Consumer centricity and unpredictability has uprooted how brands traditionally reward their customers. Building long-standing relationships with consumers has become increasingly difficult as consumer choice and elasticity has ridden the wave of materialism in recent decades, leaving the term ‘loyalty’ tarnished. This seemingly insurmountable bond that connects the brand and the consumer is sought after intensely, but deeply misunderstood.
Loyalty has evolved. Long-term habit formation starts with rewarding each consumer transaction with a tangible reward that reinforces their value to that brand. It is an intrinsically motivating force to continue returning to that same brand, and this force is fuelled by the sum of meaningful and instantly gratifying rewards that are issued to them each time they choose to experience the brand.
The power of instant gratification comes down to three keys – psychology, personalisation and proof.
Long gone are the days where Henry Ford replaced the saddle for the steering wheel, with consumers blissfully unaware of their consumption desires. Now, consumers captain their own ship. They demand perfection, empowerment and choice. They are influenced by a decision myopia that drives them towards erratic behaviours, leaving brands chasing their tail in this consumption cycle of inconsistent choice.
Yet, to build a relationship with a consumer, we must understand the consumer on a deeper psychological level. According to Forbes, 80% of a company’s future revenue will come from 20% of its current customer base, so rewarding customer loyalty has transformed from a ‘nice-to-have’ into a ‘must-have’.
Loyalty is all about the long-term, but it is fostered in the short-term. It is about the psychology of maximisation i.e. when customers spend money on your brand, they want maximum value in return instantly, not in the future. Thus, we recommend three tactics to build this instant value with every interaction they have with your brand:
Despite growing data protection sentiment from consumers, 57% agree they are happy to share personal information in exchange for a personalised experience from brands and advertisers. The point of engagement and transaction is converging, and the future belongs to brands that can offer personalisation, immediacy and accessibility as everything happens in the ‘now’.
As digitisation transforms the consumption experience, and COVID-19 further accelerates the virtual customer experience, it is more important than ever to focus on personalising every customer experience. In this case, you must personalise the rewards that they receive. Consumers must feel like you understand them, and the way that you solidify that connection is through consistent and instantaneous rewards that reward their effort in the purchasing process.
Maintaining a loyalty system that rewards long-term commitment with homogenous rewards is redundant. Each consumer must be rewarded upon each transaction, each point of engagement must be built on an enjoyable experience, and each reward must be personalised to that specific consumer. This sounds complicated, but simplicity and consistency is the key to the heart of the consumer.
To reinforce the power of instant gratification, let’s look to the leaders in brand loyalty who have transformed their rewards infrastructure to understand, tailor and engage consumers of the 21st Century.
Starbucks: For as long as coffee-drinkers can remember, the loyalty system felt like a feat of endurance, a ‘survival of the fittest’ mentality where instead of a ‘dog tag’ upon completion, you received a flat white. Seven coffees and €27 later, a celebratory free coffee left a sour taste in the mouths of many consumers. After years of research and millions of dollars into development, Starbucks overhauled their loyalty programme to reward customers with smaller rewards more frequently, as well as generating supplemental features which enhanced the customer experience e.g. order and pay ahead, personalised offers and products based on purchasing data, digital gift cards transferred to friends in the app, and an integration with Spotify for store playlists. Now, Starbucks attributes 40% of all sales to this Rewards Program. This all-encompassing experience has made previous loyalty programmes in coffee retailers expendable, creating a new benchmark for consumer experience.
McDonalds: Arguably the catalyst for transforming the customer experience, McDonalds became trailblazers in technology by focusing on simplicity, convenience, personalisation and promotion in their rewards infrastructure. It built an exclusivity within their mobile app that allowed their promotion activities to pin-point when a consumer wanted a reward, what they wanted, and how they would want to claim it using tailored push notifications. This level of personalisation, alongside their ‘Happy Meal’ toys which understood family demands, and gamification techniques such as ‘McDonalds Monopoly’ shows how maintaining customer loyalty required consistent and significant investment in the experience.
Amazon: The world’s leading disruptor and focal point in understanding the customer experience has showcased how rewards infrastructures are paramount in fostering ‘sticky’ consumers. In America today, there are more people who have Amazon Prime than a landline telephone, and this builds significant ‘loyalty barriers’ around their customer base. Loyalty to Amazon reaps endless rewards, from shipping to shopping, video to music, reading to photos – Amazon controls their consumers with obsessive detail. They understand every aspect of your personality, they personalise every decision you have to make, and they deliver an end-to-end experience like no other. This company was built on customer obsession, and has set the benchmark for others to follow.
Whether you’re an independent coffee shop or a large e-commerce retailer, implementing instant gratification into your customer experience is an essential first step in fostering long-term loyalty. The rewards system of the future must be dynamic, simple and flexible to the changing desires of each individual consumer. This demands innovation, not just within the technology we use, but within the processes that were previously accepted as satisfactory