Why Businesses No Longer Offer Perks and Freebies

Have you noticed a shift in how companies are doling out customer perks and rewards? It’s not just your imagination—there’s a tangible change happening across various industries. From airlines to retailers, the landscape of customer benefits is transforming. This article will explore why companies are adopting this new approach and what it means for consumers and businesses.

Rethinking Rewards

As we emerge from the COVID-19 pandemic, companies reevaluate their strategies to attract, retain, and reward customers. This shift is not solely driven by the pandemic’s impact on consumer spending priorities but also by businesses’ need to balance cost control and sales growth. Striking this balance is crucial because, while slashing benefits could drive customers away, being overly generous isn’t without risks.

Sabeh Samaha/ Stock Image | A loyalty program is a bridge between brand promises and customer satisfaction

David Garfield, the global head of industries at consulting firm AlixPartners, points out that adjusting perks can impact customers’ feelings toward a company and influence others. It’s not merely a matter of tweaking numbers; it’s about managing perceptions and maintaining a loyal customer base.

Evolving Sky-High Perks

One industry undergoing significant change in the realm of customer perks is aviation. As the travel industry rebounds, airlines are making it harder for customers to attain elite status. Carriers such as American Airlines, Delta Air Lines, and United Airlines have raised the bar for earning elite groups due to the surge in customers seeking these benefits.

Delta Airlines, for instance, is taking measures to curb overcrowding in airport lounges. It has increased membership fees, restricted staff access during standby travel, and begun charging for guests’ entry. American Express Centurion Lounges now charges a fee for additional guests, emphasizing the industry’s adaptation to changing consumer demands.

Edition/ Getty Images | Frequent flyer programs are used by many airlines to foster a sense of loyalty among passengers

Retail Realities

Unlike the profitable aviation industry, retailers have faced new challenges post-pandemic. Inflation has constrained consumer spending, pushing companies to scrutinize expenses more closely. This has led retailers to reevaluate their business components for efficiency, as selling more products is no longer a straightforward path to growth.

In the world of e-commerce, free returns and shipping were once a standard offering. However, the understanding of the costs associated with these perks has evolved. Retailers have implemented strategies like return fees and tighter return windows. Even e-commerce giant Amazon has added strings to its free shipping policy, introducing a fee for specific return locations.

From Freeloading to Fairness

Companies like Netflix and Costco have responded to evolving customer dynamics by tightening their membership policies. To prevent unauthorized sharing, Netflix has cracked down on password sharing and introduced lower-priced, ad-supported subscription options. Costco now verifies membership cardholders through photo IDs, enhancing the sense of fairness among paying members.

freestocks/ Pexels | Offering perks can attract short-term sales, but their long-term impact on customer loyalty is more complex

Catering to the Big Spenders

Airlines and retailers are now focusing on catering to their most valuable customers. The halt in sales during the pandemic allowed businesses to rethink their strategies for catering to shoppers, leading to changes in the distribution of perks.

Companies like Target, Walmart, and Best Buy have begun offering premium perks to paying customers. Macy’s, for instance, charges a return fee for non-members, but its Star Rewards loyalty program members enjoy fee waivers. Best Buy’s subscription program extends return windows, and Delta Airlines offers free Wi-Fi for its SkyMiles loyalty program members.