Consumer psychology: Learn what really drives customer behavior

Behavioral commitment is often perceived as true loyalty, and the real power of any loyalty program lies in its ability to drive these changes in consumer behavior.  A Salesforce report on emotional loyalty also shows that 62% of customers feel an emotional connection to the brands they buy, meaning it's often these emotional bonds that keep customers spending money with a certain brand. Consumer psychology provides a solid framework to building long-lasting emotional loyalty, and ultimately influencing retention and desired buying behavior. 

Understanding psychological drivers behind consumer behavior and decisions gives you the ability to create a seamless, memorable customer experience using your loyalty program. This motivated me to allocate a separate chapter to loyalty psychology in my book Loyalty Programs: The Complete Guide, where I focused on the main consumer psychology theories and how these translate within loyalty programs. In this blog post, I will discuss these psychological theories, including key takeaways and an example for each that illustrates how it impacts behavioral changes.

The more we know about consumers’ buying behavior, perceptions and beliefs, the higher our chances of building an emotional bond with them that engineers repeat purchases. These 9 consumer psychology theories help create a loyalty program that’s exciting, relevant and valuable for all parties involved. 

The Endowed progress effect states that people are more likely to progress towards a goal if they are given artificial advancement towards that goal. This means that creating an initial sense of progress towards a goal can increase motivation to continue participating. 

Example: New Hilton Honors members receive a welcome bonus of 1,500 points to start them on the journey to their first reward.

Introduced by American psychologist Clark Hull, the Goal Gradient effect suggests that as people approach a goal, they speed up their behavior to get to that goal faster. In other words, the proximity to a target keeps people moving towards it.

Example: Starbucks uses a combination of a visual progress tracker (how far a member has come) together with Goal Gradient communication (how far they have to go), to motivate members to increase their engagement and achieve higher tiers. 

When individuals are unexpectedly delighted, their satisfaction levels are far higher than when their expectations are met. That’s because unexpected outcomes are more emotionally impactful than expected outcomes.

Example: Chipotle is a brand that consistently offers ‘surprise’ moments to its loyalty customers. ‘Surprise and Delight’ is a core value all Chipotle team members are trained on - and even helps generate extensive coverage for the company.

Several studies show that helping people achieve a goal generates a desire to reciprocate. Offering gifts and non financial rewards can increase customer loyalty and encourage customers to reciprocate with repeat business. 

Example: Car rental company Hertz provides free upgrades for premium members when a better car is available.

Behavioral loyalty refers to the commitment of customers who are most loyal in their purchase behaviors, while attitudinal loyalty reveals which are most loyal when it comes to deeper motivations. The emotional attachment is what influences a customer’s subsequent purchase behavior.

Example: Hubris from brands that had behavioral commitment but not attitudinal, and were disrupted by a competitor that could build a better emotional bond. For example, Blockbuster was too slow to recognize threats from Netflix, and made the mistake of assuming their members were highly loyal.

Expectancy theory of motivation states that people are motivated if they know that there is a positive correlation between their efforts and the desired outcome. The three core variables of this theory are:

Example: An increasing number of loyalty programs are partnering with NGOs and charities to enable their members to donate points to environmental and social causes. For example, members of American Express’ Rewards program can redeem 1,000 points from their account to donate $10 to Save the Children. 

Introduced by B. F. Skinner, Professor of Psychology at Harvard University, operant conditioning is based on two key concepts: reinforcement and punishment. According to Skinner, 

Example: Airlines & hotels often run challenges for members to keep status, and members book extra trips just to preserve this status - as highlighted in this New York Times article,  where frequent flyers booked cross-country trips to retain their Alaska Airlines’ M.V.P. Gold status. 

According to Cognitive dissonance theory, the inconsistency between expectations and experience lead to negative emotions and regret. The reason, as American psychologist Leon Festinger suggests, is that humans strive for internal psychological consistency to function in their day-to-day lives.

Example: German carsharing company Share Now offers a range of meaningful, consistent rewards that resonate with users. Their VIP customer support, for example, always prioritizes members in their customer service queue.

Grounded in the work of Edward L. Thorndike, the Law of effect suggests that if a person is continually rewarded for their actions, they are more likely to associate the action with the reward and will keep on doing it. The Law of exercise states that the more times the action and the effect are linked, the stronger the connection between the two.

Bilt Rewards is a loyalty program and credit card that rewards users for paying rent. They launch new partners with hotels, airlines, gyms and restaurants for external point redemption on a regular basis, helping users achieve the lifestyle they want.

Designing an effective loyalty program needs a deep understanding of your brand’s path to emotional connection with customers. An extensive body of consumer psychology theories and studies exist which are immediately relevant for loyalty programs. They help you take a deep dive into your customers’ minds, setting up programs that translate directly into value for your consumers and your business.