Kate Hogenson, Strategic Loyalty Consultant at Kobie Marketing, sat down with Loyalty360 to discuss the firm’s research into customer loyalty and engagement.
What went into the construction of the customer loyalty research?
I had been wanting to do this kind of research for a long time. So, we wanted to know how people of different generations interact with customer loyalty programs. I think we’re at an inflection point where things are going to shift in terms of the interfaces people are using.
How many people did you talk to? What were the questions focused on? Did you use a third-party group to help pull this together?
Yes, we were working with Walker Sands, who is a PR agency and they do a lot of work with the future of retail. We also worked with eRewards. We do research with them to get a cross-section of other types of loyalty programs, specifically travel and hospitality. But, with this research, we really wanted to understand what’s going on in the retail space. It was a digital survey, so there were responses from over a thousand people. It was purposefully set up so that we would have sample sizes across the generations.
Were these open-ended questions? Or were they on a Likert scale?
No, we didn’t use open-ended on this one. This was in-out, fast.
So, the goal of the research was to understand the preferences of different generations in regard to technology. What was the goal for brands?
I’m a very firm believer that strategy and implementation need to work together, and you need to understand those. You can’t just design a program in a vacuum. How people are going to interact with it down the road needs to be considered.
What was the biggest insight that you got from your research?
The one that was a gobsmacker to me was this. We asked people, “Why do you join a loyalty program?” Over 85 percent, across generations, Gen Z through Boomers, said, “I joined to collect and redeem points for rewards.” We weren’t specific about what types of rewards they would receive. It was just about collecting and redeeming points. That was a surprise, because you keep reading in the press about how points are dead, and if you’ve got almost 90 percent of people joining just to collect, something’s going on there. The second reason given was “to get discounts.” That’s a rational incentive, that makes sense, but it was much lower. It was 57 percent of Gen Z, 78 percent of millennials, the rest were in the very low 60’s.
The other thing that was interesting to me is that on a couple questions, people were unsure how they felt. There’s technology they use, but they’re not sure about it. Many people, about a third of Gen Z and half of the Boomers, said, “I would like technology that is less invasive and annoying.” But the real thing that was interesting was, we asked them, “Okay, how about technology that makes the shopping experience easier?” About 20 to 30 percent said, “Yeah, I’d like technology that makes shopping easier, allowing me to check out faster.” I would have expected that number to be over 50.
We asked, “Would you like technology that makes shopping decisions for you?” Whoa, nobody wants that. It was under 10 percent for everybody. Only three percent of Gen Z said they wanted technology that makes shopping decisions for them. Forty percent of Gen Z was into technology that understood their preferences and behaviors, but only 14 percent of boomers. So there’s a real drop off. It’s a real differentiating question, “Would you like technology that understands your preferences?”
And then the next question, “What information are you willing to share in order to get a more personalized product?” People say, “Yeah, I’d like a more personalized experience, that matters to me,” but when you ask them what they’re willing to share, they’ll share their names, their emails, their age. But 60 percent say they want information from Facebook, but less than 20 percent are willing to give you their information from Facebook. And remember this is before Cambridge Analytica. For perspective, that’s about as many people that are willing to share their mothers’ maiden names. So, willingness to share Facebook in order to get a more personalized experience is way down there with credit info, social security number, and mom’s maiden name.
That’s a control issue, correct?
Yes. We’ve really been looking into behavioral economics. We have a PhD on staff doing research, and control, trust, these are big issues. I would argue that one of the real benefits of a loyalty program is that it makes the exchange of customer information and data explicit. And the customer is being exclusively compensated for that.
So, how do you take your research and make it simple for brands? How do we take data, package it, and make it actionable for them?
Well, actually, there’s an interplay between the two, and part of why we did this research was, we’re getting so many questions like, “Well, can’t I just do a loyalty program as a mobile app?” And we ask, “Well, what’s your objective with that mobile app?” If what you want to do is shorten your line wait and keep your marketing budget down, yeah, that’s going to work for you. But, if what you want to do is get higher penetration off your database, you’re going to have to move beyond a mobile app. You’re going to have to allow the customer to have multiple ways to interact with you. And, where you see this in the marketplace is the difference between Panera and Starbucks. Starbucks Rewards had all the advantages. It was a mover in the category, an innovator. It absolutely changed how people used mobile wallets. More people use Starbucks Pay than use Apple Pay and Google Wallet combined. So Starbucks really did a great thing there, but they stalled in penetration of its member base between 35 and 40 percent. Panera, on the other hand, has over 50 percent penetration. How did they do that? They integrated with POS. You can input your phone number on the keypad, an associate can take it down for you if your hands are full, they’ve just made it easier for you no matter who you are. If you’ve got your phone out, it’s easy. If you’re fumbling with your phone in your purse, you’ve lost it, it’s easy. To get better penetration, you’ve got to look at multiple ways of engaging with the customer, you have to look beyond the mobile app. You have to look at your member base. For example, if you’ve got a lot of Boomers, fewer of them have a smart phone and fewer of them are going to use it for research. You have to know who your target is and who you want to reach.
Was there something you saw in the research that you didn’t expect to see?
We saw that 52 percent of Boomers didn’t use a smart phone for research or purchasing but that around 70 or 80 percent had a smart phone. That was surprising because they’re not using the full capability.
How should brands be leveraging this information?
As I said, I think you need to tie strategy to implementation to your finances to your research. Take this information and use it to build your business case. If you want to reach the actual age group of your customers, then you can’t just go mobile only yet. I think this is changing, and I’ve been watching the digital assistant numbers, which last fall were very, very low, but I think that’s going to change. However, we’re not able to quantitatively measure this change yet.
So, you’re going to have to diversify the communication medium and message to make sure that it is prudent and powerful and can be responded to by the different generational cohorts.
Yes.
What would you recommend to brands trying to take this information and roll it out?
Know your audience and to your audience be true. Do what works for your audience. Loyalty programs are not simple, and this is one of the things that is difficult. If you’re really going to do them right, they must work across all touchpoints, all points of the life cyle of your customer, from when they first try you to when they become your huge brand advocate. They’ll buy from you to keep your brand around because they love you so much. But it’s very hard to give solutions to any one person, and that’s why I say the simplest thing is to know your audience and to them be true, especially at a specific point in time. What is the one thing they need to know at one specific point? And it has to be simple for the customer where they are. Behind the scenes it may be pretty darn complicated, because you might need one message at one point and another at another, but for them you need to make it simple.