Noodle This: Carrot and Stick

Get out your wallet or key chain. How many rewards cards do you have? How many do you use — or even remember having? And, how much kale do you need to eat before you’re rewarded, with, well, more kale?

There are 2.65 billion loyalty program memberships in the U.S. — that’s 21.9 per household. But, people are active in only 9.5 (Colloquy, “The 2013 Colloquy Loyalty Census,” June 2013). The combination of inundation, choice fatigue and a lack of differentiation is making consumers skeptical of any benefits that can be wrung from their rewards cards. It gets worse. Just 25% of U.S. consumers believe that loyalty influences their purchases (Ernst & Young, “This Time It’s Personal,” November 2011). And more than three-quarters (78%) of consumers say that they’re not loyal to any particular brand (Nielsen, “Connecting Through the Clutter,” February 2014). Deep breaths, brand managers, deep breaths.

Consumers today often see their purchase not just as a transaction, but as an investment in a brand. For that reason, they increasingly want an emotional connection that speaks to a higher purpose that transcends the product or category. They seek out brands that resonate with values they admire. A shared value -- not a punch card -- is what loyalty is all about.

Today’s loyalty programs are often trapped in a one-size-fits-all tradition, dolling out blanket offers and homogenous rewards. A survey conducted by Canada-based LoyaltyOne noted that 40% of consumers say they would welcome more customized programs, and 40% also say that they would switch most of their spend to a retailer that recognized their previous purchases. As for the types of personalization that shoppers want, the survey found that 61% want personalized discounts. Most consumers realize that they need to trade some private information to receive more relevant offers. According to September 2013 research by Forbes Insights, more than three-quarters of U.S. business-to-consumer customers saw the benefit of trading personal information for more relevant discounts and offers, and 62% were willing to do so in return.

Taking mobile and social to the next level, retailers are looking to gamification as a way to make their loyalty programs more fun and interactive. By implementing game-inspired elements and mechanics into rewards programs — such as badges, rewards thresholds and titles — retailers can boost foot traffic, engagement and sales.

Great ideas:

  • JetBlue’s TrueBlue Badges are less about accumulating points per se and more about racking up social currency. In the spirit of Foursquare’s frequent check-ins, the more active that travelers are, the more travel badges they can earn.

  • The North Face’s VIPeak rewards members for participating in select athletic events like marathons.

  • Harvard Pilgrim Health employees who fill their grocery carts with fresh fruits and veggies can earn up to $20 a month for making smart choices, thanks to a company-funded EatRight Rewards program.

  • Neiman Marcus’ NM Service iPhone app notifies sales associates when the user enters the store (and has previously shared her shopping history). It lets her request in-the-moment assistance and the inside scoop on collections based on her preferences.

    So what does this mean to marketers?
    Don’t think about how a consumer can be loyal to your brand. Think about how your brand can be loyal to your consumer. 

(Photo by Nick Webb is licensed under CC by 2.0/resized from original)

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