Price-sensitive shoppers more likely to participate in loyalty programs
September 12, 2013

Businesses may want to rethink the ways they target customers to participate in gift card programs and loyalty programs. In the past, companies have often assumed consumers who struggle financially are less likely to make repeated purchases with the same brands. The constant impulse to search for new deals and lower prices often implied a sense of randomness in regard to purchasing behavior.

However, a recent study from Dunnhumby, a consumer research firm, indicated that cash-strapped shoppers are actually more likely to stay loyal with specific brands in the long term than other shoppers. According to Advertising Age, price-sensitive customers often make up some of the most profitable demographics. The study determined the price sensitivity of individual shoppers based on how often they use coupons and actively seek out promotional deals. For example, Advertising Age said millennials, who are typically more price sensitive than other age groups, are actually one of the highest-spending demographics in the market.

The Dunnhumby study also found price sensitivity correlates directly with increased participation in customer relationship management initiatives. In fact, consumers who actively participate in gift card programs and loyalty programs are 19 percent more likely to fall into the "very price sensitive" category. After a while, they may start spending more money. According to Dunnhumby, price-sensitive shoppers spend 14 percent more than the average returning customer when they participate in some form of rewards program.

Businesses can better retain price-sensitive customers by offering gift card programs and loyalty programs that satisfy the need for consistent promotions and reduced prices. Rather than ignoring this valuable demographic, companies can target new customers and experience increased revenue. By doing so, brands can encourage shoppers to continue returning in the long term.

Nexus: G-WEBCD4