Don’t Do It! 3 Things Consumers Don’t Want from Your Loyalty Program

Posted on by Chief Marketer Staff

Most marketers tend to fall into one of two generalized categories: Luddites who never met a direct-mail campaign they didn’t like, and Technophiles who can’t wait to try every new tool (e.g., QR codes, location-based services, virtual rewards, etc.). The latter group is just beginning to truly influence the conversation in the consumer-loyalty space as a result of more in-depth discussions about what customers really want from loyalty programs.

However, giving consumers what they want doesn’t always mean doing more. Just as important, the industry needs to explore what customers don’t want in their loyalty programs. Here’s my list of the top three things customers want to avoid in your loyalty strategy:

1. They don’t want irrelevant communications. I recently joined a loyalty program for a local art store; the program is very popular with female customers. I’m reminded of this fact whenever I receive a communication from the store—they always start with “Dear Ladies.” Either “Barry” suddenly became unisex or the store needs to add more questions to its enrollment profile. Either way, it’s a misfire in my relationship with the brand.

Consumers are savvy enough to understand joining loyalty programs is a trade-off: their data in exchange for special access and rewards. With that understanding also comes an expectation to be treated in a personalized and relevant way. Unfortunately, undifferentiated communications are way too prevalent in many loyalty programs. Brands have more customer data now than any other point in history, but too many marketers act like there’s so much information, they don’t know what to do with all of it. With the sophisticated modeling techniques and marketing engines available today, there’s really no excuse.

It’s time for brands to make better use of customer data to create campaigns and offers that speak at a meaningful level. Do you want customers to see your program as a true benefit or simply another source of spam?

2. They don’t want just tangible rewards. Ask anyone who ever spent real money on buying virtual seeds for Farmville or visited a restaurant to simply earn a badge in Foursquare. People want more than material rewards from consumer experiences, and cash isn’t the only substitute. Modern studies in neuroscience show the brain positively responds to intrinsic rewards, like the power of status, in the same way it responds to physical and monetary rewards. Elevate a consumer’s sense of status in your program, and the engagement is just as sticky as though she redeemed an iPod. Yet, tangible-rewards-only offerings continue to be the predominant schemes in loyalty programs. Marketers can foster more loyalty and drive greater participation by pairing extrinsic with intrinsic.

For example, outdoor clothing and equipment retailer, REI, uses social responsibility as an intrinsic reward for its consumers. In place of a points system, the company pays a year-end dividend to each of its co-op program members. With the dividend, REI outlines how program participants contributed to the greater good by simply being a member. Their purchases helped fund numerous volunteer programs. By purchasing a new soft-shell jacket, a consumer’s experience with the brand connects them to doing social good (which stimulates the brain in a gratifying way).

3. They don’t want to join another traditional loyalty program. While program enrollment continues to increase across most industries, actual member engagement is flat. This tells us that consumers buy into the idea of loyalty programs, but they find little to interest them once inside. If you pay any attention to the latest discoveries in human sciences, it should be no surprise that customers aren’t thrilled by two-decade-old program formats. Research shows humans are driven by multiple motivators (e.g., the desire to be socially connected or to have a voice in any experience). As Gen X and Gen Y become the dominate consumer demographics, expectations will continue to rise for experiences with interaction, collaboration, mastery building and more.

Giving customers what they want starts with knowing what they don’t want—and ensuring you deliver on both ends. Listen to your consumers. Get intentional about your data. Engage people on different levels. Do these things and you’re sure to earn the customer loyalty you want.

Barry Kirk is solution vice president, consumer loyalty, Maritz Loyalty & Motivation. He can be reached at Barry.kirk@maritz.com.

Don’t Do It! 3 Things Consumers Don’t Want from Your Loyalty Program

Posted on by Chief Marketer Staff

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