Author: Sean Keith
Loyalty programs have solidified themselves as cornerstones of many business’ customer engagement and retention strategies. It’s not difficult to understand why: loyalty programs are a channel through which to reward your best customers, incentivize incremental spend from all participating customers, and generate valuable behavioral and transactional customer data.
Brands that take full advantage of their loyalty initiatives are often far ahead of their counterparts in terms of establishing ongoing relationships with their customers. But even brands with successful loyalty strategies can find ways to fine-tune their efforts. One way to optimize an already-effective loyalty program is to place more emphasis on creating emotional value for the consumer to enhance their customer journey.
Rational and Emotional Value
Loyalty programs function by leveraging two types of value: rational and emotional. Rational value is straightforward and generally present in any loyalty initiative: customers earn rewards that have tangible worth (financial or otherwise, like priority status) in exchange for activities that benefit the brand (i.e., increased spending or referring new customers). When rational value is employed well, it drives revenue and conversions by making the earning and redemption process streamlined and convenient for members.
Loblaw’s PC Optimum program is an excellent example of a loyalty program that delivers high rational value. Not only are its rewards and tiers relevant and coveted by members, they can earn and redeem their points across all banners under the Loblaw umbrella, making the process easier and providing additional value. The advantage for Loblaw, besides a satisfied and loyal member base, is the ability to gain insights into member behaviors no matter which Loblaw-associated brand they interact with.
But while rational value is important to loyalty – and in the case of well-run programs like PC Optimum, lucrative for the brand – creating emotional value for the customer is equally important. Emotional value, put simply, is value the consumer realizes from interaction with the loyalty program that isn’t tangible. Affinity, general positive feelings, a sense of understanding, (good) surprise, and delight are representative of emotional value.
Sharing is Caring
Emotional value often manifests in social sharing and advocacy, both of which have multiplicative benefits to a brand. For instance, according to our S
hifting Loyalties report based on a survey of Canadian consumers, 37% of customers will share a positive experience with a brand on their social media platforms, while 40% would share a refer-a-friend initiative.
But creating emotional value requires brands to understand who their customers are, their preferences and behavior, and how they want to engage with the brand. And getting to that stage requires connecting customer data across channels into a single customer view.
Connected Data Facilitates Emotional Value
To return to the Loblaw example, PC Optimum has the infrastructure in place to capture customer data from various interactions, both transactional and through the loyalty program. By expanding the program to encompass all of the Loblaw banners, the retailer is able to see more customer activity, and create a more comprehensive portrait of each customer. Using these insights, Loblaw can design offers, promotions and other initiatives that dovetail with each individual customers’ wants and needs, creating the “surprise and delight” factors that lead to emotional value.
While having connected customer data and a single customer view are prerequisites to delivering emotional value, other tactics can be deployed to optimize its effect. Digital rewards and communication that target the customer at the perfect time are both relevant and surprising. Transferrable digital rewards let the customer know that the brand is taking their desires into account. And hyper-personalization fosters “just for me” impressions that deepen the relationship between customer and brand.
Both rational and emotional value have important roles to play in successful loyalty programs. Brands can set themselves up for success by laying a foundation of connected data, optimizing their rational value proposition, and renewing their focus on creating emotional loyalty for their customers. The Eagle Eye platform can help brands connect their data and create deeper levels of personalization with their customers, driving emotional connections, deeper loyalty, and better business results.
Contact us today to find out how.