The loyalty statement has long been a staple for programs. However, the monthly direct mail statements of old are being replaced by real-time trackers and email statements that use the principles of human motivation to influence customer behavior.
Most people don’t know how many points they have with their favorite brand, therefore they’re not aware of how close they are to that next tier, next reward, next status.
Incorporating the right elements into your loyalty statement plays upon the motivational cues that drives member behavior and keeps them engaged with the brand, while continuing to build that one to one relationship with the customer through recognition. Every brand has its own design for statements, but the most effective statements leverage the psychological motivators behind goal setting to keep members hooked and driven toward moving to that next milestone.
Why Loyalty Statements Lift Behavior
The motivation behind real-time statements plays on basic human psychology. Goal setting and goal attainment are innately pleasurable to the human psyche and are incredibly motivating to move a person from one point to another. There are three principles to goal setting.
1. Appropriate Goals
People naturally tend to want to achieve big goals, but they don’t want the payoff to be too far into the future. You may be briefly motivated just by focusing on that big goal, but your motivation will likely wane as the goal seems too far out to attain. Rather, we’re more willing to accept a less valuable goal in the immediate future – a concept called present bias.
2. Perform Actions and Responses to Move from Current to Desired Point
Current behavior resulting from the reward or punishment of past behavior is called operant conditioning. This can be done through reinforcements or punishment.
Positive Reinforcement: Taking an action, getting positive rewards. For example, buying a recommended product, getting a 10% offer for a related item.
Negative Reinforcement: Taking an action that removes negative experiences. For example, when receiving continuous notifications that your account is about to expire from inactivity, you purchase something, and you stop receiving annoying reminder emails. The negative is taken away.
Punishment: Getting an aversive stimulus, like speeding and then receiving a ticket.
For example: Failing to purchase within a specified time period, then losing points or tier status to expiration.
Positive and negative consequences are very influential in customer motivation. The concept of loss framing requires twice as much positive to equate the emotional value of the negative experience. For instance, when gambling, a $50 loss creates such negative feelings that you can only feel the equivalent positive feelings by winning double, or $100.
3. Monitor Progress
Visual cues are key to monitoring progress, and they give an emotional boost when you achieve your goals.
Loyalty statements can motivate members in much the same way a fitness tracker motivates a fitness enthusiast. The tracker helps you set appropriate goals based on recent activity and overcomes present bias by setting the goals within reach. They use operant conditioning such as encouraging messages and badges awarded for achievement as positive reinforcement. And they monitor progress throughout the day - you’re working to close those rings to get your award!
How to Create Motivating Statements
Today, real-time statements are an additional lever for marketers to lift customer behavior. As we saw above, more people would purchase if they knew how many points they had and how close they were to their next goal.
The most effective trackers will reflect recent customer activity in a way that uses the basic principles of goal setting: attainable goals not too far in the future, at-a-glance visual cues that show members how many points they have and how far away they are from achieving their next reward or status, and provide the next actions the member can take to move from their current status to their next goal. Incorporating these cues helps members achieve status and maximize customer lifetime value.
#1 - Creates an Emotional Connection Through Recognition
Loyalty statements continue building that 1:1 connection with a member. The statement is personalized, reminds the member of how far they have traveled on their journey with the brand, and recognizes the member’s loyalty to the brand.
#2 - Instills a Belief that Status Matters
Just as goal setting picks a reward worth working toward, statements should remind and encourage members that the next milestone is important. Particularly in the age of the empowered consumer where exclusivity and preferred treatment are becoming larger draws for loyalty programs, members need to believe that the next tier or status designation is worth the effort.
#3 - Sets Appropriate Goals for the Member to Attain
To overcome present bias, the statement should show members that their next goal is within arm’s reach. Members will lose interest if their next goal is set at 100,000 points and they currently have 950 points. Setting the next increment at 1,000 points or reminding them they have to spend $100 more dollars to reach the next tier is more motivating and actionable.
#4 - Uses Visual Cues to Demonstrate Progress Toward Attainment
A member should be able to see their progress at a glance. Strong visual cues monitor the member’s progress toward their goals by easily showing them how close they are to their goals and trigger that dopamine release to make members feel good.
#5 - Uses Reinforcement Techniques to Influence Desired Behaviors
Most commonly, loyalty statements will use positive reinforcement: take this action (purchase, post, etc.) and receive this reward (double points, tier achievement). Some may visually convey negative reinforcement, such as complete your profile and these annoying emails about completing your profile will go away! And some programs may use punishment, such as unless you act, your status and points will expire.
Incorporating these key motivational factors into your real-time loyalty statements will keep members updated on their progress through their member journey and keep them engaged with your brand. We’ve seen statements that incorporate psychological triggers lift behavior and enhance their overall experience with our clients.