Loyalty Programs as Price Buffers: Promise or Myth in Inflationary Times?

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With inflation squeezing margins and recent tariffs likely pushing costs higher across supply chains in the near future, businesses face a critical question: Can loyalty programs shield customers from the negative impact of necessary price adjustments?

Research offers both promise and caution — while loyalty programs can influence price sensitivity, their effectiveness depends on program design and implementation strategies.

The Surprising Reality About Loyalty Programs and Price Sensitivity

Conventional wisdom suggests that loyal customers are less price sensitive. After all, these customers have demonstrated repeated preference for your brand, so they must value something beyond just price, right?

Academic research tells a more complex story. Studies across retail, hospitality, airlines, and financial services reveal that loyalty programs can affect price sensitivity in opposite ways — sometimes reducing it as expected, but other times unexpectedly increasing it.

When Loyalty Programs Reduce Price Sensitivity

Research has consistently found several scenarios where loyalty programs make customers less sensitive to…