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A simple trick to boost your loyalty card effectiveness.
By Jon Parrish - April 15, 2016
Have you ever lost (or tossed) a loyalty card? I have, tons of them. In fact, most people lose (or throw away) more than they keep. So how can you, a business owner, increase the odds that people stay involve in your loyalty program?
Try this – Next time you enroll someone into your loyalty program, give them an extra punch. Consumer research suggests that you might double your results.
Here’s why – According to “The Endowed Progress Effect,” a report by consumer research professors Joseph Nunes and Xaxier Dreze, customers are nearly twice as likely to reach their loyalty incentive when given an extra boost from the get go. In this study, researchers gave out 300 loyalty cards to customers at a car wash. Half of the cards required eight stamps to get a free car wash while the other half required ten stamps to get a free wash but started with two stamps already on it.
The results? 19% of customers with the 8-stamp cards made enough purchases to earn a free wash while 34% of the customers with 10-stamp cards earned their reward.
Say what!? Even though both cards required the same amount of additional stamps to get a free wash, nearly twice the amount of customers who started with the pre-stamped cards made the required amount of purchases.
The strategy is called “artificial advancement.” Simply put, artificial advancement creates a sense of accomplishment right out of the gate, as if you’re giving customers a head start. The further along the loyalty path a customer gets, the more likely they are to complete the journey. Unfortunately, consumers have grown so accustomed to being handed a loyalty card that they often overlook its value; but when that card has multiple punches on, the value goes up.
Lesson learned – Boost your punch card with one effective trick: artificial advancement.
Components of Artificial Advancement that will improve your loyalty program.
Here are three steps to take to implement artificial advancement in your loyalty program:
- Set a clear goal. A clear-cut goal enables customers to look forward to a reward that aligns with a desire of theirs and stimulates their interest in the program. Utilizing your products as rewards for achieving the goal is the best path and a perfect way to create enticement. Just make sure the goal is clear.
- Determine what customers should do to make progress. To take advantage of artificial advancement, choose carefully which behavior you want to reward. For most situations it will require additional purchases or visits. Others ideas may giving customers additional points based on referrals, product use, time of day, etc. The most standard and clear to understand is a simple buy 10 Get 1 free loyalty card.
- Position the advancement as a bonus. Make sure to clearly define the reason for the bonus, regardless of what you choose to do for advancement. People won’t be influenced by artificial advancement if they don’t know why they’ve received it. One approach that works for every loyalty program regardless of the industry is to position the artificial advancement as a new sign up reward. When new users sign up, a short message explaining that they are receiving bonus points to help get them started will easily justify the process.
The sense of progress, even artificial progress, has an impact on consumer motivation because it gives customers the feeling that they have already surpassed the most challenging aspect, which is usually getting started. The closer people approach completion of a goal, the more energy they use toward accomplishing this objective.
Going above and beyond starter points
At CityGro, we’ve found the strategy of artificial advancement goes beyond starter points. With the ability to engage each customer after they leave your store, you can use incentives such as “double point Tuesday” or even a simple “show this text for an extra loyalty punch on your next visit” to incentivize customers to take action. Though the calculated discount of an extra punch isn’t very high (one percent per punch on a standard buy 10 get 1 free), there is a surprisingly powerful psychological motivator that can really drive action.
Once customers complete the reward cycle and get that first free item, they will be motivated to buy more to complete another full cycle to earn their next reward. The strategy is simple: In the competition to acquire loyal customers, give them a head start.