Recently, when I stopped by a local pizza place, I was reminded why it can be difficult for people to break free from bad habits. While waiting in line, I noticed that nearly all people ahead of me showed their customer loyalty cards at the point of sale. Collect 10 stamps through their loyalty card program and you receive a free pizza slice.
Not wanting to miss out, I signed up for their rewards program when it was my turn to order. I received two stamps on their 10-stamp loyalty card, even when I had bought only one slice. To some, added bonus stamps may seem like a kind gesture or excellent customer service. But I knew the cashier had played a clever trick on me, one that leads to customer habit formation.
Coffee Shop Loyalty Cards
In 2006, a group of researchers held an experiment that involved a “buy ten, get one free” promotion at a coffee shop.1 Current customers received one stamp for every coffee purchase they made, and once they collected all ten stamps on their reward cards, they were eligible for a free drink of similar monetary value.
The researchers wanted to test if customer loyalty programs lead to repeat business and divided the participants into two groups:
- The first group received a 12-stamp coffee card with 2 pre-existing bonus stamps.
- The second group received a regular 10-stamp card.
In both cases, the participants had 10 empty stamp slots, but the first group was already 17% towards their goal, while the second group had to start from scratch.
The results were interesting: The researchers found that the group with two bonus stamps purchased more coffees and reached the 10-stamp goal faster than the other group.
The Car Wash Loyalty Program
A similar study featuring custom loyalty cards took place at a car wash.2 Every time new customers bought a car wash, they got a stamp on their loyalty members card.
- When the first group of participants collected eight stamps, they received a free car wash.
- The second set of customers had to collect ten stamps but received two bonus stamps.
In both cases, the participants had to collect eight stamps to be eligible for a free car wash. However, one group had to start from scratch, while the other one was already 20% toward getting a free car wash.
The findings resembled the café study; The researcher found that the group with the bonus points purchased more car washes and earned the free car wash in less time.
Different experiments, similar results. What can we make of this information?
Loyalty Cards Increase Your Spending
While giving away free stamps may seem like a kind gesture to create happy customers, the above studies show it leads to a more loyal customer base that will spend more money and return on the next purchase. Business owners profit from loyal customers and add extra points to their customer rewards programs to attract regular customers and motivate them to spend more money, and at a faster rate.
It does not matter if you purchase coffee, a car wash, or a slice of pizza at a local corner store, a card with bonus stamps is a powerful marketing tool that leads to future purchases. Loyalty rewards work because, as humans, we find it motivating to make progress. When we feel as though we close in on success, we increase our efforts.
Many companies create an illusion of progress to incentivize us to purchase more products. Bonus stamps motivate us to buy products we might otherwise not pay for. If we repeatedly purchase a product to complete a loyalty rewards cards, we also risk creating an unintentional habit.
Luckily, we can flip the script and use this information to achieve our goals. By identifying progress, we can increase positive behaviors and achieve our goals faster.
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Use Loyalty Card Psychology to Your Advantage
To make a change, look for the first two stamps on your card. Chances are that deep within you, change is already ongoing. It may not feel like it is because you have not identified the progress yet.
Rather than focusing on what is new about the change to come, remind yourself what you have already conquered. Doing this is a two-step process.
1. The Miracle Question
First, focus on what you want to change. Identify what you want by asking yourself the Miracle Question.
The Miracle Question allows you to focus on what you want to achieve: “Suppose you woke up one morning and by some miracle everything you ever wanted is now there. Everything good you could ever imagine for yourself, had happened. Your life had turned out how you wanted it. How will you know?”
When asked, most people cannot answer this question, except in very general terms. They know they want success, but do not know what that would look like. They are so busy going over the past, they never considered their ideal future. The Miracle Question stops them from thinking about past failure and helps in focusing on achievements.
2. The Exception Question
The second step, which is perhaps even more important, is to ask yourself the Exception Question.
The Exception Question helps you identify specific signs of progress: “When was the last time when the problem did not exist, even for just a short time?”
This question offers proof you are already solving the problem, at least in some circumstances. It invites you to consider a time when you dealt with the problem positively. Put differently, it helps you identify the first two stamps on your card, and makes you realize that change is already ongoing.
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Loyalty Cards and Asking the Right Questions
Understand: you are motivated by progress. The Miracle Question and the Exception Question are great at helping you identify the distance toward your goal. Answering those questions will increase positive behaviors and help you reach your targets faster.
It does not matter if you want to reduce stress, stop smoking, lose weight, quit drinking, or improve your sleeping patterns. By identifying your advancement, you will spark the hope that change is possible. Try to find the first few stamps on your loyalty card.
- Sit or lie down somewhere quiet where and carry out the miracle exercise. Suppose tonight, while you are asleep, the miracle happens. Since you were asleep you did not know it had happened, but everything you wanted is now there. You now have the perfect life. When you wake up in the morning, how will you be able to tell that the miracle has happened? What will you see or hear that is different? What will you feel inside that is different from the way you feel now? How will you be different?
- Next, carry out the exception exercise. When was the last time you saw a little miracle, even for just a short time? What was different when the problem was not occurring? How did you make that exception happen? What did you think and feel as a result of doing that?
Take as long as you need to find answers to these questions. If this takes 10, 30, or 60 minutes, do not worry. The return will be far greater than the time you invest.
References
- Kivetz, R., Urminsky, O., & Zheng, Y. (2006). The goal-gradient hypothesis resurrected: Purchase acceleration, illusionary goal progress, and customer retention. Journal of Marketing Research, 43(1), 39–58, doi:10.1086/429600
- Nunes, J. C., & Drèze, X. (2006). The endowed progress effect: How artificial advancement increases effort. Journal of Consumer Research, 32(4), 504–512, doi:10.1086/500480