The Psychology of Rewards Points: the Popularity of Loyalty Programs

customer rewards

customer rewards“Earn 10 more points to redeem these wonderful rewards!”

“Use your points and pay for your dream luxury vacation!”

The implementation of a rewards program is perhaps one of the biggest trends in an effort to build customer loyalty today. Many businesses are investing in and using this tactic to attract more customers and keep existing ones coming back. Customer loyalty programs have thrived over the years and only continue to grow in popularity, but did you ever wonder what makes these programs so appealing? Sure, there is the material gain after accumulating enough points, but is there more to it than that?

Loyalty Programs: A Compelling Motivator

Behavioral psychologists and experts from Grouptrader say that loyalty programs bank on the idea of goal setting. People are more likely to work harder and perform better when there is a concrete set of goals. Furthermore, when they see themselves getting closer to meeting those goals, they are become more motivated than ever.

Maximizing the Power of Motivation

For loyalty programs to be more effective, you should be able to plan your rewards system in such a way that people will see that it’s easy to actually redeem the reward. Here are some considerations in planning your program:

  • Create the illusion of progress. Your goal is to minimize the distance between now and the goal. You can do this by offering customers a head start; give them bonus points as soon as they register for the program. This will not only motivate customers to participate in the program actively, but the “free points” will give you an edge over other programs.
  • Update customers about their progress. Another thing you can do is give customers consistent updates about where they are in the program. Your customers need to be reminded of their goal. Otherwise, they will lose interest, slack off, or even quit.

Loyalty programs are a compelling motivator that could further improve your relationship with customers. Capitalize on the value of motivation and guarantee an effective program.