans think customer loyalty programs are more important than ever, according to a LendingTree survey.

With rising prices, loyalty programs can be that added incentive consumers need to keep buying from a brand if they feel like the perks, benefits and other discounts are worth it, experts say.

“With the cost of everything seemingly rising by the day, people are looking more and more for every little discount they can get,” says Matt Schulz, an Austin, Texas-based chief credit analyst at LendingTree, an online lending marketplace. “It’s all about getting extra value for what you’re buying and where you’re shopping.”

Perks for loyalty programs can range from cheaper prices and discounts to early access to special sales, he says.

But it has to make sense for your customer base, Schulz says.

“The businesses that have the most successful loyalty programs are the ones that tie the loyalty program rewards to the specific needs of their customers,” Schulz says.

Programs also have to make financial sense for the business, says Suzy Davidkhanian, a Manhattan-based analyst at market research firm Insider Intelligence, who leads their retail and e-commerce group.

Finding a balance

“You have to find the right balance between delighting your customers so they want to keep coming back and being able to keep your lights on,” she says.

Jodi Schubert, owner of Over The Edge Apparel with locations in Commack and Smithtown, had to put her longtime loyalty program on hold when COVID-19 hit because with the shutdown and people being on lockdown, it was hard enough keeping the doors open. “It was a struggle,” she says. “I’m very fortunate to still be standing.”

But as business normalized, she recently reinstated her loyalty program.

“I brought it back because of the need and wanting to give back” and reward loyal customers, especially given current inflationary times, Schubert says.

The way it works is when a customer spends $100, they get a click on their loyalty card, and after 10 clicks they earn a $50 gift certificate.

“I wanted to recognize my loyal customers,” she said, noting, “the more they shop, the more they get rewarded.”

To be sure, there are different ways to incentivize customers.

Just remember whatever the incentive, it must be convenient, fast and easy, Davidkhanian says, noting for example that a customer getting a birthday present is easy to understand.

Popularity of givebacks

Givebacks are also popular.

For instance, Audrey Neglia, 56, of East Northport, likes that at her hair salon, Deja Vu Hair Salon in East Northport, she earns a free blowout after every four blowouts she purchases.

Because she goes frequently, “I can reach this very easily,” she says.

And she’s going to get her hair colored anyway, so the perk is an extra benefit, Neglia says.

“Any little bit helps nowadays when everyone is trying to get the most for their money,” says Neglia, who also participates in other loyalty programs.

For businesses, in addition to enticing customers to return, loyalty programs can also provide helpful data.

“The more you know, the more you can track about the habits, spending and behavior of folks in the loyalty program,” Schulz says.

Davidkhanian agrees, noting “it’s important to think digitally.”

Bagel Boss, which has 15 locations including 11 on Long Island, recently released an official Bagel Boss app with a loyalty program built in that stores will be rolling out over the next six months.

Before its release, some stores individually offered a loyalty program while others didn’t, which was confusing to customers who shopped at different locations, says CEO Andrew Hazen.

Now there will be a unified loyalty program chain-wide, Hazen says.

When the customer downloads the app, they immediately get awarded 50 points. Then for every $1 they spend they earn a point. When they reach 100 points, they get $10 to redeem in-store, he says.

Aside from encouraging repeat business, it also can help “turn a wrong situation right,” Hazen says.

Recently a customer complained on Facebook about an experience at a store and Bagel Boss immediately reached out and gave them extra loyalty points on their app, which satisfied the customer, Hazen says.

He said the initial rollout’s been good and their new Massapequa location, which opened mid-August, already got over 1,000 downloads.

It’s not a bad time for other businesses to consider a loyalty program.

“Everybody is on a budget and people are making more decisions based on price, and are less brand loyal,” says Davidkhanian. “Businesses need to figure out what kinds of rewards do I need to give my customers to entice them to come back.” Insider Intelligence offers more insight at https://tinyurl.com/3mx3x5cm.

By Jamie Herzlich

jherzlich@aol.com

Herzlich writes the Small Business column in Newsday.