8 ways to retain customers during an economic downturn

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Recessions usually mean lower consumer spending. And by many accounts, we are heading into a recession this year. So companies need to start preparing.

The first reaction of many companies is to cut costs. While that makes sense in many cases, it can backfire if you invest in areas that are critical to your bottom line. One area worth investing more in during an economic downturn is customer loyalty.

As we all know, retaining customers costs much less than acquiring customers. When it comes to cost savings, you can only save so much. But there is no limit to how much you can earn. So if past recessions are any indication, the smartest strategy is to focus on your most loyal customers and super serve them with personalized offers, experiences, and rewards.

Done right, existing loyal customers will deliver the consistent sales needed to weather the storm. The question is not so much whether you should have a loyalty program, but rather how best to implement it. Here are a few tips:

Related: Steal These 4 Proven Customer Retention Strategies

1. Be rewarding

Brands that reward loyal customers are the ones customers return to first. It’s the brand they will refer friends and family to. So focus your efforts on the experience of rewarding, listening and acknowledging every action your customers take. Create an emotional bond that transcends price before price becomes the deciding factor.

2. Be flexible

Give customers the choice of how to redeem loyalty rewards. Let them decide whether to convert rewards into cash, account credits or redeem them at the point of purchase. If you have multiple brands under your umbrella, let customers transfer rewards between them as they wish. And don’t forget to check in and ask for feedback along the way – and look for trends in your database – and then respond. Ultimately, it’s about rewarding customers first and making sure they feel heard.

3. Be inventive

Don’t let convention hold you back. Discover new ways to reward and incentivize customers and build loyalty. Perhaps focus on product returns and offer customers an incentive to exchange items rather than requesting a refund. Or focus on the problem of cart abandonment by providing incentives to return to sales. Find the frictions in the customer experience and develop loyalty systems in response. It’s not just about points of purchase.

4. Be unique

Try to personalize customer loyalty program benefits based on their history with your products and their answers to the questions you asked them. Remember that loyalty programs shouldn’t just focus on money exchanges. It can include gamification for referrals, ratings, sweepstakes and more. Using these tactics to make loyalty programs more individually relevant not only makes each customer feel seen and valued, but increases the effectiveness of the loyalty campaign.

Related: 5 types of customer loyalty programs that pay off

5. Be coordinated

Loyalty programs, like any marketing program, should not exist in a vacuum. Sales and marketing must work together to be aligned in assessing the markets, industries and opportunities with the highest success rate. Discipline, speed and experience are the keywords to agree together on the ideal customer experience and increase opportunities.

6. Be responsive

If you are going to ask a customer for information, respond immediately. Don’t just keep it in a database for some unknown future use. Give a discount or a product recommendation. Show that you’re not just building a profile of data on them, but that you’re really listening and actively looking for ways to provide value.

7. Be strategic

It’s not enough to just put more money into a loyalty program. Knowing where to aim is important, and that means constantly monitoring the effectiveness of your efforts and making adjustments as needed. Not all customers are the same. While some may respond well to receiving more emails, others may be put off. Decide which is which and make sure you use a system that can accommodate both at scale.

Related: 3 secret reasons why your brand needs a rewards program

8. Be self-aware

The worst mistake you can make is not delivering the goods as soon as customers visit your site. So make sure your house is in order before inviting people in. Eliminate any bottlenecks in your website to ensure that every customer who visits has their needs met. Make sure your recommendation engine can recognize past visitors so you don’t offer them products they’ve already purchased. For those who are not ready to buy, offer wishlists that you can offer promotions on in the future. Getting people in is just the first step.

What do these tips have in common? They all focus on customer needs and their unique interactions with your business. After all, loyalty works both ways. The best loyalty programs don’t just give customers a way to stay loyal to your brand. It gives you a way to show your loyalty to your customers.

Remember that the goal of a loyalty program is not to generate more sales. It’s about building trust. It shows your most valuable customers that you value them in return. When you do this, you create an emotional connection with your customers that will last much longer than any period of economic turmoil or uncertainty. It will last a lifetime.

Shreya has been with australiabusinessblog.com for 3 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider australiabusinessblog.com, Shreya seeks to understand an audience before creating memorable, persuasive copy.