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Helping Customers Hedge against Inflation Using Loyalty Technology in the Retail Sector

  • Posted on June 17, 2023 by Robert
  • Reading time about 6 minutes
loyalty technology in retail

Technological advances have transformed the way businesses work and the retail sector is no exception. Even after the pandemic has ended, retail business owners are continuing to navigate across the unprecedented territory. We are witnessing the first longest inflation period in more than 40 years, with the U.S. consumer price index rate deteriorating above 7% for the last 12 months.

Though increasing prices have given shoppers a pause, they also have created an opportunity. This means retailers must harness the technology of existing loyalty programs to engage with customers in the right way as pricing pressures continue to rise. Before you search for a reliable Retail Loyalty Program Provider, let’s check out how loyalty technology in retail sector can be used and help customers hedge against inflation.

How to use Technology in Driving Value through Loyalty Programs?

Making use of the right loyalty programs enables customers to enjoy the flexibility and different payment options that can help offset price increases. On the other hand, retailers can boost conversion rates and strengthen long-term support from customers. The usage of technology in loyalty programs helps retail businesses to win customers’ hearts with lesser effort. Similarly, AI-Powered Retail Loyalty Programs are gaining huge popularity among retail businesses with several benefits like personalized experiences, lower costs, and more.

As we are aware of the advantages offered by investing in a loyalty program, here are some of the ways that show how technology can help to drive value during times of inflation.

Better Alternative Payment Method

Customers always look for a way to save a little more when they make a purchase and using points in place of cash or credit cards to make a direct purchase or to save a portion of a purchase is the best benefit a loyalty program can offer. When customers hesitate to make full payment through the traditional method, points offer an alternative to incentivize the close of a sale.

One of the big brands that use points and witnesses great engagement with the value offered with points is Walmart which gives customers an option to use points during purchase and even use points to redeem discounts at checkout through their dedicated Walmart Rewards program.

All you need is the connection of loyalty programs with simple APIs to help customers view their offerings and use points as full or in part during checkout. As product price continues to rise, points allow customers to enjoy flexibility by giving options to access points and use them as a reliable form of currency just like real cash.

Offer Price Stability during Inflation

Research says that two-thirds of consumers are deliberately cutting back on their usual spending to offset higher prices of products. Most customers are enrolled in loyalty programs to take advantage of loyalty points during inflation which helps them realize price stability, as paying with points can alleviate price increases during an exchange of goods or services.

Another study from Dig Insights witnessed that more than 60% of consumers are using points to cope with rising costs. This means retailers can also grab the benefits as an increase in customer redemption rate can lower the retailer’s exposure to inflationary pressures and help them maintain the value of points. However, using the right technology that can connect the loyalty program to the POS experience is essential to grab this benefit where the brand can encourage customers to redeem points at checkout.

Help to Boost Brand Trust

Inflation is giving a hard time to customers and research by the American Psychological Association shows that most of the adults ranked inflation as a top reason for stress. However, brands can now take advantage of loyalty technology in retail sector to support customers through difficult times.

We know that consumers are struggling with the rising costs and how this will impact their quality of life, but using the right data can help. Retailer business owners can make use of loyalty program data and create a better shopping experience that meets specific customer needs. Additionally, this loyalty data can help to highlight shopping trends and give opportunities for brands to curate a personalized experience for customers.

Increase Engagement

As prices continue to increase, there is a high chance for customers to reduce their costs by shopping at lesser stores. This is where retailers with good loyalty programs can take advantage to witness better growth. Making use of robust loyalty technology in retail sector can help brands facilitate communication with customers either through SMS or email.

Brands can collect and analyze customer data to successfully engage with customers as per their shopping preferences, habits, etc. driving them to the store. Brands can use this feature to achieve benefits such as increased engagement, more conversion opportunities, and higher purchasing volume, leading to a positive impact on revenue.

Lower Aspirational Purchases

When it comes to the inflation period, customers tend to become more strategic with their points. This means they have more tendencies to spend points on small indulgences rather than saving up for aspirational items. More than 50% of customers rely on loyalty programs to offset inflation as customers are more likely to spend their points quickly rather than accumulating them to splurge on a large purchase.

What does this mean for brands? This means retailers can grab an opportunity to leverage technology and accelerate the earn-redeem cycle. If your customers are incentivized correctly to redeem points with the help of custom-made offerings, promotions, etc., and facilitated by pay-with-points options, brands can manage and maintain loyalty programs giving them a chance to connect with customers better.

Final Takeaways

After going through the blog, we have witnessed the increasing usage of the latest technologies and tools in loyalty programs to make businesses thrive even in times of inflation. Retailers just need the help of the right technology partner that can make their loyalty program a grand success providing a win-win situation for both the brands and the customers.

Retailers have been using loyalty programs to compete for customers in the competitive market but implementing the right technology in your loyalty program can be quite valuable during times of hardship. If your retail business is planning to draw customers back to your store and increase conversion opportunities, Novus is reliable Enterprise Loyalty Management Software that can help retailers across the globe with different types of loyalty experiences tailored to meet specific customer needs ensuring that customers keep coming back, no matter the financial fundamentals.

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