As any marketer will tell you, listening to customers is much easier than understanding them. As brands continue to find ways to engage consumers and drive profits, misconceptions have begun to cloud the bigger picture of customer loyalty programs.
Loyalty360 on Thursday hosted a webinar titled, “Busting Loyalty Myths: What Customers Really Think - and Feel - About the Programs They Engage With,” presented by Maritz Motivation Solutions. The focus of the webinar attempted to clear up these misconceptions and share insight about how customers actually view the brand loyalty landscape. The presentation was led by Maritz’s Barry Kirk, VP of Loyalty Solutions; and Cheryle Frenzel, Consumer Loyalty Strategist/Consultant.
The webinar explored several myths using data from the Maritz LoyaltyNext 2016 Customer Study, consisting of data from more than 2,000 U.S.-based shoppers.
While generally accepted sentiment concludes (unsurprisingly) that customers are highly resistant to the idea of a member fee, data from Maritz shows this to be a myth. Almost half (48%) of respondents indicated that they’d be willing to pay for membership in a loyalty program, especially if the fee provided financial benefit or exclusivity.
While a membership fee may not prove wise for all organizations, the option should at least be discussed.
“If you don’t have a fee, it’s at least worth looking into, especially considering the cost of setting up a loyalty program,” Kirk explained to attendees. “Offsetting these costs can prove tremendously valuable for companies that incorporate a membership fee.”
With the focus on driving enrollment, it’s no wonder that brands often seem to be more concerned with getting customers into a program than engaging them once they’ve joined. This strategy, especially regarding Millennials, can prove disastrous. Compared to Baby Boomers, the younger generation is much more likely to quickly disengage with loyalty programs.
“The first few months are a crucial window for a loyalty program,” Frenzel said. “60% of Millennials, if they disengage, will do so within three months. This engagement comes down to understanding your customers. What do they want, what appeals to them? Are these things in your program, or are you missing the mark?”
As brands place more emphasis on “earn and burn” point redemption strategies, they may be losing focus of how customers are looking to earn and redeem their rewards. According to the Maritz data, only 16% of consumers “burn” points as soon as they have enough to redeem for a reward. Instead, said Frenzel, “members are saving points, regardless of whether or not they have a specific reward in mind.”
One of the more innovative ideas explored by the Maritz report are the four types of loyalty based upon factors regarding brand relationship (relational vs. transactional) and engagement strategy of the loyalty program (active vs. passive). These types are Inertia Loyalty, True Loyalty, Cult Loyalty, and Mercenary Loyalty. Interestingly, Maritz set out to disprove the “myth” that loyalty programs are primarily mercenary mechanisms, but the data confirmed the idea instead; 46% of those surveyed say that they join loyalty programs on a mercenary basis, but Kirk sees this as a kind of tacit agreement between brands and consumers.
“We, as consumers, tend to give the type of loyalty that’s asked of us, and the reality is that most programs are based around using financial incentives to drive loyalty,” Kirk explained.