Thursday, April 13, 2017

Change Up with Entitled Customers

Store loyalty programs work best when the customer experiences joy at receiving a program reward. The emotion strengthens the basic relationship in the brain between shopping at the store and pleasure. Eliciting joy at reward redemption is less likely when the reward is the same each time. Researchers at Yale University and Carnegie Mellon University find that, in this situation, customers come to feel entitled to the reward. They experience joy only when the amount of the reward is increased, and only until they again become accustomed to the increased amount. This effect is so strong that when the amount of loyalty program reward granted was decreased, the disruption to store loyalty was greater than if the participant had been told the program was discontinued altogether.
     Customers’ favorite loyalty program reward is a discount on an item of the shopper’s choosing. Progressively increasing the amount of this discount could quickly jeopardize the retailer’s financial viability. A better alternative is to periodically change the nature of the reward. How about a gift of a confection?
     Northwestern University researchers rewarded some consumers with cash and others with a slice of cake. As you’d expect, those who received more cash expressed greater joy than did those who received less cash. However, the size of the cake slice didn’t matter. Because there’s no number easily attached to the slice size, the happiness was determined by the flavor of the treat. So let them eat cake.
     Well, okay, I admit a piece of cake might not work as a reward for every type of store, or maybe any type of store beyond a bakery. Still, the lesson is that you can neutralize the entitlements trap with the language of merchandise rather than money.
     Yet you’re still facing the fact that the favorite reward is a discount. The solution to this one is to add the merchandise to the discount and periodically alter which merchandise item you award as a surprise bonus. Studies of loyalty programs find that small rewards given unexpectedly build a desire to reciprocate by giving future business to the retailer. Change and surprise meet the well-documented desire of consumers for moderate variety.
     In a New Yorker cartoon, the devil himself stands behind the host station at the entrance to Hell, preparing to write on a clipboard as he asks the new arrival, “And lastly, for all eternity, French, blue cheese, or ranch?”

For your profitability: Sell Well: What Really Moves Your Shoppers

Click below for more: 
Build Store Advocacy Beyond Customer Loyalty
Personalize Discount Offers
Title the Entitled “Risky to Please”
Give Your Sales Pitches Changeups
Vary Velocity for Loyalty Program Motivation
Change Up How You Do Business
See Through Consumers’ Boredom Fears

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