The Heart of Loyalty Consumer Research Report
Consumer Research Study
Our Report
As experts in loyalty for 34 years, we know that perception = reality. That’s why consumer research is vital for brands looking to validate their loyalty strategies and understand what drives value with their customers. Kobie’s annual consumer research aims to answer the burning questions we all face around how our program is perceived, and why or why not consumers feel connected to us.
Our Methodology
We fielded our research with over 4,000 consumers across the U.S. and Canada, drilling into a variety of topics like appeal of features and benefits, personalization, engagement, recognition and more. As the only provider who sees emotional loyalty as an input vs. an output of loyalty, we use this lens and our proprietary Emotional Loyalty Scoring® (ELS) methodology to tie it all together.
Our “Pracademic” Approach
This research is rooted in more than observation and hot takes (although we’ll throw a couple in to keep things interesting). We infuse psychological theory to form the underpinnings that help bring insights to life and make them actionable for your brand.
Dr. JR Slubowski, Kobie’s AVP of Strategic Consulting, runs our Research Center of Excellence and most importantly, translates this academic read into digestible cliff notes that you can start infusing into your loyalty strategy today (we won’t tell anyone they weren’t your ideas).
The Focus of the Report
Working with global brands across industries like retail, FI, travel, QSR, entertainment and more – we hear the same problems surface amongst them all. How do I measure my program health? Do my members feel seen, heard, and recognized? And the ever popular: how do we engage them between transactions?
This report focuses on answering these questions and more, based on the trends and perceptions of consumers today with a bonus lookahead to the future. We’ll help you understand if your strategy is working for or against you through the eyes of your members. We’ll reveal how personalization plays a factor when it’s done well, and when it’s not. We’ll divulge what levers to pull to unlock engagement between transactions, and at what cadence. We’ll examine how tiers and recognition actually make your members feel. And most importantly – what trends to act on now vs. taking a “wait and see approach”.
The Focus of the Report
The Loyalty “Check Engine” Light
Endowing Status vs. Endowing Progress 1 2 3 4 5
Early vs. Late Disengagement
Choice and Optionality Still Reign
The Cash Back Mindset Shift
I Want You to Know Me, But Let’s Keep Loyalty Between Us
Implications for Program Health
Let’s Get Personal
It Really is All About Me
Demonstrate You’re Paying Attention
Map the Message to the Medium and the Medium to the Member
The Zero-Party Data Request
Sharing is Emotional
The In-Between
Your Loyalty Program is a Massive Toolchest
Meaningfulness, Joy and Fulfillment
Ways to Unlock Engagement in the In-Between
State of Status
Reaffirming the Duality of Tiers
All the Feels, But No Fee
Shiny Object or Table Stakes?
Members Reject the Unfamiliar
My Choice is More Choice
Values-Driven Loyalty
Authenticity and Loyalty
Flipping the Script
The Loyalty “Check Engine” Light
The Loyalty “Check Engine” Light
To kick off our consumer research study, we first aimed to ground ourselves in the current state of overall loyalty program health. In doing so, we evaluated the appeal of over 20 features and benefits, some unique to specific industries, and looked at what consumers expect when it comes to their loyalty currency. We also examined the reasons why a member might disengage quickly in a program and after being in the program for a while to see if the reasons differed. These insights were used to ground our assessment of overall program health and effectiveness and help us understand where to look under the hood when the “check engine” light of loyalty comes on.
Let’s begin with the reasons members disengage from programs and then discuss some of the macro-trends we’re seeing to help you leverage these insights to better understand your brand’s program health.
Early vs. Late Disengagement
Just under half of respondents indicated they had joined a program and then never engaged. Of those respondents, 49% indicated the reason was it took too long to earn a reward, 31% cited lack of benefits appeal, and 31% just organically stopped shopping with that brand. Just over a quarter of respondents (26%) indicated that they only joined the program because of an introductory offer and didn’t have any intention to participate beyond that.
The implications of these insights are three-fold. First, enrollment offers should provide some means to accelerate earnings out of the gate, but be wary of making those offers too rich, lest members only join for the offer and then quickly disengage. Second, review your features and benefits mix on a regular basis, looking at the degree of benefits usage and
asking your members where their preferences lie. Finally, a well-designed program structure, complete with the appropriate financial models, is critical to early and sustained engagement.
More respondents (56%) disengaged with a program after being in it for a period of time. When asked what their reasons were for leaving, the same themes emerged. It took too long to earn a reward (52%), they started buying less from that brand or company (49%), or they just didn’t find the benefits all that appealing (32%). Finally, the program being boring or unchanging was also mentioned as a reason why members disengage later in a program. So, while members want immediate gratification after first enrolling, they also want sustained gratification and reasons to pay attention in the long-term.
These findings show that while you lay the foundation for loyalty at “Hello,” your time is limited before your members will disengage. 55% indicated that when they did disengage, it was within the first 6 months or less; 74% indicated they disengaged within the first year or less. These percentages
underscore the importance of extending offers beyond enrollment to drive sustained engagement across the entire member life cycle. Some attrition is normal and part of the natural evolution of your member base, but you can work to address the program elements that drive that negative trend.
Top 4 Reasons Why Members Disengage
Choice and Optionality Still Reign
Across industries, respondents cited being able to choose the perks and benefits they receive as one of their top motivators to engage with a program. Consistent with our 2022 research study, we also found signals that consumers want choice in terms of the redemption options and benefits they can access. Further, the ability to select rewards from a diverse online catalog was ranked in the top 3 in financial services, retail, and QSR.
Beyond redemption, members expect to do more with the currency they earn. 84% indicated they expect the points they earn to be more like actual money. Consumers also expect to be able to exchange, gift, and buy points freely in programs, even though only 17% of those who responded have done so. Merely offering a variety of options isn’t enough. 88% of members indicated they want the programs they’re in to communicate with them about the options they have when it comes to using and redeeming their points.
How Members Expect to Be Able to Use Their Points
Here are some of the strategic implications of these findings
First,
for members who are redeeming multiple times in their lifecycle, focusing on diversifying what they can redeem for will go a long way in meeting their desire for choice and optionality. To drive the importance of this insight home even more, Kobie did a recent analysis for multiple clients that showed that members who redeem multiple times in multiple categories tend to spend 3.9x more on average than a member who has never redeemed at all.
Second,
even if it’s apparent that members won’t use every feature, you should look for ways to add ubiquity to your loyalty currency through buying, selling, gifting, or exchanging currency to satisfy a member’s desire for and perception of choice. Benefits like Premium Payback (ability to use points at the point of sale), can also positively impact member loyalty, keeping your brand top-of-mind while also providing flexibility.
Finally,
communications about redemption typically don’t get top billing in terms of importance during a member lifecycle. But these insights suggest they should. Integrating opportunities to inform members about their redemption options, driving them to more cost-effective options in your redemption mix, is a great way to use communications to shift member behavior. Once you’ve collected enough redemption data about a member, you can then model what a member’s tendency is and use that data to further personalize messaging.
How
The Cash Back Mindset Shift
In a related macro-trend, we’ve also seen a mindset shift when it comes to redeeming for cash back. Not surprisingly, consumers indicated that cash back was their most favored redemption option in a program, followed by gift cards, in-kind rewards that can be used back at a retailer for instance), merchandise, and travel. What was surprising was the reason why.
In previous research studies we’ve conducted, consumers would rate programs lower on choice and optionality when they had cash as the only redemption. They saw cash as only one choice or option. This year however, we’re seeing that mindset shift. Program members are starting to realize that cash provides them with the ultimate flexibility to get what they want. They used phrases like “I can just buy what I need or want” and “it gives me so many options” to describe their affinity for cash back.
With member mindsets shifting around cash back, how does this pose serious challenges for loyalty marketers?
1
2
Cash back creates a transactional mindset with the member, where the relationship they have with you and the loyalty they’ve formed lives and dies based on every interaction they have. It’s a blocker to deeper loyalty and a precarious position to be in.
Cash back redeemers tend to spend less post-redemption and have lower average customer tenure, again, likely due to the relegation of the relationship to transactional exchanges.
3
Your members perceive points differently than cash. They permit themselves to indulge with points. Non-cash rewards occupy more mental real estate in our brains because we put points in a different mental accounting bucket. Making your program all about cash risks your program becoming invisible.
We know the solution is not to eliminate cash back as a redemption option in your program. After all, cash back is what consumers think they want most to gain optimal flexibility and freedom. So, when our clients ask how they can stave off some of the negative impacts of cash,
Kobie recommends two macro strategies:
1
2
Make the cash redemption more experiential, complete with a little positive friction.
Bring consumer’s minds into intrinsic motivation territory by encouraging them to think of what they’ll be doing with the cash instead of just having it deposited into their account.
The latter strategy can be accomplished with communications, and even leveraged as part of a gamified experience.
I Want You To Know Me, But Let’s Keep Loyalty Between Us
Consumers also signaled loud and clear that they expect their loyalty programs to know them and take measures to get to know them. Across all industries we surveyed, receiving bonus points for completing profiles was among the top five most appealing features and benefits (looking at those respondents that rated the benefit appealing or very appealing). 87% of respondents in retail programs indicated this benefit appealing would motivate them to engage (top-rated benefit); 84% in travel and hospitality (3rd highest rated benefit); 87% in QSR (top-rated benefit); and 84% in financial services (5th highest rated benefit).
This finding suggests that consumers want to share their information to help enable a better experience in the program. Especially if the information they share allows them some say in the experience they receive.
While consumers want to share their information with you, they’re not into sharing their program experience with others. Social features and benefits such as donating to a charity or being part of
a member community, along with being rewarded for social sharing, were among the least appealing benefits across industries. This doesn’t necessarily mean consumers don’t want to be social; it likely has more to do with feeling forced by the loyalty program to create artificial connections. If someone shares something on social or likes a brand, they’re doing it because they care, and they want to. Rewarding it may be perceived as cheapening the impact of the behavior, thus diminishing the motivation of the member.
Also, your members are probably part of a brand community, a fandom, a brand cult or tribe on some level outside of your loyalty program. Chances are, they came to that affinity or sense of belonging organically. Loyalty programs can work to identify those kinds of affinities and find ways to amplify them, rather than try to create them on their own.
How Appealing is Receiving Bonus Points for Completing Profiles?
Of respondents in retail programs indicated this benefit appealing would motivate them to engage (toprated benefit)
In QSR (top-rated benefit)
In travel and hospitality (3rd highest rated benefit)
In financial services (5th highest rated benefit)
Implications for Program Health
When thinking about your program relative to the market and the members you have in them, ask yourself; “Are my benefits aligned with what my members are looking for in terms of the loyalty experience we need to deliver?” If the answer is “no” or “I don’t know,” then you’re likely at risk of that check engine light turning on to indicate your loyalty program is running sub-optimally.
While there are industry-specific nuances, there are
also some cross-vertical conclusions that can also be leveraged more broadly to improve your program’s health. For instance, does your program offer members options for using their loyalty currency? Are messages about redemption options at the forefront of at least some of your communications? Are you working to increase the authentic intimacy factor by simply getting to know your members better (and then acting on that knowledge)? How long does it take to earn a reward or reach the next tier?
The truth is, when you’re considering how to improve the overall health of your program, answering the tough questions is imperative, both from an industry-specific perspective and an industry-agnostic perspective. Doing so meets your members on their terms, because your members are not only comparing your program to your competition’s, but to every loyalty program they’re in.
Here Are Some Key Questions You Should Be Asking After Reading Section 01
1
How long does it take your members to earn a reward in the program?
2
How do your members feel about their membership in the program?
3
What features and benefits do your members want?
Let’s Get Personal
Let’s Get Personal
Often for consumers, personalization is a “knowit-when-I-see-it” topic, making it challenging to objectively research. Consumers can be unaware of the personalization tactics happening all around them, that is, until it’s done poorly. That’s why we entered this research wanting to test whether personalization is what we call a deficit strategy. In motivation theory, we often talk about deficit needs. Those are the needs that, when met, we take for granted, but the minute they’re not being met, we get angry, anxious, or scared. Deficit needs are things like air, safety, food, water, or shelter. We don’t think about them when they’re present, but when they’re not, they’re all we can think about.
So, as an extension, personalization as a deficit strategy means that as consumers, we don’t
notice when it’s done right, but the minute it’s done wrong, we focus on it and blame the originator of the message or the experience.
To test this hypothesis, we asked consumers what elements of a loyalty program experience would make that experience feel personalized to them. Then, we asked about items that were conceptual opposites, and wanted to know whether those items made the experience feel not personalized. For example, we asked about the use of their name in a message versus a message that had something like “Dear Member” as the form of address. We expected elements that would indicate an experience was personalized to be named with much less frequency than those items that would signal the converse. But the research revealed it’s just not that simple.
It Really Is All About Me
60% of respondents said recognizing their loyalty tenure was something that would make an experience more personalized to them. Yet only 35% of respondents indicated that the absence of that would make the experience seem less personalized. So, while taking the opportunity to recognize member tenure and loyalty proves meaningful, if you miss the mark, it may not be as detrimental to the member’s perception that the experience is personalized. Similarly, 54% of respondents felt personalized by birthday recognition, and only 22% indicated the lack of recognition would make the experience
less personalized. So, what does this tell us? If tenure and birthday are among data points you are already collecting from your members, you should be leveraging them within your personalization strategy as it’s likely that members will perceive the experience as more personalized, Yet, not doing so won’t necessarily drive them to think the experience isn’t personalized. Recognizing tenure and birthday as part of your strategy has a lot of upside but not much downside. For tenure and birthday recognition, personalization is NOT a deficit strategy.
Demonstrate You’re
Paying Attention
Inversely, respondents overwhelmingly rated an experience as not personalized if a brand didn’t indicate in messaging that they understand their likes either based on information they’ve provided (about interests, hobbies, etc.) or based on their past purchases. 51% indicated that message irrelevance would drive them to deem an experience not personalized, yet only 23% said that message relevance would cause them to think the experience was personalized. A similar pattern emerged for product or service recommendations. 46% said that if those recommendations were not accurate, they would feel like the experience was not personalized to them, but only 36% indicated that if they were accurate, they’d think it was personalized. For product and services recommendations and message content tailored to a consumer’s interests, personalization IS a deficit strategy.
There are three main implications for this research. First, it’s important to note that we tested the
perception of whether consumers thought the experience was personalized, not whether they made an additional purchase. It could very well be that personalized content and product and services recommendations, when you get them right, do drive incremental purchases. The best way to know that is to test that approach as part of a smart, deliberate learning agenda and test and learn plan. Second, if you’re tracking purchase history and member interests, you should be leveraging this data as part of your personalization efforts, but just make sure you do it well. Luckily, with today’s smarter analytics, machine learning algorithms, and even generative AI, we can get much closer to delivering hyper-relevant content to our members. Finally, this data point also underscores the importance of having a good zero-party data collection strategy in place which includes not only a means to gather zero-party data, but the reasons why and a clear indication as to how you’ll use that data to personalize an experience (for more on this, skip ahead one sub-section).
51%
indicated that message irrelevance would drive them to deem an experience not personalized
said that message relevance would cause them to think the experience was personalized 23%
46%
said that if those recommendations were not accurate, they would feel like the experience was not personalized to them
indicated that if they were accurate, they’d think it was personalized 36%
Map the Message to the Medium and the Medium to the Member
As loyalty marketers, we hear personalization and immediately think about content, the message, or the offer. We’re accustomed to the latest recommendation engines and “people who bought this, also bought that” types of messages. True personalization, however, goes far beyond content.
Matching the medium to the type of message is also crucial to an experience being rated as personalized. We asked survey respondents about their preferred communication channels for 12 different types of messages that would occur over a consumer’s lifecycle. Email remained at the top across the board for all types of messages. Although not surprisingly, more diversification was present with younger respondents than older
respondents, as they also preferred text messages and company apps as communications channels more heavily. Generally, if a message had some sense of urgency or gravity, consumers wanted that message to come through a more immediate channel – a phone call or a text message. If a message was lighter and fun, they expected to see that materialize through social channels.
To make messages feel truly personalized, the preferred medium for various types of content needs to be considered and leveraged where possible. Understanding where, when and how to deliver messages to a member is just as critical as getting the content right.
How Members Prefer to Receive Messages Based on Message Type
Relevant Messages Based on Past Purchases
Invitations to Participate in Games or Other Loyalty Features Brand Influencer Messages Refer-a-Friend Messages
Invitations
The Zero-Party Data Request
You may be thinking at this point, all this personalization sounds great, but what if I don’t have the data I need to get personal with my members? That’s where zero-party data enters the equation.
Research indicates that members are willing to share their information and data, particularly when offered an incentive, and particularly if they’re in your loyalty program. We asked respondents to indicate what types of data they’d share with and without an incentive at the beginning of their membership in a new loyalty program.
74% of respondents agreed that they’d be willing to share email without an incentive. That number jumps to 85% when an incentive is involved. We also found between a 16-20% increase in willingness to share things like hobbies, interests, birthday, mailing address and mobile number when a reasonable incentive is added. Given the swings in willingness to share with an incentive, your loyalty program can serve as the carrot you offer to capture that information. Just keep in mind that when a member does share their data, it creates an expectation that that program will use that information wisely and responsibly, to tailor the experience and to personalize messaging. It’s imperative that you heed the warning of be careful what you ask for.
Types of Data Members are Willing to Share With and Without an Incentive
We also sought to understand what constitutes a reasonable incentive by asking respondents to name their price in an open-ended question.
of respondents indicated they’d share their information for $50 and under indicated $25 and under 71%
of respondents named an amount that would likely be cost-prohibitive at scale (>$100) and only 8% said they would never share their information, no matter what.
If $25-$50 seem like a not-so-reasonable amount, consider this: If you used that information to motivate an incremental purchase or two, would it be worth it?
What Percentage of Members are Willing to Share Data Based on Incentive Amount
Sharing is Emotional
Finally, we aimed to identify if a member’s willingness to share data with an incentive was correlated to Kobie’s emotional loyalty drivers (see sidebar). Those respondents who had all of Kobie’s Emotional Loyalty motivators in play (status, habit, and reciprocity) or who had status in combination with reciprocity, were significantly more willing to share all kinds of information about themselves, especially with an incentive.
Further, those members who were conatively loyal – or those with a deep-seeded loyalty and an intent to demonstrate that loyalty – were also significantly more willing to share, which suggests that the act of sharing data IS fulfilling that member’s intense desire to demonstrate their loyalty in concrete ways.
One cautionary note emerged from this analysis; those with no emotional loyalty motivators in play, or who only have habit as their emotional loyalty driver, are much less likely to share overall, even with an incentive. In fact, in some cases, the incentive can backfire.
See next page for more
Emotional Loyalty Scoring® (ELS)
Kobie has a proven, scientific method to score loyalty members based on their emotional drivers. Our proprietary Emotional Loyalty Scoring® (ELS) methodology provides Kobie and its clients with a better understanding of why and how members form deeper emotional connections to brands across three primary drivers. We view emotional loyalty as an input to loyalty strategy vs. an output.
Habit Status
“I made my decision regarding my preferred brand, and I am now mostly on autopilot.”
Taking comfort in convenience and the familiar drives emotional loyalty.
“I feel better about myself based on the way I interact with this brand because they make me feel special.”
Feeling valued, special, and exclusive during interactions drive emotional loyalty.
Reciprocity
“I feel there is a two-way relationship, and I owe it to the brand to stay loyal.”
The two-way relational exchanges with a brand drive emotionally loyalty.
All things considered, the state of personalization shows that your members expect you to collect information, expect you to use it wisely, and aren’t averse to sharing it particularly when you add an incentive into the mix. This analysis shows that your consumers and program members want to share more about themselves, especially if it means they’ll get something to show for it.
Here Are Some Key Questions You Should Be Asking After Reading Section 02
How well do you personalize content, channel, and cadence based on member preferences, either stated or derived? 1 2 3
How personalized do your members feel their experiences are?
What kinds of zero-party data already exist in your organization? (hint: it might not reside in your loyalty database)
The In-Between 3
The In-Between
Loyalty marketers and the programs they manage are typically hyper-focused on transactions. They’re set up to recognize a transaction, potentially allow the member to earn something for it, and then as a follow-up, may reach out and communicate post-transaction. But those same marketers are missing out on major
opportunities to engage at all the other times when a transaction isn’t occurring. We call that the “in-between”, and part of what we aim to explore with our research are the ways that you can engage your member in the in-between.
Your Loyalty Program Is a Massive Tool Chest
We started by asking survey participants to identify a program that they like or use the most in a randomly assigned industry. We screened for this in the study because we knew that to get the best read on what it would take to engage members when they find themselves in the inbetween, we ought to have them focus on programs that they’re engaged with in general.
Once members identified that program, we asked them questions to understand their engagement levels with it.
79% of respondents agreed that they think about their membership in the program when they are deciding about where or how to make a purchase. 80% indicated that they stay up to date on their loyalty earnings and rewards.
Both stats suggest that the mechanisms already in play as part of your program can serve as a strong foundation to drive engagement in between purchases. Further, only 42% of those surveyed agreed that they would stop buying from a particular brand if the program ceased to exist, yet 66% indicated that the program is a major reason they’re loyal to that brand.
The implication here is that while the program is a major driver of loyalty to the overall brand, it’s not the only driver. This is consistent with several research studies about the industry that suggest programmatic loyalty is a precursor to loyalty to a company, product, brand, or service. The effect of the loyalty generated by a program extends beyond it in most cases, and you can amplify that effect by driving engagement in the in-between. When a program can reach favorite status, like the programs we asked members about in this survey, it has the capacity to be the conduit for engagement well beyond the transaction.
79%
of respondents agreed that they think about their membership in the program when they are deciding about where or how to make a purchase
42%
of those surveyed agreed that they would stop buying from a particular brand if the program ceased to exist
80%
indicated that they stay up to date on their loyalty earnings and rewards
66%
indicated that the program is a major reason they’re loyal to that brand
Meaningfulness, Joy, and Fulfillment
So how do best-in-class programs do it? By creating meaningfulness, joy, and a sense of fulfillment.
69% responded that their programs give them joy and a sense of fulfillment. 77% indicated that their membership in the program was meaningful to them. These numbers are amplified when other conditions are met. When a member has multiple emotional loyalty drivers in play, they’re much more likely to agree that programs bring them joy, are fulfilling and are meaningful. Those same members are much more likely to identify at an emotional level with the brand. And finally, there’s
How Engaged Members Perceive Their Favorite Programs
Stay Upto-date on Earnings
Think About Program When Deciding to Make a Purchase
Active Member of Program
(read about it, monitor it, earn benefits)
Program a
Major Reason They’re Loyal to the Brand
a significant correlation between members feeling fulfilled and perceiving a program as meaningful, and conative loyalty to the program and brand.
As a refresher, conative loyalty is a deep-rooted loyalty that someone has for a brand with the intention to demonstrate that loyalty. Understanding the emotional state of your membership is a great first step in figuring out what levers you can use to drive these deeper emotional states and thus, deeper connections to your program and brand. With those connections comes the opportunity to engage in that open, empty space between transactions.
Membership is Meaningful Them
Membership Gives Them Joy
Membership Give Them Fulfillment
Ways to Unlock Engagement in the In-Between
While understanding the state of engagement with loyalty programs today was an important first step, we also wanted to get practical and look at where the opportunities are to drive additional engagement between transactions.
The first unlock is more general in nature and centers around the major opportunities for better communication with your member base. 72% of respondents agreed that programs were using communications effectively to keep their attention. And remember, this was for a program that they identified as a favorite in a particular industry. 65% agreed that they regularly log in to the program website and 69% indicated that they read most of the messages they are sent. While these percentages are north of 60%, again, respondents were thinking about their favorite program when they answered these questions. Those percentages would be much lower for a program with which they were engaged even less. One main way to unlock engagement in-between transactions is through smarter communications in general, with better personalization, more targeted segmentation, and more relevant messaging that invites the member to engage at times when your brand or your program may not be top of mind.
The second unlock we found centers around a pivotal shift in loyalty when it comes to gamification. The truth is that loyalty programs have been using gamified elements since inception. Tier structures are all about progress and unlocking new benefits. Points earning is all about collecting. With the advent of the term “gamification”, we saw a shift in a hyper-tactical approach in loyalty programs. Badges were everywhere. So were leaderboards. Brands were serving up quizzes and games without a strong alignment to any kind of overarching strategy or principle.
We expect that with shifts in the gamification space – namely, the shift from a tactically focused gamification approach to a more strategically focused game science strategy – that engaging in the inbetween will be more possible than ever. Why? Because we’re aligning to game science principles that have at their root, a sound understanding of human psychology and human motivation. Armed with that understanding, we can start to engage more thoroughly in the spaces between transactions that many of us loyalty marketers covet.
So, what game science principles and techniques resonate the most? Your members like surprises (an Easter Egg or surprise unlock dynamic). 86% indicated that surprise opportunities to earn would cause them to engage outside of the transaction. Members also wanted their voices to be heard. 69% wanted to provide feedback to their favorite programs via a member panel and 60% indicated they’d participate in surveys and focus groups. Both represent opportunities outside of the transaction to engage more fully. Members also wanted their favorite programs to alert them to their progress towards status or other goals they set. 76% indicated they wanted to be informed of their progress towards a higher tier and 67% indicated they wanted programs to track their progress towards a goal they’ve set. Marketers should consider messaging that leverages Goal Gradient Theory as means to stimulate additional engagement (i.e., the notion that the closer you are to a goal and you are reminded about how close you are, it causes you to work harder to achieve it.)
of respondents agreed that programs were using communications effectively to keep their attention 72%
agreed that they regularly log in to the program website 65%
indicated that they read most of the messages they are sent 69%
indicated they’d participate in surveys and focus groups 60%
indicated they wanted to be informed of their progress towards a higher tier 76%
indicated they wanted programs to track their progress towards a goal they’ve set 67%
A smaller percentage of respondents were enthusiastic about badges, digital games, leaderboards comparing themselves to others, and interacting with brand communities. Not to say that these game science principles wouldn’t work, but there are much larger opportunities on which to focus as you use a newly evolved game science strategy to unlock engagement in the in-between.
This still begs the question: How often should we deploy these techniques? For those members who are looking to engage with some of the game science principles and techniques described, they see programs reaching out to them once a month or more as the optimal frequency. 85% indicated once a month or more was a good messaging cadence for engaging in the in-between with 33% looking for contact even more frequently than that – at least once a week or more.
Here Are Some Key Questions You Should Be Asking After Reading Section 03
Do your members experience joy, fulfillment, or a sense of accomplishment by being a part of your program? 1 2 3
How much of your members’ mindshare does your program occupy?
What strategies do you have to engage your members in-between transactions that aren’t all about the next purchase?
State of Status 4
State of Status
Unbeknownst to many, loyalty programs have been leveraging gamification since before the word existed. For example, one of the triedand-true game mechanics in loyalty is the use of tier structures, which are designed to tap into a human’s innate psychological need to achieve and to improve. Tiers also leverage our internal need to feel like we’re better than others. Smart tier structures are designed so that members can look up and aspire to get there (with the appropriate motivation of course) and can look down to reinforce their self-worth and selfesteem with where they find themselves today.
Because tiers and status in programs have the power to influence loyal behaviors, we decided to take a new look at a traditional tactic in this year’s research study to better understand the state of status with loyalty programs today.
Reaffirming The Duality of Tiers
When asked what consumers expect to be part of a tier structure value proposition, they indicated two things:
First, they saw tier structures as the conduit to earn rewards more frequently and to earn the loyalty currency at an accelerated rate. In fact, 71% of respondents indicated they expect tier structures to deliver more frequent rewards. 67% indicated they expect tiers to allow them to earn the program currency at an accelerated rate.
While these results confirmed our prediction, the degree to which consumer expectations extend further was noteworthy. A similar percentage of respondents expected that their participation in a tier would grant them access to additional benefits, events, products and services.
66% signaled they wanted access to additional benefits and services, while 63% indicated they were looking for access to events as part of qualifying for a higher tier.
This finding underscores the importance of aligning your tier structures and benefits towards not only what’s achievable for your members, but what’s motivating them to get there. You’ll want to make sure your mix of tier benefits reflects this duality. You’ll need benefits that are tied in some way to your core program structure for sure, but you’ll also want to make sure that your members get something new when they qualify for a higher tier. Further evidence of this duality? When asked what was MOST important to them, respondents were split evenly, with no single benefit being named by more than 30% of respondents.
What Features Members Most Expect to See as Part of Tier Structure
All the Feels, but No Fee
With tier structures most common in retail and hospitality, we asked members of these industry-specific programs if they had ever qualified for a higher tier. 44% of respondents said yes, and of that group, 78% agreed that the additional benefits of higher tiers motivate them to spend more with a brand.
But, beyond this increase in their spending behavior, was an increase in emotional loyalty and engagement. 75% of respondents agreed that when they qualified for a higher tier, they felt a sense of accomplishment. 71% indicated qualifying for a higher tier made them feel special. 64% indicated doing so made them feel good about themselves. Those feelings also drive one additional outcome – engagement in-between transactions. For those who qualified for a higher tier, 76% indicated doing so would motivate them to engage in-between transactions, keeping the program top of mind.
Consumers do have limits to their desire for status. When asked if they would pay a fee to belong to a tier if they liked the benefits, only 37% agreed they would do so. While this response could be about the fee itself (we did not test fees or levels of fees, but simply asked based on the fee being “reasonable”), it likely underscores the fact that tier qualification isn’t just a transaction. For many members, it’s the pinnacle, and for others, the importance of qualifying for that tier can be diminished if non-qualifying members can simply buy their way in. Treating tier qualification as anything less than a milestone can potentially diminish the power of tier structures to influence emotional connections and the loyal behaviors that come along with them.
What Happens to a Member When They Qualify for a Higher Tier?
agree they’d spend more 78%
agree they’d engage in between transactions 76%
agree they felt accomplished 75%
agree they felt special 71%
agree it made them feel good about themselves 64%
Endowing Status vs. Endowing Progress
As we’ve scanned the marketplace, we’ve also seen a proliferation of offers where programs will grant a member status as part of a promotion either to join the program or to exhibit some set of increased behaviors. The rationale is that the program is giving members a taste of status that will leave them hungry for more, so they’ll work harder to attain it. We aimed to better understand what impact these types of offers have on the psychology of tier structures. How do these offers make members feel?
23% of respondents had taken advantage of an introductory offer that granted them tier status, and for those that re-qualified (i.e., met the terms of the offer), we then asked them to think about that experience and to comment on how it made them feel. Respondents used words like “accomplished,” “good,” “special,” and “happy,” underscoring the inherent reciprocity that occurs when we’re granted something that we maybe didn’t earn. Human psychology suggests that we’ll work to return the favor, and when we do, we feel good about our actions, our efforts, and ourselves.
These offers can have a dark side though. We also asked those who didn’t re-qualify for the tier after being granted status how they felt about their experiences. The tone of their responses was markedly different. They used words like “used,” “disappointed,” “terrible,” and “upset” to describe their emotions after they failed to do what was needed to re-qualify. And therein lies the conundrum of endowing status. You may have
experienced something like this yourself. The gift of status gets you an elevated experience, but then when that experience returns to normal, you immediately notice the negative change and aren’t happy about it. Further, those members who worked hard to achieve that status and view it as an accomplishment or an achievement, could see members having to do less than they did to get that status, and sour on the loyalty you’ve worked so hard to build. That’s because as humans, we’re also hard-wired to perceive unfairness.
From these findings and our experience in loyalty, we tend to recommend endowing progress instead of status. Get your members some of the way, but not all the way there. Human beings respond to being given a boost. We call that the Head Start Effect. When we get help, we’re even more inclined to go the distance to achieve something. Reciprocity kicks into high gear, but so does our innate drive to defend, because now, we’ve got some skin in the game, and we don’t want to lose the progress we’ve made.
Tiers and status in programs are emotionally charged loyalty topics because they’re about so much more than the benefits exchange – they’re about the deeper connection a member has with your brand and all the feels that can stimulate. Smart tier structures in programs drive not only deeper engagement and loyalty but increase the behaviors we want to see members exhibit.
How Members Feel When They Maintain or Lose Their Tier Status
Sentiment Analysis:
Sentiment Analysis:
Those
Here Are Some Key Questions You Should Be Asking After Reading Section 04
Is your tiering structure, if you have one, working as hard as it could be to drive increased levels of engagement and spend?
What are you doing to tap into the intrinsic motivations your members have to work towards a higher tier? 1 2 3 4
Take 2 of the above: Does your tiering structure drive increased levels of engagement and spend?
Are you endowing status in your program or endowing progress?
Shiny Objects or Table Stakes?
Shiny Objects or Table Stakes?
What members want from the loyalty programs they belong to can sometimes be a moving target. While some benefits remain tried-andtrue, it’s also very easy for loyalty practitioners to get caught up and focused on the next innovation and how it can be integrated into a loyalty program, even if that integration requires a shoehorn to get it to fit.
That’s why it’s important for us to validate consumer perceptions and understand what
new features would increase their loyalty. We asked about 14 different benefits, trends, and innovations in our study – some of which are not new but have surged in prominence in recent years, as well as others that are relatively new to the loyalty space. Respondents rated the degree to which each either positively or negatively influences their loyalty to a brand in general, or whether it has any kind of influence at all.
The Loyalty Features and Innovations
We Asked About:
POS Redemption
Partners
Sustainability
Status Matching
DE&I
Digital Wallet
Non-Points
Biotech
Community
User Generated Content
Influencer Events
Experiential AI
Metaverse NFTs
Members Reject the Unfamiliar
The newest innovations like generative AI, NFTs, and the metaverse, across all respondents, were deemed to negatively influence loyalty to a brand. While marketers often gravitate towards a bright shiny object, members appear to be adopting a wait and see approach. Among all 14 benefits, features, and innovations we asked about, 11 of those benefits had their highest frequency rating as neutral - meaning it didn’t positively or negatively influence respondents’ loyalty one way or another. In other words, 11 of the 14 items didn’t make a dent in their loyalty at all. This was especially true of newer innovations, suggesting that some of the negative impact surrounding them is being driven by what is akin to a classic product adoption curve, and our own natural human tendency to reject the unfamiliar.
The implication here is two-fold. First, if you plan to introduce one of the new innovations that are being talked about in loyalty circles today, you will need to create a communications launch plan around it that convinces your fence sitters to take the plunge. Otherwise, you risk investing in that innovation only to see very little adoption by a critical mass of your audience. This implication is especially salient if you have a large percentage of your member population who are driven by habit as an emotional loyalty motivator as they tend to adapt to change much more slowly. Second, when possible, consider market testing some of these new innovations with smaller subsets of members to iron out the operational aspects of the experience. This audience should be those more willing to embrace those innovations innately as part of the program (those who are emotionally loyal for instance).
The newest innovations like generative AI, NFTs, and the metaverse, across all respondents, were deemed to negatively influence loyalty to a brand.
My Choice is More Choice
Program members also signaled loud and clear that they want flexibility, choice, and optionality when it comes to what influences them to be loyal to brands. In fact, the program benefits or features that emerged as most likely to positively influence loyalty are often already part of loyalty programs today, although perhaps not implemented as widely as elements like point earning or tiers for instance.
Of those benefits, being able to redeem at the point of sale was most likely to positively impact loyalty to a brand, followed by partnerships, status matching, and the ability to use a digital wallet. Members want more flexibility and optionality when it comes to using their points for payment at the point of sale. They want more flexibility and optionality when it comes to earning and redemption in programs through partners. They want more options across the programs they’re in, and they’re looking for newer, more convenient ways to pay, like a digital wallet.
Values-Driven Loyalty
One of the most interesting research findings was the ability of sustainability, diversity, equity, and inclusion to positively influence loyalty to a brand, as these values ranked in the top 5 for consumers. This finding demonstrates that in the context of loyalty, we’re seeing an indication that a values-driven approach can work, especially in tandem with more established strategies. While some brands may be reticent to take a stand on a social cause or be transparent about their sustainability, those that use their loyalty program to make those statements and live in to those values are more likely to see an uptick in loyalty among members and customers when those values align with their own.
Now, it’s true that there could be some social desirability bias at play with these responses. We as humans want to think we care about things like diversity and sustainability when we answer survey questions to reinforce that thinking. But if a brand chooses to espouse their values in authentic ways, it can be a powerful motivator for your customers to become loyal at an emotional level and stay that way.
Authenticity and Loyalty
Speaking of authenticity, when members perceive things as forced or manufactured, that inherent inauthenticity can be to your detriment. For example, when we asked consumers about real or virtual community participation, it was deemed to have a negative impact on loyalty. The same applies to influencer events. Now, you may be thinking, “Why should I try community or influencer strategies if they have the capacity to negatively influence loyalty?” Rather than these findings indicating those strategies are off the table, instead, we believe these findings indicate something else entirely - that consumers require a level of authenticity when they engage, especially when something as important as their loyalty is at stake. Allowing communities of customers to emerge organically will work to drive loyalty in positive ways. Artificially constructed communities won’t. For loyalty marketing professionals contemplating whether to tap into the power of community, the focus should be first on identifying your customer communities rather than trying to create them, and then giving them a forum to interact in a way that will foster greater loyalty in the long run. Your program should support engagement, not force it.
Flipping the Script
You may be surprised by some of the elements that have the capacity to negatively impact loyalty to a brand. You’re not alone; it surprised us too. But there are ways those new features or innovations can increase loyalty to a brand when aimed at the right program members. The two main factors that flip the script on some of the lower performing items are age and a respondent’s emotional loyalty.
Across the board, respondents in the 18-34 age bracket (approximately 23% of the respondent pool) were significantly more likely to indicate ALL the items would positively influence them to be loyal to a brand, not just the newer innovations. So, if you’re contemplating standing up a virtual storefront in the metaverse or beginning to offer NFTs to members, you should promote those benefits to your younger customers first if you want to spur adoption and engagement to see their loyalty increase.
The other factor that significantly impacted respondents to indicate a positive influence on their loyalty were the emotional loyalty drivers they have in play. Specifically, those respondents with all three emotional loyalty drivers in play (All High) or those with status and reciprocity in combination (SR) were far more likely to view an item as having a positive impact on their loyalty.
For your program, if you’re thinking about accelerating some of your offerings to include these benefits, starting with an understanding of the prevalence of the different emotional loyalty types in your membership base is a good place to begin when you must make tradeoff decisions on which benefits to include.
What Features and Innovations Member Deem a Positive Influence on Loyalty
Based on All Respondents, Age Range and Emotional Loyalty Motivators
Here Are Some Key Questions You Should Be Asking After Reading Section 05
How are you using what your brand stands for to tap into the loyalty of your members? 1 2 3
What is your program evolutionary roadmap for integrating new features and benefits?
What kinds of onboarding plans do you have when you roll out a new, innovative feature?
What to Do Next
As with any good read, you’ll want time to digest this year’s consumer research and think through how it applies to your brand. Here are some quick hits to help you expedite that process:
Keep your barriers to earn low and benefits appeal high:
Taking too long to earn a reward and the appeal of various features/benefits are the prime suspects when a program member disengages.
Focus on optionality:
Above all else, members are craving choice and freedom from the programs they engage with the most.
Find appealing alternatives to cash back:
We know this is what members want the most – but that doesn’t mean YOU want them to want it.
Expand your personalization strategy:
If you’re only thinking of personalization of content – think beyond. It’s just as critical to match the message to the medium, and the medium to the member.
Drive engagement between the transactions:
While elusive, we know this is possible when you systematically leverage your loyalty program tool chest to inject fun, meaning and joy into your member experience.
Be smart with tiers:
We know status is one of the strongest tools loyalty marketers have to drive deeper loyalty, so don’t miss the opportunity to use it intelligently to amplify emotional loyalty for your members.
Have patience with innovation:
When rolling out bright, shiny, new innovations, remember that your members may be slow to adopt because they tend to reject the unfamiliar.
Wrap-up
We hope you enjoyed Kobie’s 2024 Consumer Research Study. We went deep into consumers’ minds to find out what’s at the heart of their loyalty. As you’re working through this research and trying to determine how it applies specifically to your brand or program, we’re here to help.
We’ve been working with global brands for more than 3 decades to translate consumer perceptions and expectations just like the ones you’ve learned from this research, into actionable loyalty strategies that drive ROI for your program. Please reach out to leverage our resident pracademics, teams of analysts, researchers, and consultants who live and breathe this work every day to help bring these insights more to life.
About Kobie
As a trusted partner for more than 30 years, Kobie delivers market-leading, end-toend loyalty solutions designed to enable customer experiences for the world’s most successful brands. With a strategy-led, technology-enabled approach, Kobie is named the ONLY Services and Technology Leader by Forrester with a mission of growing enterprise value through loyalty.
Reaching more than 330 million consumers through loyalty, Kobie’s solutions are robust, but our philosophy is simple. The thoughtful design of proven solutions coupled with extensible, scalable, and configurable technology leads to a seamless customer experience. We bring strategic tools and frameworks to design programs that deliver results, and leverage our proprietary technology, Kobie Alchemy® Loyalty Cloud, to deliver and measure loyalty experiences.
Visit www.kobie.com