Loyalty programs aren’t just a designated channel for brands to offer personalized rewards and incentives to repeat customers. They’re also a strong platform for exercising consumer psychology principles. Scarcity marketing is a tool for encouraging urgency in consumers. Together, the two powerhouse marketing strategies help build brand loyalty — and fast.
Here are four ways brands can incorporate scarcity into their loyalty programs:
Tactics to get scarcity into your loyalty program
1. Tiered rewards
Here are two quick facts about consumers: They enjoy having something to work toward and find exclusivity appealing. Tiered rewards are the best of both worlds.
Tiered loyalty rewards programs often consist of different tiers or “levels” members can unlock based on engagement with a brand. Members who interact most often with your loyalty program would belong to the highest tier, gaining early access to campaigns or receiving the largest discounts. Those who fall in the remaining tiers receive corresponding rewards.
Not only does this sort of tactic ignite consumers’ innate desire to achieve a goal, but it also speaks to their need for high social status.
One way to tier rewards is by lessening the reward’s value the longer it takes your customers to claim them. For example, you could set it up so the first customers to engage with your promotion get the best reward and your other customers receive rewards based on their response times.
2. Limited-time savings
Arguably the most popular form of scarcity marketing, limited-time offers are a trusted tool for upping brand interactions with consumers. They also pair well with loyalty programs.
Loyalty program members are often the most engaged audience in a brand’s customer base. As such, it only makes sense they’d have access to exclusive perks. One common perk of being a loyalty program member is having access to deals.
Savings are a huge incentive for consumer engagement and can go right alongside scarcity marketing strategies. Offering deals for a limited time can take standard deals and make them more exciting for consumers who feel a sense of urgency to claim the discount before time expires.
3. Exclusive access to sought-after items
For consumers, exclusive offers are major motivations for being a loyalty program member. It’s all about having access to things other customers don’t and getting those things easily.
In psychology, it’s known as the Velvet Rope strategy. It stems from the idea that those in a certain group, or behind the “velvet rope,” get exclusive perks as a reward for their efforts that others do not.
This could look like letting your most engaged loyalty members get first dibs on a new or marked-down item or giving them exclusive discount codes to apply at checkout.
4. Invite-only referrals
Loyal customers have no problem spreading the word about their favorite products and brands when they are satisfied with their service. And the more consumers hear about a high-quality brand, the more they want to experience the brand for themselves.
In psychology, this concept is referred to as social proof. It’s the idea that we as humans are influenced by others’ actions — such as a referral to a brand’s loyalty program.
So how does scarcity play a role in this? In a sense, referrals themselves have an aura of exclusivity. Consumers could feel like a referral is a shared experience between them and their friends or family members. It gives entry to a premium channel and allows for a deepened relationship between both members.
Brands could also offer areas of their loyalty program that are only available to customers who were referred by a member.
Leveraging scarcity in a loyalty program can be done in a variety of ways. The four ideas above are here to serve as a starting point for brands interested in benefiting from the perks of consumer psychology.
