4 Ways that Loyalty is Changing

Welcome to Friday, Futurists. 

This week we broached the topic of “loyalty” (with air quotes, gag me) on the podcast. I think that customer loyalty is the most overwrought term in consumer brand marketing, mostly because it means something different to everyone — both brand marketers and customers alike. 

The truth is that loyalty is always an unfair advantage — you’re making a trade with a customer to win more of their business. Either they’re winning, or the brand is winning. Either way, it cannot be sustained forever. 

My hot take: most of what we consider to be brand loyalty is more Stockholm Syndrome or muscle memory than it is true, considered, intentional purchasing. Both are a form of operant conditioning.

So I put together four ways that loyalty (or whatever approximate term best describes your program) is changing right now as the economy becomes less certain with every passing day: 

1. Loyalty is arbitrage. While brand loyalty used to emphasize a mutual relationship and respect, it has developed into more of a transactional relationship with people seeking benefits, rewards, and convenience. There’s an effective window of 24-36 months where this arbitrage eventually needs to be rebalanced. 

2. Operant conditioning isn’t effective (when every brand does it). Psychologist B.F. Skinner theorized that the rewards and punishment model used to condition rats in a maze has similar dynamics to consumer behaviors. Eventually, the rewards are no longer attractive when they become commonplace. This leads to an unrealistic expectation on behalf of the customer, especially since new market entrants are more willing to engage in the arbitrage, and long-running programs need to begin to show signs of profit.

3. Economic uncertainty influences customer preferences. During times of economic uncertainty, people may be more likely to engage with brands and loyalty programs that offer cost-saving benefits, flexible payment options, or clear value propositions. Brands, conversely, are more interested in trying to preserve existing revenues and cash flows by introducing membership and loyalty programs. “Not a good enough reason,” says brand expert Amy Madonia (fmr Estée Lauder, Hanes). “The program has to be in service of the customer and experience first. Not the brand’s need for growth.”

4. New channels for growth and innovation. The emergence of chat UIs and generative AI, like OpenAI's ChatGPT, presents a new platform for creating unique shopping experiences. Platforms like Shopify are pioneering this effort, with the potential to shift the landscape of agent-based eCommerce for the future.

You can listen to our takes on loyalty and more — including Brian’s crushing addiction to cold-pressed juices from Costco — on this week’s episode of the Future Commerce podcast.

— Phillip

P.S. We’re less than one week away from our historic first VISIONS Summit in Chicago. Excitement is building as we’re putting the final touches on incredible media and speaker talks that will blow. you. away.

We’re officially at capacity, but we’re adding more seats as we speak! If you’re in Chicago for the Retail Innovation Conference and Expo, stay over for our Summit! 

When: Thursday, June 15, 2023

Where: Chicago, IL

Location: McCormick Place

Time: 2-4 pm CDT

Get your tickets here at a 50% discount with code VS50P: futurecommerce.com/summit