Kobie provides robust solutions for its brand partners. Thoughtful design on the front end, coupled with extensible, configurable technology, leads to a seamless customer experience. The company takes a strategy-led, technology-enabled approach as it works to narrow down to what truly drives a consumer to be loyal at an emotional level. This allows clients to grow the enterprise value of their membership and of their customer base through loyalty. Kobie’s market-leading platform helps deliver those end-to-end loyalty solutions.
Kobie primarily works within retail, financial services, travel and hospitality, and quick-service restaurant (QSR) industries, but it also serves clients in a number of other verticals. From the company’s strategic services standpoint, it partners alongside clients in healthcare and manufacturing, among others.
Loyalty360 spoke with Dr. J.R. Slubowski, Kobie’s AVP of Strategic Consulting and Head of Kobie’s Research Center of Excellence, about key findings in its recent consumer research report, leveraging the power of program tiers, and avoiding pitfalls when rolling out new program features or functionalities.
The Heart of Loyalty: 2024 Consumer Research Report
Kobie recently released The Heart of Loyalty: 2024 Consumer Research Report, where more than 4,000 U.S. and Canadian consumers from retail, financial services, travel, hospitality, quick-serve restaurants, and more served as respondents. Slubowski shares that Kobie conducted a loyalty study that focused on certain hypotheses and theories that it wanted to investigate.
“In past studies, we were a little more exploratory to get a read on what consumers are thinking,” begins Slubowski. “With this one, we entered with specific ideas around what we wanted to talk to consumers about—like the foundational components of programs, the features and benefits that resonate with members, and how they correspond to the ultimate health of a program. We did deep dives in personalization and how loyalty marketers could better engage with people between transactions.”
Kobie asked questions about status and tiers in programs. To better understand consumers’ perceptions, the company also asked about new loyalty innovations or items that are part of loyalty programs today that might not see a high level of adoption. Kobie endeavored to tie answers back to its emotional loyalty scoring tool or other indicators of emotional loyalty that could be examined.
Key Findings
One of the biggest findings that emerged from the report is that, more than ever, consumers are signaling they want choice, optionality, and the ability to co-create a loyalty experience when engaging with brands.
“Choice and optionality are not new trends. We’ve seen it building gradually over the past five to eight years,” says Slubowski.
However, Kobie observed a pivot in its latest research. That desire for choice and optionality is expanding beyond the redemption/reward sphere within the context of loyalty programs to ways that people want to use their points, build their experience, and how they want to access features and benefits when they want them.
“It’s ballooned beyond ‘just’ the redemption experience and ‘just’ the rewards,” adds Slubowski.
Kobie also uncovered perceptions on personalization and about how it’s critical to match the medium to the message—and then the message to the member. To achieve true personalization, brands must acknowledge that collecting zero-party data—the information people volunteer about themselves—as part of a zero-party data strategy is often emotional in and of itself.
For brands and marketers who wonder what kind of data they need to collect to drive emotional loyalty, when it comes to zero-party data, loyalty program members are fertile fishing grounds. The act of simply “asking” tends to drive an emotional connection, particularly for those who are engaged in loyalty programs.
In its study, Kobie also discussed joy, fulfillment, and meaningfulness. Slubowski believes that brand programs that can tap into those have the best chance of engaging with members beyond transactions.
“When you think about a game science strategy in that regard, that’s really about human psychology,” says Slubowski. “Understanding human psychology is a fantastic way to achieve those engagement goals.”
Report Reception
To have value, brands and marketing teams must find relevant items to act on. Certainly, brands seek to deliver increasingly impactful loyalty programs, and many want to focus on behavioral psychology components and behavioral economics while driving more value.
Slubowski shares that many Kobie clients have embraced The Heart of Loyalty Study. Kobie’s strategic consulting team has engaged in conversations with clients, assisting them as they discern how to leverage some of the insights and findings that came out of the loyalty study.
“Context matters,” notes Slubowski. “You still need to bring it back to what your program can do and what your members look like so that you can begin to implement some of those insights.”
He offers an example. Inspired by the section on endowing progress versus status as a psychological principle, one of Kobie’s clients embraced the concept and began to explore thoughts on how to endow progress within the context of the client’s own program. Those ideas were shared with Kobie for help in evaluating them.
“This created a great collaborative moment between the client and our team,” says Slubowski. “It allowed us to share where we thought they had something and to where they could pivot if necessary.”
The Challenge and Opportunity of Authenticity
For brands, authenticity brings both challenges and opportunities. Many elements come into play—being in the right channel with relevant content matters if brands want to deliver personalized offerings and rewards, especially in light of customer demand for having a voice in what is presented to them.
For Slubowski, the big challenges brands have with personalization fall into two categories. The first is that they are unsure about what their zero-party data strategy should be. They wonder how to collect the information they need. They might not even be sure if they should ask for particular information—or when they should make the request. Brands might even question whether they should ask or, instead, derive the information. Incentives also come into consideration. Should customers or program members be offered rewards in exchange for information?
“We’re working with a couple of different clients right now,” says Slubowski. “Together, we’re crafting strategies that involve capturing that personal level of information so that they can make all experiences across the member lifecycle more personalized—especially the ones that are critical to sustained engagement.”
While Slubowski believes this is an area where brands truly struggle, he points out that loyalty programs are a wonderful place to go after that information because there’s already a trusted relationship there. Members are already engaged with the brand. They tend to be some of the best customers to ask for information because they’ll often volunteer it more readily.
Slubowski has observed that some brands struggle with how to action upon the information in ways that are accurate and efficient—or even to action on it at all.
“One of the core tenets of building out a zero-party data strategy is if you ask for it, you need to act on it,” says Slubowski. “If you don’t act, consumers are going to wonder why they supplied the information to the brand. Then, they’ll stop telling you anything.”
He advises brands that when they leverage the collected information, they do it in a way that fully drives an additional level of engagement. Slubowski understands that it can be tricky for brands to get it right—something uncovered in Kobie’s recent study. If a company uses personalization and gets it wrong in certain ways, members will vilify the brand—but they won’t necessarily give the same brand credit if it gets things right.
“Some loyalty marketers have even felt burned by executing personalization in the past because of situations where members feel they aren’t known and become angry if something small is wrong,” says Slubowski. “We encourage loyalty marketers to jump back on the horse if they have pushed personalization to the side. They can reach out for help if they think they can’t do it themselves.”
Early vs. Late Member Disengagement
Slubowski doesn’t see a real difference between the two. This was one of the bigger insights that emerged during the study. Kobie held a hypothesis that perhaps the reasons for member disengagement early in the relationship might be different than the reasons for disengagement later in the relationship. But what the Kobie team found was that the top three reasons were essentially the same.
“The number one reason is it took too long for the member to earn a reward,” explains Slubowski. “That was both for early disengagers and for those who disengaged later.”
Early disengagement is about immediate gratification. Late disengagement is about sustained ‘regratification.’
“That was an insight that emerged as one of the top reasons,” reiterates Slubowski.
The second reason—tied for early disengagers and second for the late ones—was that the member simply stopped buying from the brand. Slubowski points out this is normal in programs as there is always going to be some level of organic attrition.
And finally, the third reason involved looking at the program benefits and finding they weren’t that appealing, evolving, or bringing forth something new. This underscores the importance of understanding what members are looking for from a features and benefits perspective and then focusing energy on building out an evolutionary roadmap for the program. This is what will help keep members engaged. It will drive that longer-term sustained engagement.
Zero- and First-Party Data
According to Slubowski, the first thing a brand can do is recognize that context ultimately matters.
“One of the behavioral science theories we talk about is something called Information Boundary Theory, which basically says we build walls around information in our brain,” explains Slubowski. “We’ll take down those walls—for brands, for people, for whomever we interact with—if we find the information we’re going to share is hyper-relevant to the context,
or they give us a strong external reason to do so.”
This is why Kobie emphasizes it’s important to recognize contextually what’s going on in the loyalty program when a brand begins to ask for that kind of information.
“It’s building out that ‘ask versus derive versus buy’ strategy when it comes to your zero-party data, recognizing, of course, that you want to aim for specific audiences,” says Slubowski.
In other words, if a member has been disengaged or dormant for 9-12 months in the loyalty program, they’re probably not the person to ask for zero-party data. They’re not that engaged, and they’re not going to share it.
Kobie learned from the study that those who are emotionally connected to programs that have emotional drivers in play are much more willing to volunteer information because that’s the way they demonstrate their loyalty back to the brand.
Brands need to recognize that context and take stock of where they are collecting the information already. Slubowski notes that many brands don’t realize—especially when considered from an enterprise organizational standpoint—that they’re collecting a lot of zero-party data already, but they might not be acting on it. Brand teams must go on an “exploratory mission” to identify where the gaps exist and ask questions such as, “What are the three-to-five data points I could add to drive an increased level of engagement in the program?”
“When you start to ask yourself questions, you can build a plan around going to try to find that information through a whole host of strategies,” says Slubowski. “We talk a lot about game science because we think it’s particularly effective, but it could just be a more augmented member profile or maybe offering a reward for people completing member profile questions [for data capture].”
Ultimately, developing a plan for collecting the desired information will make the greatest impact.
Program Tiers and Status
Loyalty360 observed in its 2024 State of Customer Loyalty report that 79% of brands would either like to add, enhance, or completely redo their loyalty program. They are examining their customer value propositions to try to understand what resonates with end users. They might be considering adding tiers, or perhaps they are reviewing existing tiers or status levels to ensure they are aligned with customer expectations and desires. Brands endeavor to listen to and understand what their customers want and then provide a program that resonates and effectively drives incremental behavior.
“A cardinal rule I share with clients is that your member wants to look up and wants to look down,” says Slubowski. “They look up because it fulfills an innate need for them to improve. They like to look down because they also need to feel good about where they’re at today.”
Tier structures need to provide opportunities for members to look up and to look down when it comes to the level of engagement they have with a program. Kobie learned from its study that launching a tiered structure still needs to have “connective tissue” leading back into the core program value proposition that enticed a person to join or engage with the program in the first place.
“It’s a bit of a duality. You must have that connective tissue leading back to the program—maybe it’s through the currency or what they can do when interacting with the program or how they’re able to earn or accelerated earnings, etc. You also need to give them something on top of it,” emphasizes Slubowski. “That’s where the duality comes in.”
Brands can leverage that “connective tissue back to the core” and then use it as a springboard to bring additional features and benefits to members that others in the program wouldn’t necessarily get.
As new tiers are constructed and new items are added, brands need to think about whether it is a “net new benefit” or a benefit that can be graded out to make it better as people accelerate up in terms of the tiers.
“Tier structures and programs are probably one of the most powerful game mechanics you have at your fingertips,” says Slubowski. “Not everyone perceives them as game mechanics, but they absolutely are. They represent an achievement dynamic—the notion of leveling up—is essentially what tiers are.”
This means that tier structures have the power to drive intense reactions and emotional connection, so they need to be treated judiciously when planning, constructing, or putting a tier structure in place that invites engagement with members.
Avoiding Pitfalls
When brands seek to evolve their programs and new features or functionalities, being cognizant of what the end consumer wants is key—but customers and program members can also be hugely irrational. They may indicate a benefit or feature as something they desire, but then it turns out that they don’t actually want it. This is a challenge for many brands when designing an effective program.
During the study, Kobie asked about new things that might be evolutionary in the loyalty space—NFTs, biometric scanning, and more. It also asked questions about those that have been around for some time but have not seen as much adoption, such as communities or loyalty partnerships. Kobie found that consumers don’t think of those items as “bright shiny objects” like loyalty marketers do.
Consumers were asked about a number of items that had the propensity to impact loyalty in positive or negative ways if they were rolled out. When Kobie dug deeper, it found that there were many people just “sitting on the fence.”
“There were a lot of neutrals,” says Slubowski. “People reported, ‘I’m not going to go one way or another on this. I’m just going to wait and see.’ That’s exactly what you’re dealing with when you’re rolling out any kind of a new innovation or program feature as part of a loyalty program.”
There will always be people who sit back and wait to see what the adoption looks like before jumping in. Slubowski believes engaging that particular audience is critical.
“There are things we can do to address that,” says Slubowski. “Recognizing that it’s our human nature to reject the unfamiliar is one. Trying to make the unfamiliar ‘familiar’ to that audience is another.”
Slubowski also recommends potentially targeting specific program members—those who are hyper-engaged and perhaps those who are younger as they have shown more of a propensity to adopt innovation.
“The reality is that it’s the product curve in motion,” explains Slubowski. “Just as you would roll out a new product, you want to treat new program feature, innovation, or program rollout in the same way. You want to focus your communications on only that one feature when you roll it out. Don’t bury it in a sea of other features that might be rolled out at the same time.”
If a brand is launching something new that’s important, it needs to talk about it. Simply building it is not going to draw the attention of the people it’s meant to engage.
“You must spend the time with that rollout strategy in order to help optimize the chance for success,” says Slubowski.
Looking Forward
Slubowski shares that Kobie is enjoying many client engagements. Its pipeline for services is strong, and Kobie will be focused there in addition to bringing on more loyalty platform clients. Within the context of emotional loyalty planning, the company will be taking additional deeper dives. As a researcher, Slubowski acknowledges that one always collects more data than needed. Kobie gathered much information around emotional loyalty/additional emotional loyalty drivers, and the Kobie team will look into that data from the study.
Then, Kobie will look at its proprietary product, the Emotional Loyalty Scoring (ELS®) Tool, and begin to build out additional componentry there. Updates will be made.
“There’s going to be a deeper focus in the second half of this year on the emotional components that are emerging out of the study,” finishes Slubowski. “That, of course, will be in between client engagements and creating some great strategies for clients along the way.”
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Quick-fire Questions
What is your favorite word?
Cacophony.
What is your least favorite word?
Pamphlet.
What excites you?
Learning.
What do you find tiring?
Repetition. Repetitive tasks.
What book do you like to recommend to colleagues?
Blue Ocean Strategy by W. Chan Kim and Renée Mauborgne.
What profession other than your own would you like to attempt?
A veterinarian or a doctor of infectious diseases.
What do you enjoy doing that you don’t get to do often?
Wine trips. Wine trips to wineries.
What inspired you to become the person you are today?
I would say all of my teachers.
What do you typically think about at the end of the day?
What I have to do tomorrow.
How do you want to be remembered by your friends and family?
Probably someone who’s always brought levity and someone who’s never afraid to pick up the tab.