Comarch recently hosted a webinar on how to implement psychological principles in loyalty campaigns for retail brands. The event boasted loyalty industry standouts such as Bill Hanifin of The Wise Marketer, Phil Rubin, founder of Grey Space Matters, and the esteemed Director of Loyalty Science Lab Yuping Liu-Thompkins – and was led by our very own Director of Strategy and Growth in Americas – Christopher Sandstrom.
The hour-long discussion was chock full of valuable insights, research-based conversations, and friendly-hearted debates on the future of loyalty in the retail marketplace. With 75% of loyalty programs coming from the retail industry, it’s no secret that competition is fierce – and finding ways to think outside the box was top of mind throughout the webinar.
During the event, we received many questions from our audience members. Unfortunately, we weren’t able to answer all of them. So, we thought it would be helpful to reflect on the roundtable and continue the conversation to provide further context and answers to the questions below.
Miss the webinar? Click the below and watch it on-demand.
Q: Do you think earn and burn loyalty programs are still relevant?
Earn and burn programs are just one of the many types of loyalty programs retail brands can take advantage of. In this more traditional approach to loyalty, customers can earn points for their purchases – and in turn, spend those points on further purchases.
Thompkins explained that from a goal-psychology perspective, earn and burn loyalty programs are still a relevant mechanism for a wide range of brands.
However, she cautions that the journey for earn and burn differs drastically for individual customers, and that engaging and communicating with customers at different stages of that journey is still crucial. Data analytics plays a major role in guiding these engagements, but the manner in which brands engage with consumers is where behavioral psychology comes into play.
Rubin agreed, expanding on the various drivers and psychologically unmet needs that impact customer loyalty in the earn and burn model. He goes on to discuss how the majority of retail is predicated on promotions and discounts – expressing that the research at his prior firm found loyalty drivers that go beyond financial.
“People want to be shown that they’re known by the brands. People want to be remembered.” Rubin stated. “They want to be informed and educated so that they can make their own choices, and feel good about making those choices. And they want to feel special, which requires access.”
Essentially, it’s about creating loyalty programs or overall purchase environments that go beyond simple pricing models.
Q: What are some effective methods to increase daily engagement?
Engagement plays a vital role in building customer-centric loyalty programs. Creating an environment that fosters engagement every single day – now that’s a recipe for success.
Sandstrom kicked things off with a first-hand account of his daily engagement on a food delivery app he uses every single day. He explains how the brand utilizes a “spin the wheel” mechanic that offers rewards and incentives for daily spins. Sandstrom went on to explain that his motivation for daily engagement is furthered by additional promotions that are offered for weekly streaks.
Thompkins jumped in to elaborate, citing how her research on habit-forming plays a vital role in boosting daily engagement.
“When you look at something that is frequently repeated over time, habit actually tends to be a very strong driver, which makes the inertia your friend, rather than your enemy.”
The often-subconscious habits we form are not entirely autonomous, and brands can utilize certain behavioral and psychological methods to shape customer engagement. This is especially true for product categories that involve infrequent purchases, and building a habitual environment is one particularly effective way to increase daily engagement.
Q: There are sources saying loyalty campaigns for supermarkets aren’t effective in growing your business. What’s your opinion on this?
The truth is that many supermarkets aren’t utilizing the right loyalty campaigns. Many brands rely on the age-old process of sending weekly coupons and membership-based pricing discounts. If we take a page from the webinar on the “foundations of human behavior” – these old-school loyalty models fail to address key psychological principles.
Autonomy is almost completely absent, as there is no room for discovery or growth in many supermarket loyalty programs.
Competence is also lacking, as there is no sense of achievement or mastery in these models.
Social relatedness is completely out the window, unless a membership program has matched customer-spend with a value-based mission.
Q: How does the state of the economy impact the value vs. emotional loyalty purchase decisions?
The economic trajectory we’re currently facing certainly impacts purchasing decisions. One would have to think that price increases and general economic changes would impact emotional loyalty – taking valuable customers away from certain brands that may even be increasing their pricing.
But that may not be the case.
Take Apple for example. Emotional loyalty continues to drive purchase decisions for their customers. Even during the Great Recession (2007-2009), their revenue nearly doubled. Apple is no stranger to creating emotional connections and experiences with its customers – and they are certainly not opposed to drastically raising their prices. Since the first iPhone, which sold for $499 – prices have doubled since then – and yet, the number of users has never decreased. In fact, it’s grown from 1.3 million to well over a billion in the past 16 minutes.
Q: How can loyalty marketers limit any movement away from emotional bonds?
Safeguarding the emotional loyalty that your brand builds with its customer is all about creating, maintaining, and fostering trust. So, the real question is how do you sustain that trust?
- Personalized experiences: create unique and memorable customer experiences that make consumers feel valued.
- Exceptional customer service: make a customer’s life easier while providing a human-first approach to problem solving.
- Emotional branding: build a brand image that evokes a positive emotion while responding positively to the needs of customers.
- User-generated content: ensures that messaging comes from a relatable and trusted source that can organically build emotional relationships.
- Gamification: play upon psychological principles with tiered rewards, badges, leaderboards, and incentives.
- Continuous improvement: use customer feedback to define and refine your customer loyalty strategy.
Q: What’s the biggest difference in retail customer behavior versus any other industry?
Sandstrom wrapped up the call with this rapid-fire question, limiting the panelists to just a few words for their answer. One by one, our experts shared their answers.
Phil Rubin: Available goods
With so many products available, retail customer behavior is volatile – and it’s difficult to capture.
Bill Hanifin: Promiscuity
The ever-increasing landscape of brands means that customers aren’t always in the mood for loyalty. Today one brand, tomorrow another.
Yuping Liu-Thompkins: Triangle-like relationship
Retail is a complex environment, where one brand is selling other brands – creating a triangle with the consumer.
Do you have any more questions?
Director of Marketing at Comarch North America