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Reward programs, including birthday freebies and discounts, have long been a way for brands to build loyalty and incentivize spending. But now, some companies are becoming a bit more stingy — and customers are taking notice.
Last fall, for example, many balked at Dunkin’s decision to stop offering a free drink on their customers’ birthdays and instead give them triple loyalty points on their purchases. On June 1, Sephora started requiring a $25 minimum purchase for online customers looking to claim a free gift and 250 loyalty points during their birthday month.
Changes to birthday rewards or redemption requirements aren’t new. Starbucks, which gives its rewards members a free drink or food item for their birthdays, progressively limited the timeframe for redeeming that gift over the years — from 30 days, to one week, to four days and, finally, to just the date of your birthday in 2018.
Some experts say the cost of maintaining loyalty programs, as well as recent impacts of inflation and changes in consumer behavior since the start of the COVID-19 pandemic, are among the reasons why companies may be pulling back.
“While we’re assessing our own personal expenses, so are businesses,” Marshal Cohen, chief industry advisor of Circana and retail expert, told The Associated Press. “Businesses have to look and say, ‘Are these programs working? Are they working to full capacity? … (And) is there another way of doing this that wouldn’t cost us as much money?’”
“What (brands) need to do is not make too many changes so often — because you’re going to start rubbing your audience the wrong way and it could backfire — and you should be very thoughtful about it,” Lanz said. “They do need to communicate it so that it’s not a complete surprise.”
It’s possible this could mean a scaling back of more rewards programs. But there could also be an opposite effect, Julie Ramhold, consumer analyst with DealNews.com, said — noting that some retailers could offer “potentially better birthday rewards to encourage a return to spending on frivolous items.”
This article was provided by The Associated Press.