Can you improve a loyalty program with behavioral science?
I continue to do research on how current loyalty and rewards programs can improve the extrinsic nature they have and add some intrinsic elements.
I think for most programs, companies will still need to provide rewards, points, etc, however, if you keep to these rigid mechanics only, then your customers will not really be loyal as there is no intrinsic motivation for them.
I, therefore, have been delving into how Self Determination Theory can help and specifically for this example using one of the 3 elements of SDT - autonomy (meaning your customer/ employees have control over their own behavior.)
If we look at some loyalty program designs (image 1), they offer little in terms of autonomy, why? because the reward is fixed, there is an expiration date - you basically have no control.
How could you make it better and provide more autonomy and hence move the needle towards the intrinsic side of motivation?
a)Give Positive Verbal Feedback (image 2)- acknowledge the customer's challenges in participating in the loyalty program and not just the fact that they earnt some points or stars.
b)Give Positive Feedback + Give More Control (Image 3) here you are relaxing the explicit requirements and hence giving more autonomy to the customer or employee.
These are just some ideas and please don't go and implement them right away, as context matters and I have no idea who your customers are or any of the business conditions, or whatever else could be influencing your customer's behavior.
I give these as idea starters, and yes, if I was working on a project, I would be doing this kind of research (good ol' lit reviews) to make sure we have the science to back up what we believe could work.
The study by Kim and Anh examined the effects of external rewards on undermining customers’ intrinsic motivation to engage in a retail loyalty program.
The title of the study is
Rewards that undermine customer loyalty? A motivational approach to loyalty programs
Image Credit is from the Study as well.
Happy to share the link if you find it useful
#loyaltyprograms #loyalty #behavioralscience #behavioraldesign #digitaltransformation #productinnovation #servicedesign