Learn new ways to achieve a well-rounded loyalty experience for customers.

How to Use Gift Cards to Give an Experience This Holiday Season

It was my birthday recently (why thank you kindly for the well wishes!) and the night before official festivities were to take place my wife received a text from my sister asking for gift advice. Without looking up from her phone, she turned to me and asked for ideas to relay back. I rattled off a few of my favorite beers and ended with the caveat: “and if they don’t have those in stock you know I enjoy a good browse through the aisles.” What I didn’t put together until the next day when I opened my present to reveal a sleek little gift card (thanks sis!) was that what I had actually asked for was an experience.

With the overwhelming focus on millennials over the past few years, the term “experiences” has gotten a lot of play within the marketing and loyalty space. Numerous studies show that this key demographic holds an affinity for experiences, and often articles – like these from Forbes and Business.com – position this as a clash between the preference of material goods vs experiences, but that is not the full story. When reports quote that younger consumers “prefer” or “would rather spend money on” experiences it is misleading as this often paints the picture that these generations are primarily focused on accumulating cultural wealth instead of monetary wealth, flocking towards wildly unique happenings in an act of rebellion against consumerism.

This is false.

This type of presentation fails to acknowledge that you don’t need to mark your calendar and buy tickets to an event in order to have an “experience”.

Life is a constant experience.

And the goods we interact with in our daily lives have the potential to elevate each and every moment.  And that is what younger generations care about – creating memorable moments.

Yes, sometimes that means checking an item off the bucket list. Other times it could be hosting a backyard bonfire where laughs are shared a bit too loud and a bit too late into the night. Or simply capturing an image and sharing it with friends and family who will appreciate its contents. All are experiences.

And as I have been reminded recently by the gift card from my sister, merely the hunt for material goods can be a very enjoyable experience in of itself. A big reason for this is because when we purchase things, we imagine ourselves enjoying them in the most ideal of situations. It’s a similar phenomena as to why playing the lottery is actually worth it, even if you don’t win. We garner enjoyment from the thought of the experiences we will have in the future, allowing us to take greater pleasure in the now. So

So with the gift giving season nearly upon us, how do you ensure that the gift cards that you are giving will result in an experience not once, but twice for the end recipient? To take a deeper dive into the concept of having an experience, while prepping for an experience (where are Leo and Joseph Gordon-Levitt when you need them?) I want you to imagine yourself in 2 scenarios:

Scenario 1:

You open a birthday card with a decently funny punchline courtesy of Hallmark with a generically uplifting sentiment scribbled below from the sender, along with a $50 Target gift card.

Useful no doubt, but not very exciting or memorable. A likely scenario is that you slide the gift card into your wallet and forget about it until you are at the checkout aisle a month or two later (and let’s be honest, this isn’t even the first time you have been to Target since you received it – just the first time you actually remembered you had a gift card). It covers about half of your purchase and moves out of mind as soon as you pull out a credit card to cover the balance. There is no specific item that the gift card bought, it was essentially a great coupon. Furthermore – by the time it’s used you might not even remember who gave it to you (guilty).

Scenario 2:

You open a birthday card with a decently funny punchline courtesy of Hallmark, a $50 Target gift card, but this time a specifically tailored message from the gifter stating that they want you to use these funds to ‘revamp your board game collection’ for the next game night. Suddenly you aren’t just given a $50 catch-all, you are given a passport to adventure. (I realize not everyone will consider picking out a couple new board games as a “passport to adventure” but I do, so if you disagree simply replace the scenario with something you are passionate about.)

The key difference is that in Scenario 2 the presenter framed their gift in a particular manner, which in the case of a gift card causes 3 things to happen:

1. Clarity of focus. The focus has been shifted from the monetary value of the gift to the potential items that will be purchased which allows for a vision of the ideal state where those goods will be used. (i.e. the specific framing has created anticipation – one of the keys to a great experience).

2. Permission to spend irrationally. ‘Irrational’ might be a stretch but certainly the gifter has empowered the giftee to make a non-utilitarian decision. Let that sit. The delivery of the gift, not the gift itself, is what is impacts the end user’s ability to justify their spending behavior.

Scenarios 1 & 2 impart the same financial benefit, but because the second narrative includes commentary from the gifter stating: “I am giving a green light, nay a directive, to spend this on an activity of pleasure” there is an instant switch in the mental accounting of the recipient, stating that they can (and should) treat this pile of money differently than their usual expense budget. This is a vital piece of the puzzle.

3. Evoking a deeper emotional response. Gift cards are notorious for doing the opposite. But adding the personal touch of how the recipient could use the card improves the overall memory halo of the gift. No more forgetting who made your shopping adventure possible.

The bottom line? It is all about how the gift card is framed in the mind of the end user.

Prime the mind to pay attention to the experience that the gift card allows.

So this holiday season when you are checking names off the list, don’t feel bad by settling on a gift card. Quite the contrary! Know that based on how you present them, you have the potential to be giving millennials the thing they value most – an experience – regardless of the brand on the card.

 

Loyalty Through a Millennial Lens, Part 3

Welcome to the final installment of the series Loyalty Through a Millennial Lens in partnership with The Wise Marketer. 

Part 1 was all about Evan’s favorite brands and why he has an affinity to those brands. Part 2 was all about loyalty program’s biggest turn-offs. And now, Part 3 is all about customer data. 

Is there a threshold that brands can cross for the kind of data its collecting and asking customers for? 

According to Evan, as long as a brand is transparent about what they’re going to use the data for and use it to benefit the customers, then he has no hesitations about a brand using his information. Spotify makes it clear that their use of his data is to create something beneficial to him. This isn’t the case for all brands, however. 

To see the full video, click below to learn more about best practices brands can follow to get more data from their customers(and use it for good!) 

Loyalty Through a Millennial Lens, Part 2

Welcome to the second installment of the Loyalty Through a Millennial Lens video series in partnership with The Wise Marketer.  

This week, Evan Snively speaks with seasoned loyalty expert, Bill Hanifin. In this video, Evan expands on his favorite brands and whether or not any of these brands have a loyalty program. While none of the brands have a traditional loyalty program, Evan’s Spotify Premium membership provides him with an elevated listening experience. Spotify generates custom playlists for Evan each week, and some of them are nostalgic, or throwbacks to previous times in his life. This allows Spotify to create an emotional connection with Evan. Spotify Premium is a good example of how well-executed data personalization can become a loyalty program. 

Spotify Premium is exhibiting both aspects of Inertia & True loyalty to keep Evan engaged in the program. For more information on the four types of loyalty, click here. 

Finally, Evan shares what turns him off from participating in a loyalty program: 

1. When the employees don’t know how the program works. 

If the employees don’t care about their employer’s loyalty program, why should consumers? Employees are key in executing the brand’s loyalty experience. 

2. When it’s not clear how to master the program. 

When the consumer has little influence on how they perform in the program, it can be a turn-off. If the rule structure is difficult to follow, and the element of excitement is always something random, the program will fail to change the consumers’ behavior. 

For the full video, watch below: 

What are your major loyalty program turn-offs? Share in the comments below! 

Behavioral Science Principles + CX = Retail Loyalists

Like many people I begin the day by checking my email, a task which normally includes sifting through no less than 30 emails from retailers vying for my attention. And while some see this as an opportunity to mass-delete, I am excited to begin a new conversation with brands who want to have me as a customer (like most conversations, some are more engaging than others, but that’s a topic for another day).

People have hobbies and I consider shopping to be one of mine. Sometimes that includes making a purchase, other times I’m simply browsing. I actually enjoy the experience and appreciate the effort and thought behind every floorplan, display window and home-page. Like many consumers, I make a fair amount of my purchases online. Yet, when given the choice, I prefer to escape to an actual store (gasp!) where I can see colors and touch fabrics in person. I understand the hours of thought that went into picking precisely which button to use, or what the exact shade of red should be.

Two decades in various retail roles (from specialty and department store management, to buying, to private label product development) have hard-wired my brain so I cannot help but appreciate these details as I browse each aisle. It makes me absolutely giddy. This happens regardless of the type of store I’m visiting, from specialty apparel to home improvement – but in full disclosure, it hasn’t always been this way. In my past life I reached a point where I could not separate shopping from work. I boycotted the Black Friday madness and no direct-mail offer was rich enough to lure me into a store. But true love never dies, and after my long hiatus, shopping and I have picked up right where we left off.

I am a merchant at heart; always will be. It’s as woven into my sense of self as much as any fabric ever could be. And while not every person’s life story is as closely tied to the world of retail as my own, every person is a consumer of something – it’s one thing we all have in common. We choose what brands to interact with on a regular basis, some because we want to and some simply out of necessity. That’s why retailers today need to understand how people make decisions… what’s happening rationally in their heads and emotionally in their hearts that triggers the choices they make. This is my passion today, and over the next few weeks I’m going to merge my past and my present by serving up research-based behavioral science principles that retailers should consider as they work to strengthen their bonds with customers and save themselves, quite literally, from deletion.

I start with my favorite principle – the Peak-End Rule.

How people remember an experience is not a mental summation of the overall experience. Instead, our memories are overly biased by both peak or emotionally-intense moments as well as how the experience ended. In their groundbreaking 1993 study on the peak-end rule, Barbara Fredrickson and Daniel Kahneman exposed people to two aversive experiences: in the short trial, participants in the experiment immersed one hand in water at 14 °C for 60 seconds; in the long trial, they immersed the other hand at 14 °C for 60 seconds, then kept the hand in the water 30 seconds longer as the temperature of the water was gradually raised to 15 °C – still painful, but distinctly less so for most subjects. Subjects were later given a choice of which trial to repeat. Surprisingly, a significant majority chose to repeat the long trial, apparently preferring more pain over less. In reality, it was the subjects’ memory recall that the long trial ended better that swayed their decision.

Since not everyone has a tank of 14 °C water lying around to experience this themselves, simply think about the last time that you traveled by air. If you arrived at the airport on time, cruised through security, got the seat you wanted, your flight left on time and was smooth, yet when you landed, the plane sat on the runway for 30 minutes, or worse, your luggage was lost – how would you rate the overall experience? While many things about this trip went well, it is the way the trip ended that you remember most and are likely to share with others when asked “How was your trip”?

This leads me to ask: What are the peak moments during a shopping experience that successful retailers are creating for their customers today? Not everyone is happy about parting with their hard-earned money and most of us don’t enjoy waiting in line to do so. How could the end of the shopping experience (think check-out and delivery) be changed to become more positive and memorable? Please share your thoughts below and share this with others with a similar passion. And, be sure to check back soon for the next principle I will tackle: Goal Gradient Hypothesis. Until then, happy shopping!

Behavioral Science and the Loyalty Experience

The lack of understanding that brands have in terms of the human mind, and how it applies to their ongoing loyalty efforts, is concerning in today’s market.

Evan Snively, Loyalty Strategist, sat down with Loyalty360 to discuss behavioral science, and its impact on customer loyalty. For the full interview, click here.

At a basic level the human brain is wired to take shortcuts. Those shortcuts help us navigate the various situations daily life presents. In the loyalty industry, one of the most common consumer shortcuts we encounter is a decision-making tendency known as confirmation bias. This occurs when a person actively seeks out information that confirms his/her existing beliefs instead of undergoing a neutral search for facts.

The result of confirmation bias is that consumers make irrational decisions because they weigh the information they want to see more heavily. In terms of acquisition, that can work in a company’s favor when new customers already hold a positive view and expectation of the brand.  Confirmation bias will influence those new customers to pay more attention to aspects of the brand experience that align to their preconceptions. It is also good news for brands that already have an established relationship with a consumer as customers will continue to look at the brand experience through a lens that reinforces their past behavior (no one like to admit they were wrong, right?). Of course, the flip side of this reveals why breaking existing consumer habits can be very difficult – all the more reason to focus significant marketing resources on your existing loyal customers.

On an individual basis, is lack of loyalty in some people based on their own behavior or is the brand at fault? Or is this a little bit of both?

It is a bit of both. Brands can definitely set themselves up for success by delivering on their core value prop and creating a great customer experience. But at the end of the day it’s the consumer who has the final say. Every consumer, whether purposefully or not, has a sense of their “personal brand”. When you’re talking with your co-workers and you say “Ah, that’s classic Joe” what you really mean is “Joe is acting on-brand for himself.” Loyalty is often a question of whether your brand maps to that individual consumer’s brand.

For some people their “personal brand” is a pragmatic, rational deal-seeker. For this persona, it would go against their own ideology to be brand loyal – they want the best deal, wherever they can find it. Luckily for loyalty marketers, only 3% of people self-identify as part of this “Not loyal to brands at all” segment. We call them “The Detached”. The other 97% of the population we split into two groups – “The Transients” (68%) and “The Resolutes” (29%).

Transients claim “I’m somewhat loyal, but could be convinced to buy a competitor’s brand”. This group is more likely to be driven by price and constantly re-evaluate their purchasing decisions through the Psychology of Relativity (comparing a choice to what else is around) and Social Proof (what is everyone else doing?). Resolutes, on the other hand, state “I’m very loyal and I only buy my favorite brands”. This segment is more likely to create an emotional bond with a brand by identifying with the company’s purpose and values.

A good loyalty strategy will create an environment which nurtures and empowers Resolutes, while also capturing meaningful attention and spend from the Transient Loyalists.

For the full interview and more information on where we believe loyalty is heading in the next 5-10 years, check it out here.