Do Stock Rewards Programs Create Brand Loyalty?

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By: Wise Marketer Staff |

Posted on March 2, 2021

Stock ownership is something everyone should consider, yet most of the time it gets shelved due to intimidation or lack of knowledge of the market, lack of funds, or using a recent example, an investor can unknowingly take a rollercoaster ride via market phenomena like the reddit "stonk" rallies and may never return. But with the proper guidance or due diligence, stock ownership isn’t that scary, and it can bring a sense of responsibility and ownership (because that’s what it is) when invested in a company, even if it’s dollars in a billion dollar company. Now, can responsibility and ownership translate into brand loyalty? New research via Bumped, a loyalty program that rewards brand purchases with fractional stock ownership of the brand, says that it does generate increased spending at brands.

Professor Liu-Thompkins, Director of The Loyalty Science Lab at Old Dominion University and a member of the Board of Regents at The Loyalty Academy, recently analyzed the new research on Bumped and shared the follow with us:

There is new rigorous research evidence of how the stock ownership loyalty program influences consumers, from researchers at Texas A&M University and Columbia University. The key conclusion is that stock ownership leads to a 40% increase in weekly spending at the brand over an 8-week period post-signup.

Here're some interesting questions to ponder in future research:

  1. Why the purchase lift? The researchers offered familiarity, illusion of control, and a few other mechanisms as possible reasons but did not directly test them.

  2. Since the study showed a positive correlation between excitement about stock rewards (vs. traditional rewards) and brand loyalty, could the effect be less for individuals who already own the brand's stocks, or as excitement subsides over time?

  3. What is the longer-term impact on purchase behavior, say, after a few years?

  4. What happens when the stock price experiences major ups or downs?

  5. Could brands create a similar ownership effect without stocks?

The original research paper is available here.