Holiday Shoppers: What Can Brands Do To Retain Customer Loyalty in a Challenging Economic Season?

While holiday promotions have long been a staple of retail strategies, savvy marketing and loyalty teams have discovered that these festive campaigns can offer more than just a seasonal sales boost. They can become a gateway to year-round customer loyalty and engagement. 

This year, brands may have to get particularly creative in their holiday campaigns, especially as consumers have become more price-conscious and sensitive, with rising credit card rates/outstanding debt and a high U.S. inflation rate — sitting at 3.7% for the 12-month period leading up to August 2023. While discounts are expected to remain a prominent feature of this holiday season, it’s crucial for brands to explore additional strategies that cannot only drive sales but lay the foundation for sustained brand loyalty. From post-holiday season recognition to bounce-back rewards for holiday shoppers, there are many ways to nurture customer loyalty long after holiday decorations have been packed away.  

Loyalty360 spoke with supplier members and loyalty strategy experts about the mindset of this year’s holiday shoppers, creative ways to keep customers loyal — during and after the holidays, and leveraging technology to enhance customer loyalty programs. 

Article contributors:  

  • Cassie Preston, Director of Client Services CRM & Loyalty, Baesman 

  • Chris Barnett, VP, Strategic Consulting, Kobie 

  • Roger Williams, Head of Loyalty CoE, Marigold 

  • Kelli Hobbs, VP of Business Development, Valuedynamx 


Jingle All the Way into the Season: Customer Loyalty and Holiday Shopping  

With continued concerns about inflation, towering credit card debt, and anxiety around holiday spending, how should brands position themselves to engage their current loyalty program members while proving true value to holiday shoppers and converting them into loyal customers?  

“Consumers will remain price conscious this holiday season, and many have gone from brand loyal to price loyal — this especially impacts brands that sell products available elsewhere,” says Baesman’s Preston. “Consumers expect convenience, free shipping, free and easy returns, and a frictionless buying experience across all channels.”   

In order to support the price-loyal consumer, Preston asserts that many brands will be heavily promotional this season to steal market share from competitors, with those promotions starting earlier and lasting longer. While loyalty member acquisition is not typically a brand’s focus during the peak shopping season, she believes it may be different this year to entice inflation-burdened consumers. Expect brands to demonstrate the value of their loyalty programs early through same-day sign-up discounts, extra points, and more to capture and maintain holiday spend and future loyalty. For example, Target Circle Week offered new savings for loyalty shoppers between Oct. 1 to 7, while members of Walgreens’ loyalty program saved when shopping from Oct. 4 to 7, earning 15% Walgreens Cash rewards on eligible purchases.    

Kobie’s Barnett forecasts a heightened focus on financial outcomes, with tighter holiday campaign budgets being carefully aligned to audience insights and solid metrics to make investments work harder. He also notes that this season, many programs are evolving from generic rewards to tailored experiences and incentives, powered by data insights and delivered in engaging ways like gamification that tap into emotional motivations.    

For Marigold’s Williams, he sees retail brands using customer loyalty programs to direct traffic in-store or online depending on member lifecycle.  

“Encouraging high-value members to come into stores opens up delightful recognition opportunities, while online facilitates discounts and convenience for less frequent or recent customers,” explains Williams.  

This is echoed by Preston. “Loyal-to-brand shoppers will return to stores and expect their experience to be top-notch. From free and easy gift wrapping, ship-to-home options, and elevated free gifts, consumers expect to be delighted when they invest their time in a trip out.”   

Valuedynamx’s Hobbs believes the latest trends in customer loyalty and rewards programs for the holiday season reflect the changing consumer landscape and the desire of brands to offer more personalized and versatile incentives to shoppers. She has observed key trends such as experience-based gifts, personalized offers, and expanded redemption offers that offer greater flexibility in rewards mix offered to customers, such as gift cards, cash back, or even the ability to donate rewards to charity. Hobbs suggests options that can allow customers to choose what best resonates with them. 


Holiday Wish Lists 

During the holidays, different types of rewards and incentives resonate more fully with customers than others. Many are drawn to rewards and incentives that align with the spirit of giving as well as their financial needs at a time when spending is frequently higher than usual.  

Consumers tend to look for rewards and incentives that provide immediate value and align with the holiday season as well as their financial goals, and Hobbs points to cashback, points, and miles as ways brands can offer practical advantages, noting that added opportunities to earn and spend points can be a major incentive. Furthermore, seasonal offers catering to gifting, food and beverage, and luxury items tie to the season of giving and receiving gifts, making them particularly appealing to customers leading up to the holidays.  

“These offerings cater to customers’ desires for special experiences and meaningful gifts during this special time of year,” Hobbs adds.  

Preston nods to “hard benefits” — tangible dollars-off or percentage-off discounts. She says, “These discounts are needed to capture market share from competing brands with healthier margins or flexible cash flow.”  

Williams agrees, finding that, generally, deals and discounts are always a winner, even with less price-sensitive customers who tend to become more so when gift buying. 

Rewards that offer immediate value or create memorable experiences often attract customers. Barnett also highlights rewards that can be shared with others. It is the season of giving, after all.  

“We also see greater customer engagement with socially conscious program elements or rewards tied to charitable contributions and sustainability during the holidays,” adds Barnett. 

However, personalized offers perform best, according to Preston. She advises brands to consider how their loyalty file should be segmented so that unique discounts and offers associated with loyalty can be presented in a creative, personalized way. Testing in ongoing campaigns to get an idea of what resonates most can provide direction for strategies.  


Deck the Halls with More Rewards 

With increased festivities and goodwill during the holiday season, brands seek creative ways to engage and reward loyal customers beyond the traditional points-based system during the holidays. Our experts weighed in with examples.   

Williams believes that micro-accrual journeys or punch cards tailored to customer preference are a great way to reward customers and generate incrementality.  

Preston looks to experiential moments — both in the digital and store settings — to capture attention and create the experiences that members want.  

“Whether it’s a holiday-themed digital app gamification experience or an in-store holiday gift buying experience, loyalty members will be looking to brands to make their shopping experience as enjoyable as possible,” she emphasizes.  

Virtual holiday event invites, personalized gifts for VIPs, holiday-themed user content campaigns, exclusive holiday product access, and rallying members around charitable challenges appear on Barnett’s holiday list of ideas for brands to consider.  

“It’s about captivating members during a time when competition for their attention is fierce,” remarks Barnett. 

Hobbs also sees offering unique experiences as an effective way to engage loyal customers, citing opportunities to attend special events or exclusive access to holiday-themed activities as examples. Such personalized experiences can help deepen a customer's emotional connection to a brand. Additionally, brands can offer increased rewards or points for a limited time during the holiday season and even implement an auction-style system for limited offers and rewards to generate excitement and competition among loyal customers.  

“They can use their accumulated points or loyalty status to bid on exclusive experiences or items, like VIP tickets or celebrity meet and greets,” Hobbs explains. “This gamification approach can make the reward system more interactive and engaging.”  


Standing Out, Shining Brightly 

To stand out in a crowded marketplace, brands will need to leverage technologies like mobile apps, machine learning (ML), or artificial intelligence (AI) to enhance their holiday loyalty programs.   

Again, it comes back to personalization. Mobile apps and AI can help offer more tailored reward recommendations. This business intelligence may suggest specific offers or rewards that could be relevant, based on a customer’s historical interactions with the brand. Hobbs also believes such personalization is especially valuable during the holiday season when many consumers are also on the lookout for gifts for themselves.  

“Personalization remains an important factor in loyalty engagement, especially at holidays when brands are doing their best to cut through the seasonal clutter-bombarding consumers,” affirms Preston. She also directs brands to leverage data and predictive models to better understand loyalty members and truly understand what they’re looking for during the holidays.  

With more shoppers than ever buying online or incorporating digital channels into their buying experience, brands need to ensure their mobile app experience is optimized before the shopping season begins. Members need a reason to engage in a brand’s app, and Preston believes in the months leading up to the holidays, implementing marketing activations to seek out more app users can be beneficial. For example, brands reinvigorating geolocation technology alongside AI can send hyper-targeted messages to customers when they’re miles or steps from their store during the holidays.  

“Mobile apps position loyalty programs beside holiday shoppers — before, during, and after purchases,” says Barnett. “That makes them the perfect platform for tactics like gamified holiday experiences, where challenges keep members engaged.”  

“AI and machine learning technology also provide businesses with key insights into customer behavior patterns during the holiday period,” explains Hobbs. “This information helps in understanding which products or services are in high demand, identifying peak shopping times, and optimizing marketing strategies in real-time and in the future.”  

Hobbs sees AI-driven data as providing brands with a deeper understanding of their customer base, which can be helpful in creating more effective and targeted loyalty campaigns. For example, high-value customers can be identified and offered exclusive perks or early access to holiday promotions.  


Beyond Auld Lang Syne 

But what happens when the holiday season has come to an end, when the last of the wrapping paper has been tossed in the bin, and shopped-out customers want a break from the festivities. What strategies can help businesses retain customers beyond the holiday season once the loyalty program ends?  

“It’s really simple,” begins Williams. “The natural downturn post-holiday season should be addressed with recognition and gratitude toward your customers — back off on the promos. Instead, thank them for their patronage while positioning your brand as indispensable in their head.”  

During the holiday season, Preston believes that new traffic in stores offers brands the opportunity to acquire more loyalty members. “We expect many brands to run promotional sign-up incentives or even offer a bounce-back reward for holiday shoppers to nurture them and encourage ongoing spend [after the holidays].”  

Hobbs stresses that it’s vital to keep the loyalty program pertinent to customers’ changing needs and interests throughout the year. Customer data must be continuously analyzed to understand evolving preferences and behaviors. Furthermore, customers need to be able to effortlessly earn rewards year-round, noting that the integration of the loyalty program into the overall customer experience is key. No matter where a customer may shop, earning and redeeming points should be straightforward and user-friendly.  

“Brands can cultivate lasting customer loyalty and increased customer lifetime value beyond the holiday season,” says Hobbs. “This ensures that the loyalty program remains a valuable and meaningful aspect of the customer journey throughout the entire year.”  

While the holidays may be the year’s climax, it shouldn’t signal a halt to member engagement — particularly for those newly acquired during the holiday peak.  

“Programs should plan for sustained momentum and enrich member profiles to fuel year-round initiatives,” finishes Barnett. “Creating a continuity of communication, paired with showcasing year-long member value through focused onboarding campaigns, should create a seamless transition into the new year.” 

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