Brands for Rewards
Consumers Purchase Brands to Earn Points, Rewards
By Deborah L. Vence
Forty-five percent of consumers purchase brands for rewards, according to a new study by Maritz Motivation Solutions.
The Maritz LoyaltyNext Customer Study, completed late last year, indicated that a majority of consumers cited "the ability to earn points and rewards, as well as good promotions and low prices" as the reasons why they purchase from a brand. To boot, fewer consumers purchased based on great experiences and service, or on shared values and opportunities to connect socially. (Results of the study, which queried more than 2,000 consumers in the United States online about their loyalty to and engagement with brands, will be released in stages in 2016.)
"When evaluating your brand, consumers also are evaluating your loyalty program," stated Barry Kirk, vice president, consumer loyalty strategy, Maritz Motivation Solutions, in a press release. "Marketers shouldn't be surprised by this, as U.S. consumers have been trained for decades to expect brands to pay them for their repeat business."
The study also revealed that 43 percent of consumers join loyalty programs because of the desire to earn rewards, while only 17 percent of those in loyalty programs stated that they joined out of love for the brand's products, and just 5 percent because of a shared identity with brand values. Moreover, six out of 10 customers believe that companies only offer rewards programs to get them to buy more, rather than in an effort to build a relationship with them.
Kirk also stated that while the results underscore the value of points and rewards programs, the study also demonstrates the potential for brands to forge better relationships with consumers, and that the data suggests consumers don't see the experiential part of the program and that brands really do want a relationship with their customers.
To help foster those relationships, Maritz developed a framework that outlines four types of customer loyalty based on the behaviors and engagement of loyalty program consumers and program brands. The framework shows the degree to which a program is transaction-based or relationship-driven, and the level of passive or active engagement of program members.
The four types comprise the following:
- "Inertia loyalty," which focuses on "barrier to exit," such as subscriptions and contracts.
- "Mercenary loyalty," which focuses mainly on customers being rewarded monetarily for purchase behaviors. And, retention is driven mainly via a "hidden" rebate offered to the member in terms of points redeemable for rewards and status.
- "True loyalty," which focuses on great experiences and service. "Earn" behaviors share equal focus with "burn" behaviors through an engagement strategy that includes a refined member life-cycle, segmentation, a data-driven communications cadence, meaningful personalization and surprise-and-delight.
- "Cult loyalty" that involves personally identifying with the values of the brand and actively seeking to connect socially with fellow brand loyalists.
"The data reveals a major opportunity for companies to tap into the relationship aspect of loyalty inside their programs," Kirk stated in a press release. "By creating engaging experiences and emotional connections, you can forge deeper relationships with your customers."
The study also revealed a few suggestions by Maritz on how companies can differentiate their loyalty programs from the competition by developing more meaningful, personal and lasting relationships with their customers. The ideas are:
- Be specific. Highlight your reward offering in brand and program communications. Customers are seeking that information when they evaluate you.
- Make it fun. Look for opportunities to make your program's point-earning experience more fun, engaging and challenging to tap into True Loyalty.
- Add social elements that enable members to see what other members are doing in the program as a tactic to bring Cult Loyalty to life.
Moreover, the study pointed out that "True and Cult Loyalty are inherently more relationship-driven than their transactional-based loyalty counterparts, Mercenary and Inertia Loyalty. And, we know stronger relationships build stronger loyalty. The problem is that only 24 percent of program members strongly agree that their loyalty program 'treats me like an individual,' and only 25 percent strongly agree that their program is 'personally meaningful to me.'"
Maritz Motivation Solutions is part of the Maritz family of companies. The company provides consumer loyalty, employee recognition, sales incentive and channel loyalty programs to companies in the U.S. and globally. For more information, go to www.maritzmotivation.com.