Customer Gratification with Rewards

Rewards programs work! They motivate consumers to achieve a benefit from spending their money with a brand. There’s a psychological pull that a lot of consumers can’t resist. Here are our top reasons why customer gratification with rewards works!

Customer Interactions

People respond to promotions and rewards in various ways. According to research by the global consulting firm McKinsey, these reactions have to do with context, habit, friendly influence, incentives, emotions and other factors. It is an accurate way to engage someone’s emotions, and in turn, win or lose their loyalty.

Research shows that shopping is not only about pleasure, but equally about pain. A battle between these two feelings takes place in the medial prefrontal cortex. 

Ultimately, the goal is to have your product win the choice battle between pleasure and pain. There are two routes to this: increase the attractiveness of the product or remove the pain. Giving an instant discount is very effective in reducing pain.

Making customers feel positive about their purchase is crucial to not only the customer experience but also brand loyalty. Research shows that 79% of consumers look for deals in loyalty rewards programs such as loyalBe before buying an item.

Add real value

More broadly, the psychology of rewards and the current cost of living crisis should prompt companies to rethink “value” and how to incorporate it into their marketing plans. 

In previous years, “value” meant that consumers got something meaningful for what they gave to a company. In today’s times, consumer needs have shifted dramatically and “value” can also be defined as helping customers achieve their budgetary goals in a tangible way.

Even in the long term brands will have to think in a very different way about how to provide value to customers. Marketers must consider factors such as relieving consumer stress, offering more options for convenience and putting money back in consumers’ wallets when they need it most. The challenge is to find ways to add value to their customers in a frictionless way.

Cashback is king

With consumer budget challenges in mind, rewards are on the rise as more brands turn to “surprise and delight” experiences. Brands are flocking to embed loyalty programs into their user experiences. 

Rewards such as cashback also drive sales. For instance, more brands see increased revenue via rewards (36%) compared to discounts (28%). Promotions enable businesses to encourage consumers to buy products while creating engagement that makes them more likely to make repeat purchases in the future.  Consumer loyalty can be fleeting, but reward-based promotions offer businesses the opportunity to keep shoppers coming back while also encouraging revenue growth and building brand reputation.

For banks

The best way for banks to implement rewards into their offering is to make the customer experience as frictionless as possible. When customers sign up for a loyalty program, the payout that follows should be automatic. Once customers experience the ease and delight of automatic rewards, engagement with the bank’s digital channels will only increase.

Win

McKinsey’s study showed that instant gratification, like rewards, results in a positive customer experience and more brand loyalty. Rewards are all about psychology and can create positivity in shopping and the best outcome for consumers, brands and financial service providers alike.

The psychology of rewards is powerful. Brands have the opportunity to make such rewards even more memorable for customers, when the rewards look more like something they need and can use immediately, like cashback.

If you are wondering how best to delight and retain customers, contact us!