Points and discounts are the hallmark of most loyalty programs, and our data shows that they are usually pretty successful in incentivizing purchase behavior: Nearly half of US online 18–35-year-olds admit that programs influence what they buy and how much they spend. But loyalty isn’t just about the purchase — or at least it shouldn’t be. It also has an emotional component which programs often fail to satisfy: Only 41% of consumers say that programs make them feel more loyal to the brand.
The stakes for loyalty programs are high. Success requires striking a delicate balance among what customers want, the behaviors the business wants to drive, and showcasing what a brand can uniquely offer. And it’s not easy. The market is saturated, consumers and businesses have a lot of expectations for what loyalty programs will deliver, and they’re expensive to execute.
If you want to build a loyalty program that isn’t just a replication of every other program out in the marketplace, you have to start with your customers. Specifically, you must deepen your understanding of what they expect from programs, how they feel about the benefits, and how they interact with them.
Our latest report uses Forrester Analytics Consumer Technographics® 360 research to do just that. When we dug into consumer perceptions of loyalty programs, we found that:
- Consumers expect more than a brand’s best discount. Yes, the majority of consumers expect savings from the loyalty programs they belong to, but they also want to feel special and look for perks that are relevant to the companies they are buying from. Even in industries with little brand differentiation such as QSR, 80% of loyalty program members want to receive special treatment not available to other customers.
- Rewards elicit varying emotional responses. Emotion is the single largest driver of customer loyalty, so it’s important to consider not only the type of emotion that benefits evoke but also the intensity. Cash back provides positive reinforcement in the moment, but status tiers create feelings of anticipation and extended gratification.
- Consumers exhibit multiple personalities when it comes to redemption. Behaviors within loyalty programs vary: While some individuals appreciate instant gratification, others get more satisfaction out of working toward a certain outcome. We uncovered three fundamental personality types when it comes to program engagement: hoarding heroes who are hyperconscious of maximizing the value of their rewards; savvy spenders who make conscious decisions about when to hoard to burn their points; and fast fanatics who thrive on getting free stuff as soon as they can as often as they can.