Adapting Loyalty to Meet Revenue and Customer Needs

There are a lot of options vying for a customer's attention. Large and small retailers, restaurants, convenience stores, and more are re-evaluating their approach to customer loyalty programs. While these programs have long been a cornerstone of customer retention strategies, there is a noticeable shift toward broader marketing tactics that encompass all customers, not just loyalty members.

Removing discounts—which were once a staple in attracting new customers—can lead to higher profit margins. Discounts, while beneficial in boosting initial sales, often cut into profit margins, necessitating increased sales volume in the long term to recover the loss. For companies facing financial pressures, eliminating discounts can stabilize finances, offering a path to healthier profit margins over time. 

However, discounts can be beneficial, as they can:

• Increase sales volume
• Improve cash flow
• Attract new customers and retain existing customers  
• Clear excess inventory of a specific product
• Help launch new products
• Achieve time-bound sales targets

There are concerns about how this shift might affect customer loyalty and new customer acquisition. Without the lure of exclusive discounts, companies must shift focus to enhancing the overall customer experience and building brand value through other means.

At the end of the day, loyalty is about maximizing customer lifetime value and building meaningful relationships with customers. Discounts are one tool, but retailers and brands are finding that they’re no longer the tool for building and cultivating loyalty.

How to Increase Loyalty Without Discounts

The way consumers engage with brands has evolved—offering discounts to get customers in the door doesn’t really create long-lasting customer loyalty. According to research by MINTEL, 87.5% of loyalty program owners plan to engage their customers in non-transactional ways in the next three years. This will look different from retailer to retailer, and could focus on gamification, exclusivity, access, and better or more seamless experiences.

Consumers want a deeper, more meaningful relationship with their favorite retailers and brands. They want an emotional connection, which causes them to value an association with a retailer or brand and how it makes them feel.

Evolve Your Loyalty Program with Non-Discount Rewards

Our approach to loyalty? An innovative and timely loyalty program that doesn’t revolve around discounts, enabling our clients to continue to build revenue and a lasting customer base.

• We encourage our clients to think outside of the box in six meaningful ways to create a one-of-a-kind loyalty experience:  
• Create urgency and exclusivity by offering rewards in limited quantities to encourage quick engagement from customers.  
• Enhance customer loyalty by recognizing and celebrating key moments, such as birthdays or anniversaries, with special rewards.
• Increase satisfaction by allowing customers to choose their rewards, ensuring they receive something they truly value.  
• Offer free samples of new or popular menu items to entice customer interest and encourage repeat visits.
• Foster goodwill by enabling customers to gift rewards to friends or family, broadening your engagement base.
• Collaborate with complementary brands to offer unique rewards, enhancing the value and appeal of your loyalty program.

Download our latest industry report, “Gaining Loyalty without Discounting,” to see how we’ve helped some of our key clients build engaging customer loyalty programs.