Here is a well-established knowledge: loyalty programs compete hard to find the idea that will retain and conduct consumers to conclude their shopping. For instance, gifts offered through the Flying Blue program of Air France can be obtained only under certain conditions based on an amount spent within a given time framework. Promod or Yves Rocher brands give access to “points” that expire after a certain time delay. Also, as Sephora loyalty programs, numerous brands use the threat of downgrading status providing certain privileges if the customer does not meet the purchase requirements. Yet, as underlined by Virginie Pez, Raphaëlle Butori and Aïda Mimouni Chaabane in their article published in Research and Applications in Marketing, the common denominator in these commercial practices is the introduction of constraints that create pressure on customers’ shoulders.
The golden prison syndrome
The authors show that unsatisfied customers associate loyalty program to constraints. In their minds, loyalty program with a point system represent a close pathway within a business model built on by the organization, a consumption path and a sort a spying attitude towards their purchasing behaviors. At the heart of their mental representations, the obligation to manage the risk of point’s expiration limit, or the change in their status within the loyalty program, increase negative evaluations’. Finally, the locking loop into the constraint system is at the heart of the rejection of loyalty programs.
CRM tools: a double-edge sword
Surprisingly, the topic of pressure on customers through loyalty programs is generally studied within a positive angle in the marketing literature, and for good reason, previous research on consumers’ purchasing behaviors constantly show that the closer it comes to the points’ limit to obtain a gifts, the more customers’ purchasing frequency increases.
By adopting a consumers’ perspective, the authors take another angle and take the opposing view of the previous analysis based on the purchasing behavior acceleration. Using data issued from a consumers’ sample group registered in a loyalty program, the authors determined that psychological pressure generated by these programs reinforce consumers’ belief to have purchased the wrong item. It also triggers a strong reaction of discomfort toward the brand or the retailer which, in turns, reduce the overall positive feeling usually associated with a purchase.
Consequently, by introducing high level of pressure in the relationship with the consumer, brand and retailers deal with a CRM tool which is, in reality, a double-edge sword: one the one hand, it represent a significant increase of purchase within a given period of time, while on the other hand, it decrease the post-purchase consumer’s state of mind and well-being which downgrade the relation to the brand.
Is it possible for a CRM manager to solve this problem?
The answer is clearly no. The solution lies in the introduction of greater benefits for the consumers, of which the lever is situated out of constraints mechanism. Sponsoring, consumers’ (sincere) reviews on products, participation to creative contest, and contribution to the brand community: all these actions reflect other aspects of the consumers’ engagement toward the brand that the latest should reward.
Pez, V. Butori, R. & Mimouni Chaabane, A. (2017), The dark side of the pressure exerted by loyalty programs on consumers: Practical and ethical issues, Research and Applications in Marketing, 32(3), 71-83.