You know that loyalty programs drive sales and increase market share. But do you know why?
Research by the Wise Marketer Group has now identified behavioural scientific reasons for the success. Here, we discuss some key insights you should know about.
The key reason for loyalty
Strong relationships are based on mutual trust.
Bill Hanifin, CEO of Hanifin Loyalty and COO of the Wise Marketer Group, suggests the one word that explains customer loyalty is trust. The most enduring relationships we foster with customers and employees alike are founded in strong emotional connections.
This of course is achieved by building mutual trust, something that in the age of technology requires transparency and open communication. The internet opened new avenues for consumers to research and compare different brands to form personal opinions before even interacting with a company.
Because of this, it’s as important as ever to focus on building reciprocal relationships with your audience from the get-go through efforts such as incentives and rewards programs.
The psychology of trust
The age-old conflict between conscious and unconscious decision-making applies to consumer loyalty as well, says Hanifin. When an individual claims to make buying choices purely based on logic and rationale, the reality is that emotional reasoning is just as important – if not more dominant.
It’s something that links back to the need for emotional connections through well-thought out loyalty programs, according to Marketing Land contributor Steve Olenski. He adds that the structure these programs provide serves not only as framework to build relationships, but also allows customers to rationalise their choices.
Loyalty programs serve as framework for trusting relationships.
After all, an organisation that gives back to its loyal clients clearly shows that each individual and their purchase is valued. Moreover, showing that loyalty is more important than attracting new customers creates a positive image for a business, which in turn can lead to more lucrative sales down the track.
According to behavioural psychologists Dreze and Nunez, loyalty programs can further benefit from the human tendency to want to achieve a goal if it seems to move closer – in other words, becomes more attainable. A great program will help foster a stronger relationship with loyal members as each consumer makes progress towards their next rewards-goal.
Whether you’re looking to launch your first loyalty program or want to take your current efforts to the next level, understanding the importance of trusting relationships for customer loyalty is key.