Loyalty Focus: Fundamental Buyer Motivations vs. the Power of Rewards and Discounts

Today’s hyper-competitive marketplace makes it difficult for brands to stand out from the pack.

Independent businesses and chain stores alike are vying for a customer’s attention, hoping that their appeal will be significant enough to make a lasting impression and encourage a purchase or return visit.

Plus, with the rise of digital-first consumers, businesses need to engage customers wherever and however they choose.

While nearly all brands of any size know that getting a customer through the door is half the battle, engaging them once they’re in is just as important.

Because of this, many of today’s most successful retailers have turned to rewards programs as a means of attracting new customers and encouraging repeat business.

The power of rewards is undeniable, but are they the only way to gain loyalty? Or are they part-and-parcel of a successful business strategy?

Matthew Betes, Corporate Marketing Director at tcc Global who offer purpose-led loyalty solutions, says For me, true loyalty is an outcome of a retailer’s fundamental understanding of what is important to shoppers. When executed well, loyalty is considered as the heart of the wider marketing strategy and provides both a rational reason to shop i.e. convenience, value, choice and communicates an emotional connection i.e. does this retailer care about the same things that I do as a shopper? For many retailers there is a huge opportunity to integrate their stand-alone loyalty activities in a way that creates an instantly recognisable identity that connects both rationally and emotionally to relevant shopper priorities.

The Driving Motivators of Buyer Behaviour

Rewards and discounts may attract a customer’s initial attention, but today’s business must aim beyond the basics to create authentic brand loyalty.

A focus on four primary buyer motivations that drive consumer behaviour: predictability, convenience, choice, and emotional connection. Each plays an integral role in determining which brands win the hearts of customers and which fall by the wayside.

Predictability

Customers like to know what’s in store for them before they even walk through the door of a business. This is why reviews and testimonials are so critical – they help provide an idea of what to expect. With nearly 46% of customers still desiring that in-person shopping experience, predictability in uncertain times is critical.

Convenience

Customers appreciate businesses that simplify their lives, so it’s essential to ensure the brand is easy to access and has multiple ways of communication with customers (e.g., social media).

The 2020 COVID-19 pandemic has shown that companies can – and often must – shift their selling to convenience-based strategies to reach customers. Those who do are primed to make loyal customers quickly.

Choice

Consumers are always looking for the most appealing combination of price, selection, and convenience. This makes it crucial for brands to offer various products and services so that customers can find exactly what they want.

Emotional Connection

The human touch can be a major advantage for a business, especially one that is otherwise lacking. For example, Starbucks targets its employees’ ability to forge connections with customers as part of its branding strategy.

Similarly, loyalty programs that create a personalised experience for each member go a long way toward creating customer engagement.

Oksana Medvedeva, CRM Expert at perfumery retailer, Brocard in Ukraine, says From my point of view, emotional connection rather than economical benefit influences customer loyalty. Let’s imagine that every day I visit my store near my house. This store’s employees know my name, my nearest relatives and my habit to buy a coffee without sugar. Bonuses for my daily coffee. It’s a pleasant gesture for me, but my loyalty is based on my relationship with store employees.

Can Rewards and Loyalty Program Match the Power of Fundamental Customer Motivations?

When these four buyer motivations work together, they create a cycle of customer activity that might seem impossible to break. So, where do rewards and loyalty programs fit in?

While some may see reward or loyalty programs as simply “smoke and mirrors” in building consumer trust and connection, the truth is that they work best when designed to supplement and feed into the already existing motivations of a consumer.

Henry Christian, Consultant at HC Loyalty Advisory in Singapore says The truth is – customers don’t care about loyalty programs. All they care about is how these brands/programs can make their life better. Customers want you to either: remove their pain points (frictions) or elevate their joys. If brands can uncover what their customers need, and give it to them, customers will be loyal to them – with or without the existence of a program.

Building the Perfect Loyalty Program

Different brands succeed based on their ability to hone in on one or more customer behaviour motivators. By focusing on the fundamental motivations of buyers, brands can shape their loyalty programs to deliver results that are far more meaningful than discounts and rewards alone.

Consider grocery stores and supermarkets. Many local or franchise grocers thrive on convenience and choice to bring in customers, while larger chains may also use predictability and emotional connection to drive brand loyalty.

We asked Mark Maclure, MD of Stream Loyalty “Why are customers loyal?” And he said, “It isn’t just points or discounts or tech products that ultimately makes a customer loyal to a brand. These are rewards that incentivise behaviour change and if the behaviour change is a win for the customer they will continue with it but if it isn’t they will likely eventually revert to their old habits. Would you drive 10 miles out of your way to a supermarket that gave you rewards? Probably not, but if the supermarket offered a level of quality, customer service and unique products then yes very possibly. Customers are loyal because what you are offering is something they need or want. Customer needs differ so what is right for one customer won’t necessarily be right for the next so it absolutely must be personal. Decide what customers you want, design your offering to suit their needs and then use loyalty to drive behaviour change amongst that customer base.”

So, by combining these forces with customer rewards, they can achieve their ultimate goal: a customer who is willing to buy again and again

Or consider popular fast-food chains. Customers are emotionally connected to the brand by engaging in clean, bright, and smile-inducing environments.

At the same time, these brands excel at convenience by offering drive-thru windows on all sides of their restaurants for full access.

When paired with rewards programs that encourage repeat visits or discounted menu items, fast food chains see a huge boost in membership and sales. Connect those to consumer-centric ethics and morals, and you can find a recipe for long-term success.

Customers want the brands they choose to meet their fundamental needs first and foremost, and loyalty programs can help deliver the experience needed to win them over.

Tom Peace, MD at The Loyalty People, tells us I believe loyalty is always created (or destroyed) by an emotional connection. This isn’t about a love affair with the brand (although it can be) but often a much more mundane behavioural trigger like location, convenience or price. Rational benefits like points or airmiles have and still do create a strong emotional connection for some, but more and more strong customer experience is becoming THE emotional trigger driving customer engagement and loyalty

Rewards and discount programs must understand who their customers are and how individual customer motivations shape the way a brand is viewed.

Then, by matching these fundamental needs with a loyalty program design that caters to them, brands can create an unbeatable strategy for success.

Build Your Loyalty Program On A Pillar of Fundamental Customer Motivations

A loyalty program will never be enough to convince the most loyal of customers to stay with a business. Instead, it must build on the existing motivations that a brand has already established.

If you are considering creating a loyalty or rewards program, it’s essential to know the four fundamental needs of your customers.
Once you determine the fundamental motivations you are trying to hit, it becomes much easier to shape your loyalty program around strategies that will best suit your brand.
Find the perfect mix of rewards and discounts that build on top of existing customer motivations, and you will have a recipe for customer loyalty success!

Final wise words from Bob Salmasi, Founder of Bobs’ Loyalty Shop, “Brands who believe in loyalty should place it at the core of everything they do from price, products, customer service and user journey. Unfortunately, few do.

Amazon is customer obsessed. So much so that Jeff Bezos brings an empty chair to meetings to represent the voice of the consumer and Amazon Prime which is effectively a paid loyalty program offers members exceptional and highly relevant added value benefits for being a member.

Compare the Market similarly place Meerkat Meals and Movies at the core of everything they do. Unlike Amazon, the benefits really don’t have any correlation to their core business, but discounted meals and cinema tickets over a year add up to a tidy sum. Also, the engagement is highly visual, seeing up to 50% evaporate from your bill every time you eat out or go to the movies.

Airlines use loyalty to engage with their most valuable customers who make high-ticket low frequency purchases. But it also provides them with a revenue stream from selling points to banks and credit card companies to use in their programs.

Supermarkets use loyalty to add value to a more frequent shopping occasion. Rewarding you with product related deals or treats such as more affordable access to restaurants, days out, weekends away etc.

Data driven, value driven, CRM driven not all loyalty programs are the same. But they exist to help differentiate the customer experience in what has become largely commoditized.”

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Visit www.thegiftclub.io or email info@the-gift-club.com and talk to our Founder, Hadie.