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February 8, 2023

Ditch discounts; create customer loyalty through engagement

In the ever-evolving world of commerce, businesses look for ways to attract and retain customers. Businesses have traditionally relied on various methods to drive sales and build loyalty, from advertising to promotions. Today's consumers are looking

What customers are looking for in 2023.

In 2023, customers will look for more than just products and services. They are looking for a deeper connection with the businesses they interact with. Customers want to feel like they are part of a community and to be valued beyond just the dollars they spend. Recent research shows that 89% of customers say they are more likely to be loyal to a brand that shares their values.

Almost all non-essential spending is expected to decline this year, so brands must demonstrate empathy and focus on building relationships now. Customers are more conscious about their purchasing decisions and, as a result, are more likely to value community and experiences over discounts. 

In addition to shared values, customers are also looking for a personalized experience. They want to feel like their products and services are tailored to their needs and preferences. Most customers (80%) are likelier to do business with companies that provide personalized service.

The cost and impact of discounting.

In addition to cutting profit margins, discounts damage the perceived value of products and services. Deals and promotions may seem quick and easy to drive sales, but they can come at a high cost. 

Higher discounts correlate with low customer lifetime value, lower satisfaction scores, and higher revenue churn. By providing discounts, customers will learn to wait for sales and ultimately attract less-than-ideal customers. 

The perceived quality of the products and services businesses offer may even erode when businesses rely too heavily on discounts. Offering the lowest price can lead to a race to the bottom, decreasing overall revenue as companies compete to provide the best deal.

What other approaches can be taken?

Thankfully, businesses can also build customer loyalty through a holistic approach rather than relying exclusively on discounts and promotions. Businesses can create a sense of community with their customers and build lasting relationships by focusing on engagement. 

Here are a few ways businesses can prioritize engagement:

  1. Unique content
  2. Rewards and gamification 
  3. Community engagement and connections
  4. Rewards

Unique content:

One way to engage customers, especially Gen Z, is by creating unique and valuable content that speaks to their interests and needs. Whether it's blog posts, social media content, or videos, businesses can use content to share their values, educate their customers, and build a community around their brand.

Rewards and gamification:

Businesses can create customer incentives through points-based systems, exclusive discounts, or experiences that encourage them to engage with the brand more often. Gamification, on the other hand, involves incorporating game-like elements into the customer experience. Rewards and gamification are two effective ways for businesses to build brand engagement, drive growth, and build a strong foundation for success.

Community and connections:

Businesses can also foster customer loyalty by creating communities and connections by providing forums and other spaces where customers can interact and the brand. After years of fragmented communications, businesses that cultivate a sense of community build stronger relationships and more loyal customers.

Customers feel heard and understood when a brand actively seeks out and responds to customer feedback. Businesses can strengthen customer relationships by identifying and responding to customer needs, increasing trust, loyalty, and engagement.


Finally, businesses can use rewards to incentivize and thank loyal customers. Rewards can come in many forms, from points-based systems to exclusive discounts or experiences. By offering rewards, businesses can create a sense of value and recognition for their customers.

In addition to creating communities, businesses can offer access to exclusive customer experiences like products, services, or events. By providing access to something not available to the general public, businesses can create a sense of exclusivity and make customers feel unique and valued.

Ensure customer loyalty through a customized engagement program.

While discounts and promotions may have worked in the past, more is needed to build long-term customer relationships. Businesses can create a community around their brands and build loyalty by prioritizing engagement beyond just a transactional relationship. Companies can engage and reward their customers in many ways, from unique content to rewards and access. This is what drives growth and establishes a strong foundation for long-term success.

Explore how programs like RareCircles turn community engagement into sustainable revenue.