Wednesday, July 29, 2009

One Way to Fight the Recession

Colloquy has completed a study of consumer participation in loyalty programs. It found that incremental incentives that reward repeat business is up nearly 20% from 2007. About one third of the shoppers say they're relying more on such programs to find value during the recession. The rewards are not likely to entice them to spend more money according to Randy Allen, Associate Dean of marketing and corporate relations for Cornell University's Johnson School. His suggestion is that the loyalty programs might work if they lower prices.

There are a few changes that may give the loyalty programs some traction. Here are some that are popping up:
1. High-tech convenience - some retailers are letting the customers print reward certificates from home or even load manufacturers coupons onto their club card for automatic redemption at the checkout counter.
2. Concierge rewards - some stores are adding concierge-type rewards such as early access to concert tickets or sporting events via ticket brokers.
3. Tiered programs - some retailers are focusing on the customers that spend money so that those who spend more may be given additional rewards or have reward limitations removed.
4. Expanded partnerships - some stores are cross-marketing with other retailers to that discounts can be accrued from more than one store. For example, one store could offer discounts on gas when groceries are purchased at a supermarket.

The bottom line is that the American businessman is adaptable and will find ways to survive even when the economy goes South. This will remain true as long as the government stays out of the way. Regulations tend to have a greater negative impact on small business than the economy. We can only hope the "pols" in Washington get the message.

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