CONFUSION IS UNDERMINING THE VALUE OF LOYALTY PROGRAMS

Tiered programs are even more confusing. As companies move to tiered loyalty programs, confusion is also increasing. Almost one-third of consumers do not know which tier they belong to in the loyalty program they use most, according to COLLOQUY’s Fears for Tiers: 2014 Study on Membership Status in Loyalty Programs. Based on responses from 3,077 U.S. and Canadian consumers, the study finds that the traditional three-tier loyalty structure is actually creating confusion among some members and not fostering loyalty. Eighty percent of members in the bottom tiers are discouraged by the difficulty of meeting the requirements needed to achieve top-tier status.

In my book, Simple: Conquering the Crisis of Complexity, I discuss the role of empathy when writing, speaking or otherwise communicating. While the need to protect the company from unscrupulous consumers who might try to “game” the system is often what is cited as a communications impediment, companies also need to see how they look through the eyes of their customers. Loyalty programs need to do three things well to be viewed as appealing and fair: empathize with customers, distill program rules to their essence and clarify redemption procedures.

Customized interactions seem more caring. If a credit card company knows I have an exclusive card but doesn’t take the time and effort to send me the specific terms that are relevant to my account, there is no emotional connection. I am simply one of millions of faceless customers. Similarly, greater recognition of what motivates me could also lead to customized rewards. Convenience might be important to one member while another focuses only on cost savings. Asking me what I want would show greater empathy and lead to greater perceived value.

People need people. Another communications issue is the degree and nature of engagement. Online, self-service rewards redemption removes the opportunity to tell the customer service representative that you are redeeming points for your honeymoon or daughter’s graduation. Moments of human connection should not be overlooked as an aspect of value in a loyalty program.

Don’t kill the buzz. Companies must realize that loyalty programs are based on emotion—rewards, fun, “free stuff.” Bogging down that experience with layers of mind-numbing procedures and exclusions kills the buzz for consumers.

Planning rewards redemption has the magical value of “anticipation.” As reported in a 2010 New York Times article, researchers from the Netherlands set out to measure the effect that vacations have on overall happiness and how long it lasts. The study, published in the journal Applied Research in Quality of Life, showed that the largest boost in happiness comes from the simple act of planning a vacation. In the study, the effect of vacation anticipation boosted happiness for eight weeks.

What to do? Eliminate all the unnecessary complexity from loyalty programs and mitigate what must remain. Most companies tweak and modify small moments of the member experience but rarely step back and take a comprehensive, blank-slate approach.

Customer experience is the culmination of myriad interactions. Every sight, sound and engagement is important. Simple noting the questions and impressions formed by customers during their journey from enrollment through points redemption can be remarkably revealing and lead to insights for improvement. Where was the search function circuitous, when did marketing messages intrude, was it clear how to reach the next tier of rewards, etc.?

Accept the simplification challenge

We challenge everyone in the industry to take a deep breath and remember what the mission of rewards programs is—to build loyalty. Don’t take the joy out of your programs. Adopt a truly customer-centric approach by spending the time, effort and resources necessary to simplify and rethink loyalty program communications.

Complexity is the coward’s way out. Breakthrough simplicity requires empathizing (by perceiving others’ needs and expectations), distilling (by reducing to its essence the substance of one’s offer) and clarifying (by making the offering easier to understand or use). Customers and companies will benefit from all three. Be brave—treat customers as people. Don’t turn rewards into punishment.

Read this article on Loyalty360.org

Irene Etzkorn is Chief Clarity Officer at Siegelvision and believes complexity is the greatest barrier to progress. Siegelvision helps organizations achieve clarity of purpose, clarity of expression and clarity of experience. Follow her on Twitter at @Irene_Etzkorn.