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Tuesday, January 8, 2013

Memorable points when designing reward programs for customer happiness and satisfaction.

Consumer research teaches us one lesson: to sell to the masses, create products that are uniform in character and design, but to sell to a customized clientele, to people in the know, create products that have unique experiential aspects. I breached this topic in another blog concerning the different ways novices and experts seek new knowledge and how much they are ready to cost those new knowledge.

iPhone Size. Hand of the beholder. Flickr.com/The Searcher
We can go one step further: to give your customers satisfaction when designing a reward program, design the reward program with the target in mind when you aim to create a satisfying experience.

If your target is the general public, deliver reward programs that can be easily counted, that can be easily measured. On the other hand, create reward programs that are not easily counted or measurable by your clientele if you are targeting a specific subset of your customers.

In a recent study, Jingjing Ma and Neal J. Roese, of the Kellogg School of Management, Northwestern University, found that customers are often less satisfied when they receive products that are easily counted. But when they receive products that are not easily counted, they are more satisfied. When gifts or rewards are easily counted, it spurs comparison. More especially is this evident when money or cash is at stake. A customer is more satisfied if he receives a gift which cash value is above that of others, and might feel denigrated when the monetary value of his gift is below that of his peers. On the other hand, if a gift cannot be easily monetarily estimated, the customer is equally satisfied but concentrates on the intrinsic qualities of the gift.

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Customers are humans. Humans always compare. It is a natural impulse. This is because we learn from watching others. According to social comparison theory, humans compare themselves to others in order to create uniformity, and to measure up to what is expected. Sometimes, comparing oneself to others can be a source of inspiration. When this is taken too far, it could be a self-denigrating tool, a tool for self-punishment. This is not fair but that is how we are built.

Humans compare themselves against their peers and competition.

When companies design reward programs that are easily countable, they could indirectly be asking their customers to compare their reward against that of others. Andrew was given $50 and I was given $40. Why? What if a customer thinks he was downgraded; that your reward was unfair when he has been a loyal customer? That would be bad for customer retention.

On the other hand whether customers are faced with a reward program or with the choice of picking between competing products on the store shelf, it has been found that humans as novices always compare when they are presented with different products. Only experts take a product apart; only experts have the unique ability of evaluating products on their intrinsic features, separate from comparison with other products. Experts make up a tiny fraction of the universe of customers. So, whether it be a reward program or doing shopping, humans will always compare, will make decisions slowly and carefully after every consideration has been given to their buying and will want to choose the product that is uniform to the accepted standard. Comparison creates a veneer of confidence.

What this means is that if your reward program is targeted at the general public, like say, a sweepstake, then you should not be worried about giving them rewards that can be easily monetarily estimated. You could even be using that as a competitive strategy. The options given in the program should also reflect the values you believe your customers would usually attach to the effort needed to receive such a gift. This is because the public are usually novices. They will compare notes whether you like it or note. They will compare between your present and past programs, between your programs or offerings and that of your competitors.


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On the other hand, if your reward program has as its target customer retention, customer satisfaction, or enhancing experience and increasing their happiness, it would be a mistake to present them with rewards that can be easily monetarily estimated or counted. Your customers are assumed to know a little more about your product than the average. That is why your brand is a favorite or preferred. They would be more satisfied if you present them with an experience rather than monetary value.
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2 comments:

  1. Successful organizations must show their clients and customers how much they appreciate their business. Bukoo Gifts offers best Customer Loyalty Programs that build relationships with your clients. Show them you appreciate their business and are willing to invest in keeping their business. Also, utilize Bukoo for referral gift programs, and give your customers and clients thank you gifts for sending business your way.

    ReplyDelete
  2. Thank you for sharing. Business client gifts are the best way to properly thank clients and show them that you appreciate their business.

    ReplyDelete

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