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The Psychology of Loyalty Programs – How to increase customer retention

the-psychology-of-loyalty-programs

‘An exploratory idea to help businesses connect with their clients on a whole new level’ 

What are loyalty programs, and how do they affect us

Loyalty, loyalty, loyalty! All we seem to hear about is how loyal customers are to their respective companies and brands. 

But in truth, how does one even create a rubric to measure and decide what this entails? By which methodology does one have to appropriate to take an accurate measure or at least check the temperature of the current loyalty-based climate – to be so verbose? 

Now as you are reading this you are probably wondering what I am blabbing about but bear with me, this will bear fruit.

Our discussion today revolves around loyalty programs and their impact on the global marketplace. Moreover, the focus being on client to customer relationships and how to foster these relationships for beneficial gain, namely fiscal and customer satisfaction – with the end goal being customer repurchase. A lot of industry standard loyalty programs exist out in the marketplace but all fail to truly address the most important factor that underpins success in this industry. That being the psychology of relationship and habit-forming mechanisms that drive an individual to feel compulsion or subconscious devotion to one brand over another. 
Sounds complicated, right? Well, yes and no, but don’t worry I will be your guide and hopefully we can make sense of this fascinating topic.

The core of loyalty and how to connect to your customers

Plato once argued that ‘love directs the bonds of human society’ which as beautifully put, hits hard at the points we wish to elaborate on today. For the purpose of this article, I am delving into the work of Grisaffe, Douglas & Nguyen, Hieu. (2011) who have extensively written about antecedents of emotional attachments to brands. 

They describe three critical points of emotional attachment, or for our purposes, the psychological bond that individuals form with brands. Facilitating strong emotional attachments to brands is thus an important means of realizing devoted, profitable, customer repurchasing. To evoke these varied sentimentalities and attachment they must address; 

– firstly, the nature of emotional brand attachment 
– secondly, the dispositional value that drives emotional connection to a specific brand
– thirdly, which presuppositions are controllable in emotional attachment.

Regarding our points, theorists widely regard that at the core of affective commitment is emotional attachment

This is further solidified by the supporting ideas of attachment theory which stipulates ‘each party manifests profound pleasure in each other’s company and especially in times of emotional affection.’ The inverse is also true that negative emotions are felt when the parties involved are separated or involved in states of rejection which can ‘manifest in intense emotions of anxiety and distress’. 

Bonding preserves proximity to the attachment figure, ensuring protection, care and survival. Disconnection produces pain and stress. 

Taking this into the context of brands and loyalty, emotional attachment implies a deep sense of security felt in connection with a brand and to actively avoid separation which manifests itself in repurchasing and overall loyalty to one brand.

Furthermore, the outcome of deep emotional attachment is extreme brand loyalty and repurchase ‘against all odds and at all costs’, despite incentives and enticements provided by the competition in the marketplace.

Strategies on how to further develop connections with your customer base

With the knowledge we have gathered just now, we can begin to figure out what type of antecedents or dispositions are important when considering to build a holeproof loyalty program. Grisaffe, Douglas & Nguyen, Hieu. (2011) research found 5 key tennents on which emotional attachment and brand loyalty are feverently based on.

Fig. 1. Antecedents of emotional attachments to brands.

In Figure 1 we can see that the core of emotional attachment to brands is;

●    Sentimentality/Emotional Memory
●    Socialization
●    Superior Marketing Characteristics
●    Traditional Customer Outcomes
●    User-Derived Benefits

The research suggests the two strongest antecedents were Superior Marketing Characteristics and Traditional Customer Outcomes, with the others following in consecutive order. 

This tells us that to increase customer loyalty and cohesion, companies and brands must focus on providing the maximal effort to supplement these values. By capitalizing on the satisfaction of a customer, the service, the product, the price, (as listed above) etc  – that you completely enforce emotional attachment for your brand and thus increase customer repurchase. In sum, a brand must stand out from other options to engender special attachment.

What Sparta Loyalty creates for you

So where do we fit in this puzzle?

The cornerstone of any loyalty program is understanding your customer’s desires and how to advance on their needs, to build cohesion and a healthy relationship that capitalizes on repurchase. To foster this ecosystem varied methods must be taken into account. 

Sparta Loyalty can help you understand this diverse and somewhat difficult ecosystem by being able to sit down with you and our panel of analysts who can disseminate raw marketing data taken from your customer base. Also by taking what we have learned today we can dive deep into the psychology of building stronger relationships with our customers by addressing the underlying values that engross emotional attachment to brands but more so the true core of loyalty.

Recently Sparta Loyalty teamed with BRIJU, Polish company that has been successfully operating on the market since 1920. It offers a variety of jewelry. Among others, it is known for high-quality wedding and engagement rings. Daniel Górny – Digital Marketing Specialist, who teamed up with Sparta Loyalty had this to say about our collaboration;
“It was necessary to create clearly defined goals for the program, and thanks to the expertise and consulting assistance of Sparta Loyalty, we were able to jointly develop ways to implement them on the various facets of IT, business and marketing levels. In fact, the implementation of the program involved preparing the organization to operate in the reality of constant change. Thanks to the available tools, we are able to react very dynamically to all market impulses, which gives us an advantage – especially in the context of the realities of running a business during a pandemic”. 

With high levels of customer success with BRIJU and a number of many clients we offer a way to tap into the climate and psyche of the marketplace to help you create the best possible avenues for success. Are you ready to take the next step? We invite you to!

Grisaffe, Douglas & Nguyen, Hieu. (2011). Antecedents of emotional attachment to brands. Journal of Business Research. 64. 1052-1059. 10.1016/j.jbusres.2010.11.002. 

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