A psychologist has put forward a fascinating theory as to why we’re hooked on loyalty programs. The impact of those plastic loyalty cards we carry with us could be having a surprising impact, changing our brain chemistry.
Dr Rachel Grieve of the University of Tasmania says loyalty programs make us less “rational” as we chase rewards, even though consumers have to spend a lot to receive comparatively little in points or redemptions. (Coles’ Flybuys and Woolworths Rewards may return as little as 0.5 per cent of customer expenditure, for example.)
“Receiving rewards actually changes our brain chemistry, with different neurotransmitters released in response to rewards,” she told news.com.au. “These are often pleasurable in nature. Getting a reward feels good.
“This means that we are more likely to engage in the behaviour that got us the reward in the first place, and then the cycle gets reinforced and begins again. It doesn’t matter that the reward might be very small.
“With these strong neurological processes in place, it is unsurprising that people will stick with a program once they sign up.”
And the huge companies behind these loyalty programs know how addictive the chase for rewards can be, openly using the “spend stretch” technique offering, for example, extra points to encourage consumers to spend more than usual.
According to a study by Finder.com.au, 82 per cent of Australians are part of a loyalty program. The most popular of these are the Frequent Flyers program from Qantas, Woolworths Rewards, Coles’ Flybuys, Myer One, and Priceline Sisterhood.
And if you’re encouraged to shop according to the brand your loyalty programme is attached to, you’re not alone, with 60 per cent of Australians doing the same.
Dr Grieve separates the type of rewards loyalty programs offer into three categories: constant (points), intermittent (product), and social (status).
“It is a powerful combination,” she said. “And in fact, our brains have particular neural networks that detect rewards, including anticipating rewards.”
And some loyalty programs are also tapping into the social conscience of consumers, like the Priceline Sisterhood program where customers buy products at the chain with the company donating to charities, predominantly for women.
“It’s emotional in nature and based on favourable attitudes towards the company itself,” Dr Grieve said.
“These are social rewards and the more rewards a customer gets, the more this strengthens their emotional bond with the company, which makes them more likely to continue purchasing.”
Dr Grieve says consumers can become addicted to reward programs, and their emotional pull.
“As you get emotionally closer to each goal, like the new item or status level, it can make you less rational about purchasing decisions,” she said.
If you find you’re addicted to chasing rewards, she says it may be time to avoid loyalty programs.
And Dr Grieve cautioned that people should remember that nothing comes for free.
“You are, in fact, paying for the rewards you receive. The money companies make from you is what pays for your reward,” she said.
“So why not cut out the company and just make your own purchase? You’ll certainly get it quicker.”