Should consumers expect that loyalty programs can be sustained by delivering transformative, emotional customer experiences alone? Not according to loyalty expert Chris Barnett, who believes in the importance of balancing emotional and rational benefits. Loyalty360 talked to Barnett, Vice President of Strategic Services at The Lacek Group, about the case for loyalty program balance and why brands should strive for this as well.
Why are so many brands emphasizing emotional benefits and rewards these days?
Barnett: There are a number of things driving this trend. They range from points fatigue and growing interest in experiential rewards (given shifting demographics) to the sidestepping of currency-related liability burdens and an explosion in the number of programs competing for share of mind.
Let’s face it, emotional benefits—say, complimentary tickets to a major sporting event or a chance to meet a celebrity backstage—can be incredibly powerful: The recipient feels like a VIP, the brand gets social media buzz, and the customer usually feels a stronger tie to that brand. Everyone’s happy.
But the challenge is that only a tiny percentage of loyalty program members can ever enjoy those big emotional experiences. The vast majority of these experiences just aren’t accessible, scalable, or financially feasible for most programs. So, while they have a place, emotional benefits alone can’t maintain a loyalty program.
Beyond that, the increasing popularity of emotional and experiential rewards doesn’t mean that customers don’t also feel emotional about earning and redeeming currency-based awards. On the contrary, members often feel attached to rational benefits. Thus, brands must strive to be creative in how they’re delivered to find a middle ground between rational and emotional.
Why can’t loyalty programs provide emotional rewards for all their members? Why must programs be balanced?
Barnett: Most emotional benefits simply aren’t as scalable as rational benefits—and a program’s financial sheet can’t handle the ramifications. They create tough operational challenges as well. And many times, those emotional benefits that are scalable generally aren’t compelling enough to create strong emotional bonds. Also, programs overly focused on emotional elements fail to leverage the many proven mechanics of rational components, including artificial advancement, reward velocity, dynamic pricing, and more.
Listening to consumers confirms the importance of balanced loyalty program designs. Member-only discounts are routinely named by the vast majority of global online shoppers as their favorite perk. Most members also like collecting reward currencies and having access to hard benefits like free shipping. All of these are rational benefits. So, while emotional benefits play a definite role in loyalty program design, consumers also greatly desire rational benefits.
How do you begin to create a balanced program?
Barnett: Start with your member touch points—that is, wherever your program comes in contact with members. The best programs envelop members within the “wrapper” of the loyalty experience. Throughout these brand interactions, sprinkle in personalization, relevance, and context. It’s through this hypercontextual information and these small, but highly personal, connections that your brand can build and scale personal relationships across millions of members and customers.
Second, your program needs to create and convey a core value proposition—usually a combination of hard benefits, soft benefits, and utility that spans the spectrum from rational to emotional. These are the very reasons members join and engage with your loyalty program in the first place.
Hard benefits are easily monetized and appeal to the desire for rational or tangible incentives—for example, a discount or earned rewards. Soft benefits may include things like early access to new products, exclusive content, or customer prioritization. These elements are typically more emotional in nature and convey the feelings of appreciation and recognition. And utility benefits—say, the ability to save past purchases or place an order via a mobile app—make members’ lives better or easier.
Once a program is balanced, how does a brand keep members motivated?
Barnett: Your brand needs to leverage a spectrum of “engagement motivators.” These can range from tangibly rational to wildly emotional. Commonly used motivators include points and rewards, promotions, partner benefits, member sharing and communities, gamification, and surprise and delight. As your brand considers which motivators to use and when to use them, your company needs to both maintain rational-emotional balance and initially prioritize rational over emotional motivators with new enrollees.
Why? Because rational elements are more easily evaluated by prospective members when considering whether joining a loyalty program is worth their time and effort. For this reason, it’s often said that members join for the rational benefits but stick around for the emotional benefits.
Whether rational or emotional, individual motivators can be introduced over time and on a permanent or temporary basis. Further, considerations of which engagement motivators to introduce should weigh on whether they’re appropriate for your brand, product, consumer, or financial circumstances. For example, many luxury brand programs don’t offer currencies or points, because their customers are less focused on saving dollars and more focused on improving their experiences.
What’s important is that the more motivators your loyalty program provides, the broader the spectrum of members your program will attract. Leveraged effectively, your program must deliver what members seek from the brand across each touch point of the customer journey.
What advice would you offer in terms of loyalty program balance?
Barnett: Keep in mind that engagement motivators, both emotional and rational, should not be used to the exclusion of the other; layering several approaches onto your loyalty program incents desired behaviors in a way that caters to members. Be open to adding new features and designs—that helps ensure a course for future investment and development. Leave room, too, for future innovations and technology adoption. And finally, be cognizant of a changing business environment and competitors—and adjust your loyalty program to suit.