Loyalty As A Consumer Hedge Against Inflation

By: Ray Chelstowski / Hilton Barbour

If you really want to get into an animated conversation with your spouse or your best friend, ask them about the price of gas right now. Or if you’re feeling particularly rambunctious, ask them about the cost of a loaf of bread, a carton of milk or a case of beer. 

In just a week gas increased by almost 8% here in Canada. In parts of the US that rise was 1.2% from last week…but 40% from this time last year.*

With a conflict raging in Eastern Europe, Covid still running its course in several countries and a global supply-chain that’s as fragile as a pile of Jenga, no-one is surprised that the ugly specter of inflation has risen its head once more.  

According to the Ziff Media Group Q1 2022 Trends Survey (performed Jan. 20-21, 2022; N = 1,036), 72% of American consumers say they are more concerned than usual about inflation. The survey also found that:

-        54% of consumers believe it is harder to sustain their household today compared to a year ago.

-        Inflation is more prominent in essential goods and services. Higher-than-expected inflation prices are primarily seen within grocery stores (82%), gas stations (70%), restaurants (51%) and with clothing purchases (36%).

It is at times like these that a well-run loyalty program can provide significant relief to your consumers – and significant goodwill to your brand and business.

At a time when some retailers and QSR’s are responding to inflation by raising their prices to help absorb their own increased operating costs, others have shifted to easy-to-use loyalty programs that are helping consumer battel inflation head on day after day.

For example, Target offers 1% back on practically everything via its Circle rewards program. All you have to do is scan the app at checkout (or use your phone number) to earn points on your purchase. Then, on your next purchase, you can use those rewards in any increment to take that price tag down a notch. Or you can join the Kohl’s rewards program and earn 5% back, which gets converted to Kohl’s Cash (which can be redeemed against a future purchase).

For decades consumers have complained about the arduous lengths – and amount of time – required to build up a meaningful point balance on many loyalty programs. The Target and Kohl’s examples win because of their sheer simplicity and the instantaneous rewards they give back.

Loyalty programs come in a variety of shapes and sizes. However, the best one’s are nimble and respond to market shifts quickly. At a time when most media outlets are recommending that families cut household spending, the most innovative marketers are instead demonstrating how they repay their consumer’s loyalty at checkout, daily.

Those loyalty-focused marketers are the ones who will not only hold on to consumers through this inflationary period. They’ll build increased brand affinity and likely even stronger consumer loyalty too.   

Loyalty programs have long been a place for consumers to turn to during tough economic times. Since the turn of the century period of “hard time tokens” to the inflationary days of the early 1980’s that transformed loyalty and helped set its course for the modern era, rewards programs have not only helped consumers stretch every dollar, they also have helped give them hope.

Marketers like Target and Kohl’s are doing both and setting an example of how far reaching a loyalty programs impact can truly be. They are also securing loyalty for life.

ray.chelstowski@kognitiv.com

hilton.barbour@kognitiv.com 

*source - https://ycharts.com/indicators/us_gas_price