Today’s utilitarian approach to loyalty programs—earning points and rewards—may drive repeat customers who spend more. However, that method ignores two essential aspects of human nature: emotional and social attachment.
According to Accenture Labs research, 42 percent of customers are enrolled in retail loyalty programs, and these customers generate 12 percent to 18 percent more in incremental revenue compared to non-members.
Capturing the opportunities requires a more holistic view of loyalty, understanding humans’ multi-faceted motivations and needs and designing products and services accordingly. Accenture Labs identified three steps to “expand the loyalty purview” and deliver the highly personalized and contextualized experiences consumers demand.
"84 of executives agree that through technology, companies are weaving themselves seamlessly into the fabric of how people live today."
With the loyalty market now producing about $30 billion in revenue a year, loyalty programs have proliferated in retail, travel, finance and other industries.
Most existing loyalty programs fulfill functional needs: saving money at the gasoline pump, for example. Few get at the actual emotional and social needs behind these transactions—the "why" behind what incents people to do something.
Businesses will often jump from the first stage of identifying needs (why) to the third stage of building products or services (how), but skip the critical second stage. This can result in a program that looks good on the surface but is not sustainable because it can't meet deeper, long-term emotional needs.
To empathize more fully with customers, companies must dig deeper using human-centered design methods, including ethnographic techniques like interviewing and shadowing to observe how people are interacting with a loyalty program.
A research methodology known as the User Burden Scale examines ways to reduce "friction points" in customer experience, which can help create programs that drive intrinsic loyalty.
Businesses can expand or modify the scale to consider ways to decrease a range of customer burdens, such as difficulty of use.
Ride-sharing offers one example of a service that builds brand loyalty by addressing emotional or social needs. By "completing the matrix," you gain greater understanding of what you don't know about customers' interactions, and, in turn, open opportunities for innovation with products and services that do not yet exist.
Sometimes the hardest part of innovating is knowing where to begin.
Business leaders can take a methodical approach to discovering unmet customer needs by completing a matrix that identifies customer burdens and needs. This exercise both unlocks new insights and helps determine what products or services to build or design.
Focusing attention on the areas where the emotional or social needs are missing or undeserved can produce new opportunities for innovation.
Read the full report for more on how we create intrinsic customer loyalty.