Loyalty can manifest across cultures in diverse ways. In an Eastern culture such as Taiwan, communities come together to honor their beliefs and loyalty has deep roots in religious and cultural traditions. On the other hand, in Western societies such as Australia, loyalty often intertwines with Western values of individualism and self-expression—for example, in the way Swifties express their loyalty and deep connections to Taylor Swift’s music and style.
This diversity carries over to the commercial world, in which loyalty programs are forming and adapting for multiple markets. Loyalty programs have become ubiquitous today. According to the data, there are more than 3.3 billion loyalty-program memberships in the United States. Even though the concept of loyalty programs has been pervasive in modern society, it resonates differently across generations, geographies, and cultures.
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Some images can illustrate the diverse ways in which loyalty manifests across cultures:
The New York Times reported on the famous celebration in Taiwan of welcoming religious pilgrims of Mazu—sometimes known as the Goddess of the Sea. Figure 1 shows a temple jam-packed with pilgrims.
A BBC broadcast showed a huge crowd of Taylor Swift fans, Swifties, who couldn’t get tickets, gathering outside a venue in Australia, as shown in Figure 2.
Figure 1—Celebrating Mazu in Taiwan Figure 2—Swifties without tickets gathering outside a venue in Australia
Having designed for multiple markets, I’ve found the cultural aspect of loyalty programs intriguing, especially for those that delve into the psychological dimensions of both the users and the organizations offering a service. In my new column, I’ll explore the cultural factors behind loyalty programs, using some current examples from consumer-facing loyalty programs.
Cultural Factors’ Influence on the Design of Loyalty Programs
It’s not a surprise that loyal customers are more valuable to companies. They not only make regular purchases but also contribute to cross-selling, word-of-mouth marketing, and are sometimes willing to pay premium prices. A 2016 study by Nielsen found that 67% of survey consumers reported increased shopping frequency and higher spending at retailers where they are enrolled in loyalty programs.
Why do consumers choose certain loyalty programs over others? They choose loyalty programs that meet their value-proposition preferences. What consumers want and value in a product or service can change depending on where they live and the cultural values that shape their preferences. Because of the need to address this cultural influence, loyalty-program designs can differ from country to country.
Before delving into how culture impacts loyalty-program design, I want to introduce Hofstede’s six cultural dimensions, then leverage this theory to highlight their impacts on loyalty-program choice.
Hofstede’s Six Cultural Dimensions
Psychologist Dr. Geert Hofstede introduced his cultural-dimensions model in 1979. Since then, this model has become a globally recognized standard for understanding cultural variations.
His research initially focused on employees at IBM, across more than 50 countries. He identified four dimensions that could differentiate cultures from one another. Then, in collaboration with Dr. Michael H. Bond and Dr. Michael Minkov, he added two more dimensions. Hofstede’s six cultural dimensions follow:
power distance index—high versus low
individualism versus collectivism
masculinity versus femininity
uncertainty avoidance index—high versus low
long-term versus short-term orientation
indulgence versus restraint
Figure 3 shows Hofstede’s six cultural dimensions along with some example countries.
Among these six cultural dimensions, the following two dimensions are highly relevant within the context of loyalty programs:
Individualism versus collectivism, which plays a pivotal role in most cross-cultural research
Long-term versus short-term orientation, which is relevant to a programs’ focus on sustainability, as well as its timeless aspects
Let’s explore how these two aspects influence consumers’ experience, plus their impacts on two particular dimensions of loyalty-program design:
Type of reward—direct or indirect
Timing of the reward—immediate or delayed
Note: I acknowledge that every individual and society is unique. However, understanding these models can provide us with basic knowledge of foreign markets, especially for organizations that are expanding their presence beyond their local market.
Impacts of Individualism Versus Collectivism on Reward Types for Loyalty Programs
In individualistic cultures, consumers typically focus on themselves and their immediate family and identity comes from within the person. These consumers value uniqueness and prioritize personal values over group affiliations. This leads to a lower level of brand loyalty and a tendency to try new brands and products. Therefore, such consumers prefer loyalty programs that offer diverse rewards that are less closely related to a company’s products and support their variety-seeking and innovative purchasing behaviors.
In contrast, in cultures where collectivism is prevalent, there is a greater emphasis on social conformity and belonging to the in-group. Consumers prioritize value propositions that enhance their sense of belonging and that are accepted by their social network. In comparison to individualistic consumers, their purchasing behavior is less varied and they show higher loyalty to particular brands, sticking to established purchasing patterns. Therefore, closely related rewards that align with the initial value proposition are more appealing to these consumers.
To illustrate this variation, let’s take Starbucks Rewards as an example. In the United States, which is more individualistic, the rewards program facilitates opportunities for members to connect with partners such as Delta SkyMiles and Bank of America to unlock the benefits they provide, as Figure 4 shows. In contrast, that for China, a collectivist culture, allows access only to related rewards such as vouchers for related products and services or the customer’s next purchase, as shown in Figure 5.
Figure 4—US Starbucks’ rewards program Figure 5—Starbucks’ rewards program in China
Impacts of Long-Term Versus Short-Term Rewards for Loyalty Programs
Societies whose orientation is toward the long term typically tend to demonstrate pragmatism, modesty, and thriftiness, emphasizing long-term planning and valuing persistence. They prioritize value beyond transactions, including personalized offers that are based on consumer preferences or being granted early access to new products. Therefore, programs that offer delayed rewards such as tiered rewards or recognition for long-term loyalty appeal to these consumers.
In contrast, countries with a short-term orientation prioritize principles, consistency, and truth. Consumers in such contexts appreciate immediate rewards such as discounts, points, or perks in return for specific actions such as purchases or referrals. In loyalty programs, a short-term orientation can lead to a more transactional relationship between customers and businesses, with consumers prioritizing deals and discounts and making short-term decisions on the basis of the current benefits that the loyalty program offers.
Beauty Insider, Sephora’s loyalty program, is a great example to demonstrate this difference. The version in China, shown in Figure 6, prioritizes long-term benefits, offering “first access to new products” for basic tier members, and has more tiers and granular levels of services. In contrast, the US version, shown in Figure 7, has a more short-term orientation and prioritizes discounts and points, which are more transactional, letting consumers apply them to their purchases in the relatively short term.
Figure 6—Sephora’s Beauty Insider program in China Figure 7—Sephora’s Beauty Insider program in the US
Technology-Driven Patterns Shifts
According to Nielsen’s finding, 46% of consumers said they are now more open to trying new brands than they were five years ago. We can attribute this shift in part to the “Amazon effect”—expanded consumer choices and the ability to compare prices efficiently, as facilitated by modern technology.
Let’s zoom in to a specific market, China, a collectivist country with which strong brand loyalty is traditionally associated, where we have observed a shift in this pattern. China is known for its dynamic online landscape and a sophisticated, competitive retail culture. The overuse of tactical marketing strategies such as sale promotions has transformed consumers into deal hunters. As a result, many consumers in China have become more willing to switch brands in pursuit of better deals or promotions, challenging the notion of deep-rooted loyalty.
This shift highlights the evolving dynamics of consumer behaviors, especially within the context of rapidly evolving technology and digital platforms that shape consumers’ purchasing decisions. With the shorter attention spans of online-first customers, brands need to find a way to provide emotional satisfaction and become integrated into consumers’ lives—going beyond just products and transactions to consider cultural contexts.
Understanding Cultural Impacts on the Success of Loyalty Programs
Loyalty programs offer advantages, but also come with certain costs. For multinational organizations that are operating across countries, it is essential to thoroughly understand cultural differences and their impacts on loyalty-program design. Variations in consumers’ cultural values significantly influence their choices regarding loyalty programs. Moreover, given the ever-changing digital landscape, crafting targeted loyalty strategies and adapting user experiences to each local market become increasingly critical to ensure the success of a brand’s loyalty-building efforts.
Jo is a product designer who has experience in various markets. She has worked in countries such as Taiwan, China, the Netherlands, and the United Kingdom. Jo has a keen interest in exploring how different cultures intersect and influence the software user interface (UI), user experience, and product strategy. Over the years, Jo has gained valuable insights from these diverse cultures and their transitions. As a result, she aims to share these insights with a broader audience that is interested in the cultural aspects of digital product design. Read More
