Most loyalty programs are not designed with a true understanding of the people they’re created for. As a result, consumer behavior stays the same and loyalty doesn’t improve.
Fortunately, there are better tools than instinct to understand why and how people make decisions. Behavioral science allows us to understand humans at a fundamental level, providing a smarter pathway for the development of effective loyalty programs.
The lesson is clear: we need to stop trying to create loyalty and instead focus on creating habits.
By using principles from behavioral science, brands can leverage the momentum of a customer’s existing life, and by doing so, form deep connections with the customer. Once a brand is incorporated into a person’s habits, it becomes part of their identity and sense of self. Transforming habits is the foundation for long-lasting brand fidelity.
How to create habits that lead to loyalty
1. Become a part of something the customer is already doing
Much of what we do is based on habit. We are hard-wired for habits. They make our lives easier because they require less cognitive resources to execute than if we consciously had to make a decision for every action we take.
And yet, creating entirely new habits is really hard. If you’ve ever completely lapsed in your workouts, only to try to return to a daily exercise routine, you know it isn’t an easy transition; instead, If you started adding one exercise to something you regularly did, (i.e., 5 sit-ups every time you went to the bathroom), then that small, incremental change would be far more likely to become habitual.
The great thing about a habit — once it’s established — is that it becomes automatic, requiring very little thinking or effort.
When companies build a new habit by connecting to an old one, they take advantage of this pre-existing wiring of the brain:
For example, millions of Americans watch NFL games every Sunday (and Monday, and Thursday). Typically, before they start watching the game, most people have a handful of activities they tend to do. Someone might check the Vegas odds or revisit their fantasy football league, or place their regular game time food order.
A brand wanting to benefit from the customer’s existing habit would encourage pairing that behavior with an interaction with their brand. Even better, the brand might take advantage of what they already know consumers are doing and automate the desired behavior.
This is what we accomplished with a major pizza chain. We know pizza is a favorite food for noshing on during games, so we asked customers to share their favorite NFL team with us. With this small piece of information, we automated order reminders via push notifications and emails during the pre-game show for that team’s games.
The conversion rates continue to be astronomical because we’re plugging into an existing behavior and making that experience even better. Nurturing this habitual process helps the brand seamlessly fit into their customers’ lives and makes them a part of their ritualized pizza and football combo.
2. Understand consumer triggers and cues
Material’s habit framework is based on individual cues or triggers that lead to a behavior. The execution of the behavior might lead to some benefit or outcome — be it financial, emotional, or simple completion. Over time, the behavior becomes automatic.
Imagine when you get out of bed in the morning that you spend 5 minutes stretching. The cue for stretching is getting out of bed. If it’s a strong habit, you will probably stretch, even when you get back in bed for a little afternoon nap. Or maybe you find yourself snacking every evening, even if you’re not hungry. After you send your last email, the kids are in bed, and the dishes are done, you start to unwind, and self-care behavior like eating a cookie kicks in!
This also applies to brands. By understanding consumers’ triggers and cues, brands can make themselves part of the consumer’s habit. For example, recognizing that the random Google search at 11:30 AM is a cue that this person is tired and hungry and starting to consider lunch, a brand can then enable this person to take action.
Over time, they could be cued to order from their favorite brand. If a brand also makes acting on that behavior smooth and easy, it’s a win all-around. Unfortunately, most loyalty programs don’t have a system in place to understand these individual consumer cues.
3. Build in positive reinforcement
Reinforcement is what happens after a specific behavior is performed. A signal is sent to the brain when something good happens (or when something bad is avoided), releasing dopamine and encouraging the behavior.
Part of how this reinforcement works is that, in the future, an individual also pays more attention to what triggered the reward in the past. Maybe you decide to eat healthier and end that nighttime cookie habit; yet, the allure of old habits remains: opening the refrigerator, it’s easy to gravitate to the sweets rather than the veggies!
Consumers will choose the easy, comforting path unless they’re given positive reinforcement for shifting behavior. Perhaps they decide to buy local and rely less on Amazon. What’s the reward? Amazon makes it fast and easy, so competitors need equally alluring positive reinforcement to change the consumer behavior and make it a habit. A quality loyalty program can make all the difference.
4. Nurture a lifetime of emotional loyalty
The point of loyalty is not to enroll consumers who never engage beyond their startup perks. The real goal is emotional loyalty, and that happens when brands become an integral part of consumer habits and rituals.
When the brand infiltrates the consumer’s psyche, influencing how they define and perceive themselves and design their lives, they stop thinking about other brands. There’s a habitual connection that breeds an emotional allegiance. This should be the gold standard for loyalty programs.
At Material, analyzing consumer behavior and aligning brand strategy to create advantageous habits is one of our core capabilities and a true differentiator from other agencies. Reach out if you’d like to explore how to integrate this science-driven approach into your company’s offerings.