Defining The “Experience Factor”

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By: Lanndon Lindsay |

Posted on October 4, 2018

Your loyalty program offers best-in-class rewards. It is marketed to the teeth, so not an eyeball can avoid it. Maybe it is even a pioneer in its industry, a tentative foot put forward that has transformed over the years into a sprawling, multinational endeavor. And yet, quarter after quarter, the engagement metrics are crashing; costs are skyrocketing; and as members become increasingly disenfranchised, the sense of urgency only grows.

Sound familiar? While loyalty practitioners are finally starting to tune into the fact that rewards alone or longstanding reputations are not enough to maintain success in today’s hyper-competitive landscape (how many seemingly invincible behemoths have we seen stagger in recent memory?), the deeper elements of loyalty – experiences, emotions, equity, or the summary of which I often call the “experience factor” – continue to elude the grasp of marketers who are frantic to turn the tides on their sinking ships. Perhaps this is because of the tenuous nature of emotion itself, or the utter subjectivity of the individual experience…but without a precise understanding of how the modern customer craves to be engaged, the prospect of resurrecting stagnant programs is a daunting one.

MIT Sloan Management Review has published research conducted in late 2017, surveying more than 9,000 consumers about their experiences with loyalty programs across nine different business sectors, including grocery/drug/mass merchandise, retail, airlines, hotels, car rental organizations, and restaurants. Consumers in the survey reported what they value in a program and how they engage with it. The results of this research not only produce the revelation that well executed loyalty remains a significant boon for businesses (consumers who participate in top-quartile loyalty programs are 80% more likely to choose the brand over competitors and twice as likely to recommend the brand to others), but also propose four key “principles of loyalty” that help pin-down the “experience factor” as a tool of explicit utility:


1). “Tailor your program’s benefits to the ‘head’ and the ‘heart.’”


Rewards like money and discounts appeal to the “head”, to the rational shopper with a budget in hand and a bills to settle. The only problem is that few shoppers are purely rational; in one way or another, they all have a “heart” which influences their behaviors along the path-to-purchase. A great rewards mix not only satisfies the members wallet, but it captivates them on an emotional realm: loyalty programs that make customers feel special and recognized have 2.7 times more satisfied members. Rewards tactics like surprise-and-delight work towards establishing this connection, but oftentimes, immaterial benefits like special recognition, honors, or premiere statuses can have the most impact of all.


2). “Speak to all parts of the loyalty funnel”


An experience is not a singular moment in time; it is a culmination of many different touch-points, associations, memories, and tangible & intangible brand elements that form an overarching equity within the minds of customers. It seems to go without saying that to form a positive experience, a loyalty program must influence the entire customer loyalty funnel:


   >> Aware of Loyalty Program 
     >> Member of Loyalty Program 
         >> Active In Loyalty Program 
           >> Behavior Change Due to Loyalty Program


The MIT Sloan Management Review study suggests that the greatest opportunity to gain a competitive edge is in the section of the funnel where members have joined the program but aren’t actively using it, because these are the members that have both purposeful intentions and the motivation to act on them.


3). “Offer customers rewards today & tomorrow”


The age of instant gratification has never been more pronounced. Shoppers have an insatiable appetite to gobble up any reward they are bestowed, and want immediate access to the points they have worked to earn.

The only problem with instant gratification is that it is never a lasting solution. Just as how too much candy will eventually sicken any sweet tooth, rapid-fire rewards will eventually overwhelm members and undermine any lasting sense of purpose or satisfaction (a significant part of what separates top-tier programs from the pack). Most members, on some level, still crave the ability to earn big benefits, and many are willing to spend the time saving points in order reach that accomplishment.

The best programs recognize and leverage this dichotomy, using a spectrum-like rewards strategy that keeps customers engaged on the short term, while instilling within them the excitement to save points and earn bigger ticket rewards…which are inherently more engaging in the long run.


4). “Make it easy to understand and use”


This is probably the capstone principle for great loyalty, and is often the aspect that is most difficult to execute well. Many companies misunderstand the evolution of loyalty as an inclusion of any novel technology that leaps forth from Silicon Valley, or by offering the most feature-rich program available. But user intuition is a valuable artifact that stems from simplicity and elegance; from great targeting that hones in on exactly what a member will want, and excludes excess noise that serves only to distract; from observing the loyalty experience from a powerful design perspective, where every element works in unison to engage members and resonate with them at every turn. This is the philosophy that will ultimately set apart the strong programs from the weak, and it is one that needs to be purposefully architected into every facet of the loyalty offering.

Lanndon Lindsay is a reporter for The Wise Marketer.