Business As inflation rises, consumer habits change. Here's how...

As inflation rises, consumer habits change. Here’s how to adapt

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Opinions expressed by ukbusinessupdates.com contributors are their own.

The current uncertain economy, coupled with rising inflation, is driving consumers to seek money-saving tactics, including cash back rewards, discounts and online coupons.

Economic pressures are driving the widespread adoption of store rewards programs, which “bridge the gap” from coupon clippers and early adopters to mainstream consumers looking to cut costs in every way possible.

In a questionnaire Commissioned by Wildfire and conducted by the research firm Big Village, we examined mainstream consumer attitudes and expectations towards rewards and other shopping incentives. The findings showed that 90% of respondents are more interested than ever in getting discounts, using coupons and earning cashback rewards when shopping online, precisely because of rising prices.

Related: 3 Secret Reasons Your Brand Needs a Rewards Program

Rewards and discounts influence online buying behavior

Regardless of the economic environment, consumers will continue to shop. But in difficult financial times, they will adjust their buying behavior, for example by buying store brands instead of more expensive options. Recent reporting on these kinds of behavioral changes includes from: Personalityshowing that nearly 2 in 3 consumers are curbing spending on non-essentials because of the higher cost of living, and from Gartnershowing that nearly 1 in 4 consumers will spend less on Christmas shopping this year as a result of higher prices.

In such an environment, rewards and other incentives are a substantial factor influencing consumers’ online shopping behavior. The availability of rewards and incentives has a direct and positive effect on 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 shows that rewards affect consumer behavior even before they decide where to shop: 81% say rewards availability is a factor in deciding which e-commerce retailer their business gets.

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

Many consumers are looking for bargains when they shop online, and we expect that the propensity of consumers to seek discounts will continue to increase as the economy tightens. The majority of respondents (61%) say they are “always” or “often” looking for coupons, discounts, cashback rewards, or other ways to save on their purchases.

Based on these findings, the points to consider for any brand selling online are clear:

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

Related: Why Trust and Incentives Help Consumers With Better Brand Selection

Respond to customer preferences for simplicity

In addition, consumers are looking for ease of use and want easy access to rewards and discounts within the natural flow of their online shopping behavior, without detours or barriers. Most consumers surveyed for Wildfire’s report prefer rewards to be applied automatically at checkout or activated while shopping without having to look elsewhere. Conversely, fewer consumers want to receive an email with a special offer, and even fewer people prefer to search through a list of offers.

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

The need for simplicity and convenience in reward programs is confirmed by other research. In the 2022 Loyalty Marketing & Rewards Program report Comarch and Forrester asked retail marketers 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 does this mean for companies considering a loyalty program? Online shoppers have become extremely smart. They are now much more accustomed to seamless digital experiences, so their expectations regarding 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 is simple and easy for customers to earn and redeem rewards.

Related: The Marketing Power of Rewards Programs

Conclusion

By offering easily accessible store incentives such as cashback and coupons, businesses selling online can meet the demands of today’s value-seeking consumer. Through such programs, they can not only positively influence the purchasing behavior of consumers, but also provide much-needed relief for their wallets.

Shreya Christinahttps://ukbusinessupdates.com
Shreya has been with ukbusinessupdates.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 ukbusinessupdates.com team, Shreya seeks to understand an audience before creating memorable, persuasive copy.

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