With fears of a recession looming, marketers are carefully assessing their spending strategies and looking for ways to trim their budgets.
During economic downturns, you’re absolutely right to worry about decreased sales. That’s why focusing on retaining your existing customers, particularly those who are already engaged, is a good idea.
Harvard Business Review shared an often-cited study that revealed that increasing customer retention rates by 5% increases profits by 25% to 95%. Focusing on retaining customers can help grow your business, even during the hard times and challenges a recession brings.
What’s more, fully engaged customers are more loyal and profitable than average customers, regardless of the current economic outlook, according to research by Gallup.
So while you’ll want to continue offering incentives for engaged customers, you’re also looking for ways to make them more affordable. Below are some suggestions to keep engaging your best customers while spending less.
READ MORE: BHN Rewards’ Pro Tips on Using Customer Incentives
If you haven’t looked at your incentives for engaged customers in a while, now is the time. Switch up your digital rewards so they don’t take as much of your marketing budget.
For example, if you’ve been offering instant rewards, reassign which tasks qualify. Or offer free items instead, like an e-book or other valuable content, for smaller actions taken by your engaged customers.
While you’re evaluating your rewards, consider that even just a $5 incentive can be enough, as long as you choose a reward that makes sense at that value. For example, $5 to use at Pottery Barn or Best Buy probably won’t be very compelling, since that’s not enough to purchase many of those brands’ products. But $5 is enough to buy the fanciest of coffees at Starbucks or several doughnuts at Krispy Kreme.
Instead of rewarding each task individually, establish a points program to help limit your incentives for engaged customers. Points offer your organization a lot of flexibility in terms of how much each action earns, what each point is worth, and how many they have to accumulate before they can redeem a reward.
They’re called your best customers for a reason. Why not use your engaged customer base to help offset costs elsewhere? Start a community where people can access self-service resources for troubleshooting or ask power users for help. You’ll cut down on customer service requests and spend less resourcing that department.
If you’re still shipping out physical incentives for engaged customers, it’s time to stop. Even though you can get inexpensive swag options to reward customers, you won’t save as much as you think, once you consider the mailing costs — especially if you have international recipients.
Beyond the financial considerations, you also have to factor in the time and effort required to pack and ship physical items. Digital delivery is free and instant, plus monetary rewards such as gift cards are far more effective as an incentive.
Finally, losing an average of 15% of your budget to unclaimed rewards can make a big difference. By using a platform that automatically issues 100% refunds on all unclaimed rewards, like BHN Rewards, you can be sure that your money is going toward improving your reward program.
Not sure if you should be rewarding customer loyalty with instant rewards, sweepstakes, or points-to-rewards? Download our Cheat Sheet to help you compare and choose the right structure for your rewards program.
BHN Rewards puts the power of digital rewards to work for marketers, researchers, and HR managers. Don't forget to check out all the great content in our Resources section!
BHN Rewards puts the power of digital rewards to work for marketers, researchers, and HR managers. Don't forget to check out all the great content in our Resources section!
