As inflation soars, consumer habits are changing. Here’s how to adapt

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Today’s uncertain economy, coupled with rising inflation, is driving consumers to look for money-saving tactics, including cash back rewards, discounts and coupons online.

Economic pressures are driving the widespread adoption of shopping rewards programs, which are “crossing the chasm” from coupon clippers and early adopters to mainstream consumers looking to cut costs in any way they can.

In a survey commissioned by Wildfire and conducted by the research firm Big Village, we examined core consumers’ attitudes and expectations toward rewards and other purchase incentives. The results revealed that 90% of respondents are more interested than ever in getting discounts, using coupons and earning cash rewards when shopping online, precisely because of rising prices.

Related: 3 Secret Reasons Your Brand Needs a Rewards Program

Rewards and discounts affect online shopping behavior

Regardless of the economic environment, consumers will continue to buy. But in challenging financial times, they will change their buying habits, for example, buying private label brands instead of more expensive options. Recent reports on these types of behavioral changes include Personetics, which found that nearly 2 in 3 consumers are restricting spending on non-essential items due to higher cost of living, and Gartner, which reveals that nearly 1 in 4 Consumers will spend less on vacations. purchases this year due to higher prices.

In such an environment, rewards and other incentives are a major factor influencing consumers’ online shopping behavior. The availability of rewards and incentives directly and positively affects consumer behavior at the top of the purchase funnel (awareness and consideration) and at the bottom (completing a purchase).

A key finding in the Wildfire survey reveals that rewards affect consumer behavior even before they decide where to shop: 81% say the availability of rewards is a factor in deciding which e-commerce retailer gets their money. business.

In addition to influencing where consumers shop, rewards and incentives further impact the purchase decision, driving higher sales conversion rates. Results show that most respondents are more likely to complete a purchase when they can earn cash back rewards or use a coupon or discount code.

Many consumers look for deals when they shop online, and we expect consumers’ propensity to look for discounts to increase further as the economy tightens. The majority of respondents (61%) say they “always” or “often” look for coupons, discounts, cash back rewards, or other ways to save on purchases.

Based on these findings, the takeaways for any brand selling online are clear:

  • Retailers can win the battle for consumer preference by offering rewards for shopping, whether through native loyalty programs or online cash back rewards programs.
  • Offering coupons through loyalty and rewards programs generates business benefits, including increased sales conversion.
  • Companies that choose not to offer such incentives are at a disadvantage in consumers’ selection of online shopping destinations.

Related: Why Trust and Incentives Help Consumers with Better Brand Choice

Responding to customer preferences for simplicity

In addition, consumers are looking for ease of use and want to access rewards and discounts conveniently within the natural flow of their online shopping behavior, without detours or roadblocks. The majority of consumers surveyed for the Wildfire report prefer rewards to be applied automatically at checkout or activated while shopping without having to look elsewhere. In contrast, fewer consumers want to receive an email with a special offer, and even fewer prefer to search an offer directory.

Consumers have spoken: the simpler and more convenient a rewards program or discount offer, the better. Consumers prefer easy-to-understand, easily accessible rewards like rebates over rewards like points, miles, or future discounts. The survey also revealed that 80% of respondents prefer cash back as a reward over points or credits for future purchases.

Other research confirms the need for simplicity and convenience in rewards programs. In Comarch and Forrester’s 2022 Loyalty Marketing & Rewards Program report, retailers were asked what they consider to be the most critical elements of a loyalty program. The results showed that most are inclined to offer cash rewards.

What is the implication for businesses considering a loyalty program? Online shoppers have become extremely savvy. They are now much more used to seamless digital experiences, so their expectations around earning and redeeming rewards through retail loyalty programs or other shopping rewards programs have changed. Consumers are no longer willing to settle for jumping through hoops, and retailers will see low adoption of their program unless it’s simple and convenient for customers to earn and redeem rewards.

Related: The Marketing Power of Rewards Programs

conclusion

By offering easily accessible shopping incentives like cash back and coupons, businesses that sell online can meet the demands of today’s value-seeking consumers. Through such programs, they are not only able to positively influence consumers’ buying behavior, but also provide much-needed relief for their wallets.

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