The economic impact of incentivizing local spending: What communities can expect

Incentivizing local spending through programs like Bludot's Open Rewards isn’t just about supporting local businesses—it’s about creating a lasting positive impact on the local economy. When residents are encouraged to spend locally, the benefits ripple through the community, boosting not only small businesses but also jobs, public services, and the overall economic health of the area.

This blog will explore the broader economic impact of shop local initiatives and why communities should prioritize these programs to drive long-term growth.

1. The immediate impact: Dollars staying local

When residents spend their money at local businesses, a significant portion of that money stays within the community. Studies show that for every $100 spent at a local business, approximately $68 stays in the local economy, compared to just $43 for chain stores. Local businesses source materials locally, employ residents, and pay taxes that benefit the local government.

Take the city of Southlake, TX, for example. Their Open Rewards program delivered $1.5M in economic impact, with more than $500,000 in rewards distributed to residents, encouraging them to shop locally. According to Southlake’s Economic Development Director, “The Open Rewards program has been incredibly successful in generating local spending and providing immediate financial relief to our businesses during critical times.” This direct spending injection supports businesses and helps generate local tax revenue, which directly benefits community services.

With programs like Open Rewards, communities can help increase the amount of money spent within local businesses by offering rewards for participating in the program. As consumers earn rewards by shopping at local businesses, more money circulates within the community, benefiting not just individual businesses but the economy as a whole.

2. The long-term effects: Creating a more resilient economy

While the immediate benefits are easy to see, the long-term effects of incentivizing local spending are even more profound. Here are just a few of the ways local spending programs strengthen a community's economic resilience:

• Job creation: Small businesses are significant employers, and as they grow, they create more jobs. By supporting local businesses through rewards programs, communities can help foster job growth and reduce unemployment. The city of Lancaster, CA, saw firsthand how a shop local program like Open Rewards helped boost local employment, with small business owners reporting increased hiring due to the program's success. “The rewards program helped us hire additional staff and expand our services. It’s not just about the immediate rewards; it's about the long-term sustainability of our business,” said one local business owner

• Increased local tax revenue: As businesses thrive, they contribute more to local taxes, which in turn fund public services, infrastructure improvements, and community programs

• Stronger local networks: Supporting local businesses strengthens the web of commerce and community ties. As businesses thrive, they are better equipped to invest in and collaborate with other local businesses, creating a more robust, interconnected local economy

• Fostering entrepreneurship: Shop local programs make it easier for new businesses to succeed. By encouraging consumers to shop locally, new businesses can build a loyal customer base from the start, helping to foster entrepreneurship and diversify the local economy. Arlington County, VA, utilized Open Rewards for its shop local initiative, and reported significant improvements in its business community’s collaboration. According to Arlington’s Economic Development Director, “We saw our new businesses thrive and grow, not just because of the program’s incentives, but because it helped connect them with local customers who were eager to support their ventures.”

Hear directly from Arlington County, VA on the impact their program has had on their community:

3. Supporting the “local multiplier effect”

One of the key benefits of local spending programs is the local multiplier effect—the idea that money spent at local businesses circulates multiple times within the community. For example, when a local retailer hires employees, those employees spend their earnings at other local businesses. As that money flows through the community, the collective impact amplifies, resulting in a much larger economic boost than initial spending alone.

This “multiplier effect” is especially powerful when communities use technology, like Bludot’s Open Rewards, to encourage consumers to keep their money within the local economy. When rewards are used across multiple participating businesses, consumers are incentivized to shop at a variety of stores, supporting not just one but many local enterprises.

4. The role of technology in maximizing local economic impact

Technology plays a crucial role in streamlining the process of incentivizing local spending. Platforms like Open Rewards make it simple for businesses to participate without requiring additional effort. The app handles the processing of rewards, allowing local businesses to focus on customer service while the platform ensures that all transactions are accurately tracked.

Take the example of Lancaster, CA, where businesses were able to seamlessly participate without the need for additional technology integration or complex systems. The program was quick to set up, and the business owners reported high levels of satisfaction. As one local café owner mentioned, “The ease of use for both businesses and customers has been a game-changer. We can focus on serving our customers, while Bludot handles all the back-end work.”

By making it easy for businesses to participate, the program encourages more businesses to get involved, amplifying the economic benefits for the entire community. This technology-driven approach also provides valuable insights to local governments and business owners, helping them make data-driven decisions to further boost local spending.

5. Actionable insights for communities

For cities and towns looking to get started with a local spending initiative, here are a few steps to consider:

• Engage local businesses: Make sure that businesses are aware of the benefits of joining a local rewards program. Provide them with the tools and resources they need to participate without hassle

• Promote to consumers: Encourage residents to sign up for the program and start shopping locally. Use targeted marketing strategies through social media, email campaigns, and community events to get the word out

• Track and report success: Use analytics from the rewards program to monitor the impact on local spending. Share these results with the community to build trust and encourage more participation

• Consider long-term sustainability: Look at how you can keep the rewards program sustainable over time. Plan for future funding, whether through public-private partnerships or community support, to ensure the program remains beneficial for all stakeholders

6. Conclusion: A strategy for sustainable local growth

Incentivizing local spending through programs like Open Rewards not only supports businesses but helps create a more resilient, sustainable local economy. By encouraging residents to shop local, communities can strengthen their businesses, foster job growth, and increase tax revenue. With the help of technology, these programs make it easier than ever for businesses to participate and thrive.

As communities continue to face economic challenges, investing in local spending initiatives is a strategy that pays off—both immediately and in the long term.

See what Open Rewards could look like in your community →