Running a small business during an economic slowdown can feel like swimming against the tide. Small businesses walk a tightrope as it is, but the forces of inflation and the threat of a recession can make matters infinitely worse.
According to a survey by Zensurance, a staggering 89% of Canadian small business owners identify inflation as their primary worry. Rising input costs have led to owners wondering what to do when business is slow without passing the burden onto customers.
The same survey also indicates that 60% of small businesses report a negative impact from current economic conditions as they struggle to navigate financial strains.
What makes matters worse is that many small businesses are forced to cut their marketing budgets to offset these strains. That hamstrings their ability to attract new customers and retain existing ones at the most critical juncture.
These realities make it obvious that small businesses must adapt their strategies during tough economic times. In this article, we explore strategies to leverage customer loyalty during slowdowns.
When the economy gets tough, small businesses must get creative. Enhancing customer experience and keeping your brand strong with smart marketing can help keep your revenues robust.
Let's explore actionable strategies for enhancing customer experience, especially when business is slow.
Marketing budgets are often the first item to take a hit during economic slowdowns. According to Gartner, marketing budgets have dropped from an average of 9.1% of company revenue in 2023 to 7.7% in 2024, a significant fall of 15% year over year. In such a climate, it’s critical to focus on proven marketing efforts that yield high returns.
Here’s how you can optimize your marketing strategies for cost-effectiveness:
A good example of this strategy comes from PC Express, an online grocery delivery app. It offers the PC Express Pass with $0 pickup and delivery on orders of $35 or more. It’s a perk that excites and rewards existing customers while attracting new ones.
Another affordable yet results-driven marketing strategy focuses on customer retention.
Here's how you can do it:
Businesses naturally struggle to acquire and retain customers due to budget constraints and cost-cutting measures during economic slowdowns. Effective customer loyalty programs can be a strategic solution to mitigate these challenges.
Economic slowdowns significantly impact consumer behavior and spending patterns. The following are usually the most common trends:
Given these patterns, small businesses must prioritize resource-efficient efforts like customer retention to thrive during tougher times. According to McKinsey, focusing on existing customers can optimize your business and set the stage for future growth.
A great example of customer retention and acquisition through a loyalty program comes from Cheekbone Beauty—a sustainable cosmetics brand.
The company offers an extensive reward points system. Customers earn points for signing up, making purchases, celebrating birthdays, posting text and video reviews, and just following them on TikTok and Instagram. This gamified approach incentivizes customers to spend and stay loyal, which is especially effective when customers are cautious about purchasing.
Focusing on customer retention through effective loyalty programs can be a game-changer for your small business during periods of economic stagnation.
Here’s why investing in these programs can be one of the smartest moves you can make:
A well-crafted loyalty program can be a strategic investment that continues to deliver over time. Providing rewards, offering personalized experiences, and maintaining customer engagement can help turn temporary economic challenges into long-term opportunities.
We’ve established that loyalty programs are highly effective for customer retention and acquisition during economic slowdowns. The question is: how can you ensure your program offers real value and stands out?
Let’s explore some essential tips for creating a standout loyalty program that keeps customers coming back.
Offer value to customers without raising expenses. Focus on low-cost rewards that have significant benefits.
If you run a cafe, for instance, you could offer a high-margin item like a free cookie with orders over $20. Small gestures like these go a long way in building customer loyalty without a substantial cost.
Design your program to adapt to changing economic conditions. You must make a conscious effort to show customers that you value their money.
Think about temporary promotions or adjusted reward structures when consumer spending is tight. For instance, a grocery app can offer double the points on essential items to help customers save more.
Prioritize rewards that customers truly value to make your loyalty program stand out. Offer discounts on essential products or personalized rewards that cater to individual preferences.
For instance, a retail eCommerce shop could provide personalized discount codes for frequently purchased items to enhance customer satisfaction.
Maintain transparent communication to build trust with your customers. Use push notifications, SMS, WhatsApp, and emails to update them on program changes, new offers, and rewards.
Select software that fits your program objectives and supports future growth.
Look for features like scalability to handle increasing users, integration capabilities with existing systems, and manageable implementation costs.
Finally, ensure it is user-friendly for both your team and customers. A simple interface can make it easy for customers to track rewards and for your team to manage the program efficiently.
These strategies are all about helping small businesses stay resilient and adaptable during economic slowdowns. These are exactly the times you can get the most out of your investment in marketing and retention efforts by focusing on customer loyalty.
Implementing effective loyalty programs, offering valuable rewards, and maintaining open customer communication can drive repeat business and boost your bottom line. These approaches ensure you’re not just surviving the downturn but positioning yourself for future growth.
When the economy slows, all small businesses ask themselves the same question - what to do when business is slow?
The answer: intensify your growth strategies.
DataCandy’s all-in-one gift card and loyalty platform is designed to help small businesses like yours thrive in the most challenging of times. Our easy-to-manage software lets you set up a robust loyalty program in as little as 10 business days.
Here’s how you can get started with DataCandy:
Join over 15,000 businesses that are seeing real results with DataCandy. Don’t just navigate the slow business times—turn them into opportunities for growth!