Marketers have been manufacturing consumer loyalty through rewards and loyalty programs since the 1970s. The average American belongs to seven programs and 7 out of 10 are willing to join more programs.
Most of us sign up for rewards from airlines, credit cards, grocery stores, gas stations, favorite retailers, and a hotel chain or car rental firm. A third of most programs have members who have defected in-place without formally cancelling. Forty-seven percent of respondents stopped participating in one of their programs in the last year.
And yet in spite of competition and attrition, fifty-seven percent of respondents say they modify when and where they buy to maximize loyalty benefits. Forty-six percent say their choice of brands is a function of optimizing reward value. Loyalty marketing is personal, fickle, schizophrenic, and well worth doing.
Building and sustaining loyalty is tricky. It’s part stimulus-and-response conditioning, part value exchange, and part emotion or experience driven brand love. The dynamic mix of these rational and irrational elements in the context of larger macro economic factors, like a recession, or micro factors, like an awful experience with a store clerk, can change quickly.
What looks valuable today is piddling tomorrow. Too often the experience of trying to redeem points or miles is so frustrating, infuriating, or just plain unfair that it destroys the rationale for collecting them. On the other hand a free trip, automatically applied coupons, or discounts that yield free groceries or a first-class upgrade can be sublime.
Enter Maritz Loyalty Marketing, who recently published its first US Loyalty Marketing Report, under the leadership of Scott Robinson and Bob Macdonald.
They surveyed more than 6000 people in 30 national loyalty programs across six industry sectors.
Here are the four key drivers of loyalty program satisfaction they discovered.
Relevant Communication is Critical. Duh! While more than 9 out of 10 members want to hear from their loyalty programs, only half (53%) see the communications are relevant. Fifty-seven percent of members read everything they get from their rewards programs while just 12% say it’s too much. Everybody wants to know the rules, the news, and what’s in it for me.
Duplicate Channels. Almost all participants (96%) want communication and almost half (46%) want it in at least three channels. Seventy-three percent want their mobile device to interact with their loyalty programs. But only a third (37%) see mobile as their primary loyalty channel. These are the people most likely to download loyalty apps. Loyalty loyalists want their communications on their terms and they want a choice of access points that they direct.
Finesse the Cool-to-Creepy Spectrum. Sixty-nine percent like and want personalized offers based on purchasing habits. These are the “do it for me” people. Sixty-two percent prefer to drive themselves. They want offers based on preferences that they manage. Both groups want rewards earned and applied to the stuff they care about most.
Some consumers feel understood and appreciated when offers are based on their attitudes or behaviors. Others are entirely creeped out by the experience. Loyalty marketers need to segment participants to find the right balance and test the information-for-value exchange to determine consumers’ tolerances.
More than a quarter (29%) of participants think programs require or acquire too much information, prompting privacy concerns. There’s a built-in paradox here. If program satisfaction is a function of relevance and data collection drives relevance, without data you are doomed.
If you don’t collect and use the data, you risk developing programs and content that nobody cares about. That’s probably why, in spite of generalized privacy concerns, a majority of Americans still trade personal information for relevant offers.
Don’t Discount Values. On some level, loyalty is about brand awareness, preference, and advocacy. Don’t let CRM tactics fool you. There is a strong link between personal values and brand values. Forty percent of those surveyed see their favorite brand’s values as “the same as mine.” People who see themselves in alignment with a brand’s values are much more satisfied with loyalty programs.
This is classic branding strategy. Successful brands mirror image the personality, values, voice, and tonality of their best customers. Loyalty marketing needs to focus much more on content and messaging to resonate with program participants. It’s probably time to let consumers into the tent and ask them to co-create content and tactics that reflect who they are and what they believe in.
In a plugged-in, on-the-go, ADD society, loyalty is a constantly shifting bogey. Yet this new data offers some insights, approaches, and tactics that can create, capture, and apply the longing for connection, recognition, reward, and love in each person.