What a choice game tells us about consumer strategies, market outcomes, and optimal designs
How many loyalty program tags do you have on your key chain, or loyalty apps on your phone? One? Two? How about a dozen?
The 2020 Loyalty Report from Bond Loyalty says that US consumers on average belong to 14 loyalty programs.
When loyalty programs are that common, competition is bound to happen. Consumers are likely to be loyalty program members of multiple companies that directly compete with each other. In some sectors such as credit cards, restaurants, and travel, this competition can get pretty intense.
How do consumers choose among these competing programs?
A recently published research study in the Journal of Marketing Research by Professor Jia Liu from Hong Kong University of Science and Technology and Professor Asim Ansari from Columbia University can shed some light on that process. …
What we learned from a retail field experiment and an airline study
Sophia is a member of a reward program. It’s almost the end of the year. She is only a base tier member at the moment, but she’s getting pretty close to the Silver tier. To get there, Sophia needs to make one or two additional purchases before the year is over.
Making it to the Silver tier would make Sophia happy. She will be able to enjoy all the perks reserved for Silver members in the coming year.
A happy Sophia is good in the long run for the business. The immediate revenue from her additional purchases would be helpful too. So it’s a win-win situation if Sophia were to reach the Silver status. …
Evidence-based advice on leveraging the power of appreciation
Thanksgiving is right around the corner. Although many businesses are preoccupied with Black Friday and Cyber Monday sales during this time, some are quietly sending out words or gifts of appreciation to their loyal customers.
For the last 50 years, the insurance company Amica has been sending out artistically designed Thanksgiving cards to their customers every year. This year, they’ve also created an e-card, featuring original art by Del-Bourree Bach and poem by Julia Meylor, who also happens to be a retired Amica employee.
Alongside the e-card, Amica pledges to donate $1 to Feeding Children Everywhere for every share of the e-card, and to match customer direct donations to the charitable organization dollar for dollar, up to $25,000. …
An in-depth conversation with two Teradata retail analytics experts
The COVID-19 pandemic has brought significant disruptions to the retail industry. Store shutdowns, supply chain issues, and changing consumer behaviors are all creating challenges for retailers. What has really changed? How should retailers adapt their analytics to the new reality?
To find the answers to these questions, our Lab Director, Dr. Yuping Liu-Thompkins, spoke with two retail analytics experts from Teradata:
- Dr. Bonnie Holub, Managing Partner, Data Science, Americas. Dr. Holub has a Ph.D. in artificial intelligence. She has spent her career correlating different sets of big data for actionable result. Dr. …
Delivering small doses of delight to earn long-term customer loyalty in a problem-filled environment
The COVID-19 pandemic has posed unprecedented challenges to customer experience management. At first, supply chain disruptions made the fulfillment of customer orders difficult. Then restrictions on physical contact and social gatherings brought in-person customer engagement to a halt.
Although many businesses have pivoted to the digital channel, bridging offline and online customer experience is fraught with obstacles and complications. Many companies today are facing a “many fires, few solutions” reality.
Consumers are feeling this reality in their purchase experience. A recent consumer survey found that a shocking 66% of customers experienced at least one problem in their most recent purchase. Examples of the issues encountered included insufficient or ambiguous information on the website, undesirable delivery time windows, stock-outs, and product return issues. …
Only one of them involves monetary value
According to the 2020 State of Loyalty Report from Bond Loyalty, US consumers belong to an average of 14 loyalty programs but are only active in about half of them. What makes consumers actively participate in some programs and not others? First and foremost, consumers need to see value in using the program; not just monetary value, but the overall value provided by the program.
If your business offers a loyalty program, you must regularly audit the value provided by your program in order to create sustained engagement with your current and potential program members. …
Leveraging reward distance psychology in loyalty program management
Working toward a reward in a loyalty program is a lot like running. There’s a starting line, where zero point stands. There’s also a finish line, where the reward is. As people earn more points toward the reward, they get closer and closer to the finish line.
For loyalty program managers, it pays to know how members may think and react differently at different places along the path, and how program promotion and communication should be adapted accordingly.
In this article, we explain three known psychological effects of reward distance based on previous research. For each one, we will show you what the effect is and what it means to loyalty program management. …
What an analysis of 5,092 retail customer journeys tells us
The COVID-19 crisis has prompted 85% of consumers to try a new physical store and 76% of consumers to try a new online store. But a recent study by Braze suggests that these newly acquired customers may not be here to stay. According to the study, over 50% of the new customers acquired during COVID-19 have already churned, creating a retention rate that is 82% lower than customers acquired pre-COVID.
What can businesses do to reduce customer churn? A research study published in the Journal of Retailing says that the right thing to focus on may depend on how consumers move through the customer journey. …
Ways to unlock the hidden value of your loyalty program
If your business has a loyalty program, you are probably sitting on a gold mine of customer data. Are you using those data to gain customer insight and improve business effectiveness?
An academic research study of retail loyalty programs says you should. The researchers analyzed survey responses from loyalty program managers across 15 retail sectors. They found that gaining customer knowledge through such programs is crucial to enhancing customer loyalty.
In this article, we will show you 6 sample uses of loyalty program data.
Use #1: Customer Segmentation
Marketing 101 often teaches market segmentation based on demographic information. But in practice, demographic segmentation is often ineffective, as the tastes and needs of today’s consumers become increasingly complex. …
Designing marketing strategies based on loyal vs. habitual customers
If Jane comes to your store every Saturday and spends $200, would you consider Jane a loyal customer? Businesses often define loyalty based on how much consumers spend and how often they buy. But digging a little deeper into the psychological reasons behind “loyalty” can generate important customer insight and target marketing strategies.
In Jane’s situation, there are two possible reasons behind her “loyal” behavior:
- She really likes your products and services. So when the need arises, she always buys from your store;
- She comes to your store out of habit, whenever she’s on her way to visit her grandma on Saturdays. …
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