Australians might be bracing for a leaner Christmas this year, especially as the cost of living continues to increase and the latest data from the Australian Bureau of Statistics (ABS) shows the consumer price index (CPI) rose another 1.2 per cent in the last quarter [1].
With the anticipation of a conservative spending approach from shoppers this holiday season, businesses are faced with the dual challenge of maintaining customer engagement and safeguarding profitability. However, savvy business leaders can use digital loyalty and rewards programs to their advantage to secure Christmas success.
The power of personalisation sits at the heart of a successful digital loyalty strategy. Personalised loyalty rewards do more than just acknowledge a customer’s purchase; they convey a sense of understanding and appreciation for the customer’s unique preferences. This approach can convert one-time purchasers into loyal patrons who feel a sense of belonging to a brand.
Digital platforms let businesses learn from customer interactions across multiple touchpoints, creating a comprehensive view of their journey. With these insights, businesses can deliver customised communications and offers that are relevant to the individual, delivering a level of personalisation that bolsters the customer experience and elevates the brand’s position in a competitive market.
Consumer loyalty is both fickle and coveted. However, digital loyalty programs give businesses access to a platform that delivers tailored value, including rewards and recognitions, tapping into a fundamental consumer desire for value-added experiences. This empowers businesses to lean on customer spending behaviours and leverage those insights to craft personalised offers that resonate with their recipients.
This means that, leading up to and throughout the holiday season, businesses can use changing spending behaviours to create targeted promotions that align with emerging purchasing patterns, thereby enhancing the perceived value of every transaction. And, the immediacy of digital rewards for consumers can stimulate a positive feedback loop, encouraging repeat patronage through instant gratifications and incentives.
While customer acquisition is an ongoing challenge, the retention of existing customers through digital loyalty programs can be a more cost-effective strategy. Reward programs can not only be designed to drive new customer acquisition at a lower customer acquisition cost, but also to incentivise repeat patronage by leveraging gross margins or moving excess stock, without resorting to blanket discounting, which can erode profit margins.
Such programs also present opportunities to forge partnerships, where complementary businesses can offer joint rewards, sharing the cost and increasing the perceived value for the customer. By doing so, companies share the burden of discounting while expanding their reach to the partner’s customer base, promoting broader market penetration.
However, that’s not where the benefits end. Digital loyalty programs also afford efficiencies that extend beyond customer interaction. They permeate operational facets, reducing overheads through automation and data analytics. This lets businesses adapt their loyalty offerings in real-time, based on current market trends and inventory levels, optimising the supply chain and inventory management.
Digital rewards programs also require less physical infrastructure than traditional loyalty schemes, resulting in lower resource expenditure. This creates savings that can be strategically reinvested into other areas of the business or used to enrich the rewards program further, creating a cycle of continuous improvement and value creation.
Using digital loyalty and rewards programs leading up to and during the silly season isn’t just a defensive tactic. In fact, it’s a proactive strategy for retaining customers and optimising margins. By leveraging consumer spending insights with the precision that the right payment-linked digital loyalty platforms afford, along with providing ultimate PCI DSS Level 1 certified security posture for peace of mind, businesses can transform the looming challenge of a potential dip in festive spending into an opportunity to strengthen customer relationships and optimise revenue streams.
Embracing a digital loyalty and rewards program as a strategic asset can bolster a business’s resilience against changing economic tides, particularly leading up to and during the festive season.
By prioritising personalisation and operational efficiency, companies can deliver meaningful experiences that resonate with customers while simultaneously shoring up their profit margins. Proactive, digitally-empowered engagement strategies will likely flourish in the face of spending conservatism, fostering a loyal customer base ready to support the business through the Christmas period and beyond.
Anurag Vasisth is co-chair and group CEO of Loyalty Now.