There is more to engaging customers than points, discounts and rebates.
According to the 2014 Loyalty Report, the average American is enrolled in 10.9 loyalty programs, but are only active in 7.8 of them.
Something is getting in the way of a higher level of engagement among program Members. The answer lies in values alignment.
We conducted a national consumer loyalty study, The Loyalty Report, and revealed a tight link between Member engagement and the extent to which the (perceived) values of a program are aligned with a Member’s personal values. It seems the greater the alignment, the more likely a Member is to be engaged with a Program.
The study investigated the link between Members’ personal values systems (i.e., the set of principles and ideals that individuals use to govern their behavior, to inform their decisions, and which shape their attitudes as they go about their everyday lives) and Member engagement (i.e., the extent to which a Member is satisfied with a brand and the extent to which a Member is likely to make repeat purchases and advocate for a brand), as a means of uncovering whether differences in personal values systems could, in part, account for differences in Member engagement. There answer is, it does.
The hypothesis in undertaking this values alignment analysis is that differences in the level of engagement among Members is due to differences in each Member’s personal values systems. Given that the factors which drive and sustain engagement between a brand and its customers are unique to each customer, it is not surprising that a one-size-fits-all approach to program design achieves inconsistent results in engagement across a diverse Member base, comprised of individually unique customers.
The approach we used to uncover the link between personal values systems and Member engagement involved two key steps. First, we determined a Member’s dominant personal values (i.e., the values which most heavily govern their decisions and behaviors). Next, we assessed the Member’s preference for a variety of program elements, including mechanics, benefits and rewards.
Figure 1 – Dr. Schwartz's Personal Values Inventory.
The study applied an existing personal values inventory, created by Dr. Shalom Schwartz. He contends that the personal values which guide decisions and influence behavior exist across two key dimensions – the first, the extent to which an individual thinks of and acts in the best interests of self vs. others; and secondly, the extent to which an individual seeks stability vs. change. Eleven values dimensions roll up into four main values segments described as: Self Transcendent, Self Enhancement, Open to Change, and Conservation.
We found meaningful differences in Members’ preferences for loyalty program elements across these four values segments.
For example, Members in the Self Transcendent segment whose dominant personal values are universalism (i.e., seeks social justice and tolerance for all, promotes peace and equality) and/or benevolence (i.e., are very giving, seek to help others, provide general welfare and nurturing) have higher preferences for program mechanics such as ‘giving points to a charity’, tend not to redeem points as soon as they are eligible to redeem them, and tend to redeem for less frivolous rewards.
The analysis also revealed a powerful insight regarding values alignment: the extent to which Members describe their personal values as aligned with the values of the program in which they are a participant correlates strongly with their satisfaction with the program. Meaning, the more closely aligned the program’s values are to a Member’s values, the higher the Member’s satisfaction with the program.
The implication for loyalty marketers and program operators is to identify and understand the extent to which the values profile of their specific brand audience and Member cohorts differ. These differences hold meaningful clues about which program elements are under-represented or over-represented in the current design, and guide marketers toward more engaging programs for Members.
Confirming a link between personal values and Member engagement is very exciting, and can arm loyalty marketers with necessary insights to design more relevant and engaging loyalty programs.
Interestingly, only 40% of Members describe their program’s values as being aligned with their personal values. This is a strong call to action for loyalty marketers and program operators.
Gymboree’s Gymboree Rewards and The Children’s Place’s My Place Rewards are examples of programs for which a high percentage of its Members (60% and 56% respectively) cite values alignment. Gymboree’s Play & Learn Classes, for example, encourage a child’s development through play and learning. This is a good example of a program element aligned with a parent’s personal values system.
Enabling Members to fulfill on their personal values as part of their participation in programs points us towards how to achieve a more highly engaged and satisfied Member base.
Successful next-generation programs should embrace a holistic approach to customer value proposition design. More specifically, marketers should include elements which enable Members to fulfill their personal values through program participation, to deliver emotionally rich, personally fulfilling experiences. It seems that values alignment is very valuable for both brand and for Member.