A Love For Loyalty: Rewards Programs
Loyalty can be defined in many different ways depending on the industry or segment the topic applies to. For example, what loyalty means to a brand and what it means to a consumer will vary significantly. To brands, loyalty can mean customer lifetime value, the support of brand ambassadors, and the potential for repeat purchases, ultimately leading to increased revenue.
The end goal of loyalty for brands will be primarily focused on adding monetary value. For consumers, the development of loyalty, although gradual, is formed on a psychological level and can turn into a long-term connection. In order for this connection to evolve, there are certain expectations that customers have that must be upheld by the brand. Customers expect brands to be transparent, offer a satisfactory product, provide a high level of customer service, and to create an experience, unlike what the competition is willing to offer.
By offering a rewards program, and then personalizing those rewards to each customer/customer group, brands appear more humanized and vested in maintaining a high level of customer satisfaction. Inclusion in the rewards group can make customers feel privileged; like they have access to a special club or the VIP treatment. While consumers that participate in loyalty programs often feel as if their business is appreciated and view a program as incentive, to not only continue supporting a particular brand and repurchasing, but also to promote the brand to others.
Along with this emotional connection, comes the tendency for brand advocates to display irrational behavior, motivated by their love for a brand. Examples of this include, paying more for a product simply because it is from a certain brand or driving completely out of the way in order to shop in a particular location.
Rewards programs can also have other psychological impacts for consumers. They can experience a rush of adrenaline and excitement from watching balances grow or the opposite, and exhibit signs of impatience because they want an instant reward. An investment of both time and money is needed in order to see an increase in revenue, but if implemented successfully, loyalty programs can create long-term, dedicated customers and steady profit margins.