Simply unique: how special will your loyalty program be?

“We want something unique! We like new features. We need to differentiate.” Clients ask us to support them to be successful in influencing customer behavior. Of course, programs that successfully influence behavior and that represent a specific ‘unique’ brand, product or service will need to be unique too. Right?

Wait a minute… is that actually true?

We took a few days to reflect and assembled data to explore if behavioral focused programs are really served with a strong emphasis on ‘uniqueness’. We find two very different results.

The findings

Our findings indicate that – with regard to uniqueness – programs better split ‘the program story’ (the narrative that explains why you should become member; convincing people to ‘come in’) from the way features work within the program (what members experience when they ‘are in’). We call that the Program Experience. Our findings indicate that while the ‘Program Story’ succeeds by offering uniqueness, the ‘Program Experience’ is best served with ‘simplicity’.

 

The first element: the Program Story (the soul)

Programs with a story that emphasizes uniqueness, and communicates it in clear ‘reasons’ are more effective in recruiting members, if they focus on an audience that is interested in ‘feeling’, lifestyle or aspiration level. These programs grow significantly faster and have to invest less in converting new members. Highly positioned retail fashion programs, brand programs, automotive and lifestyle products are the best illustrations of this group. Until 2005, many of these programs were very limited in functionality and function as a ‘club’, allowing members to receive information, visit events and get a few periodic tangible benefits. In 2017, programs just offering ‘club features’ are no longer sufficiently successful. Programs with a higher contact frequency and sufficient data extraction – so personalization can be used throughout all contacts – continue to grow successfully.

On the other side of the spectrum, we find programs that do not have a Program Story emphasizing uniqueness, but that communicate clearly defined tangible benefits, such as discounts, convenience or privileges. In this group, the uniqueness trait is not important and is replaced with ‘clarity’, even though often uniqueness is claimed by the combination of benefits that are offered, or by the financial value of the benefits.

These ‘down-to-earth’ programs experience more challenges to recruit members outside sales channels, but when the benefits are communicated at purchase moments, the conversion is high. A quickly achieved ‘second purchase moment’ is required to continue to build habit forming, which is essential for behavioral success in these type of programs.

 

These results are not surprising and are connected with the way the brand, store or service itself relates to uniqueness. Loyalty programs can only be consistent with that.

The challenge marketers have is to determine in which group your loyalty program is or will be, and to make choices accordingly. Mixing ‘unique reasons to join’ with tangible benefits can deliver a program that doesn’t address the needs of its targeted audience, with low member growth as a result. This risk seems to be especially larger in B2B loyalty programs.

 

The second element: The Program Experience (the features)

Within programs, keeping it simple seems to be the best way to start. Offering more complex features is best based on usage and profile data, and that type of data is only collected in sufficient quantities in the program after a while. Most marketers would agree with that.

There’s only one problem: simplicity is difficult to grasp. Marketers often get stuck in ‘availability bias’: because they can think of a feature, it must be good/important. This often proves to have a negative impact on the chance of launching a successful program straight from the start. Complexity delays the launch date, with later data collection as a result, which complicates the successful introduction of new features.

So… we conclude that simplicity is crucial at the start of a program for the Program Experience, not uniqueness. But, what is ‘simplicity’ exactly? It’s one of those general principles that we can feel, but have difficulty to explain.

For loyalty program experience design, vague “gut feelings” aren’t enough. We (advise to) use a specific framework to guide the experience design process.

One of the fathers of Persuasive Marketing – BJ Fogg – and his “Six Elements of Simplicity” offer an effective framework for designing effective and successful loyalty programs that retain members for a long time, and have them engage in a relatively high frequency. The six elements that Fogg mentions are:

• Time
• Money
• Brain Cycles (Mental Effort)
• Physical Effort
• Social Deviance
• Non-routine

Let’s touch each of these six elements briefly.

 

Time: Activities that take a lot of time to execute are not simple. A loyalty program experience that is “simple”, is one that can be performed as quickly as possible. Programs with effective experiences have a constant drive for improvement on this aspect. Members should recognize that the program and its experiences change over time as technology offers better solutions, or the program budget allows them to make use of quicker processes, faster technology or that they are offered a higher priority within the organization.

Generally, if a behavior is ‘easy’ to do, it tends to require less time than behavior that are less easy to do. Confusing, or mentally and physically challenging, behaviors are time-eaters. This relates to ‘Brain Cycles’ and physical efforts described further, but the causes are different.

 

Money: Adding monetary costs to behaviors makes them more complicated. Going to the bathroom in a shopping center and having to pay for it, is more complex than going at home or in a restaurant. Loyalty programs that offer free shipping for members or allow upgrades make life simpler for members.

 

Brain Cycles or “mental effort”: If something is hard to understand, it’s not simple. The more the behavior in an experience requires people to think, the less simple it is. Simple.

 

Physical effort: Behaviors that require more movement or strain are not as simple as the ones that don’t. Having to go to a location further away, or having to involve more people because it’s physically challenging (like moving a couch from Ikea to your new house) is less simple than when you don’t have to do that effort.

 

Social deviance: Some things are easy to do, but they are – in your context – shameful or embarrassing. That is the same for experiences in loyalty programs. Not wearing any clothes in a shopping center is easy to do, but it’s not ‘simple’, due to social norms that will cause reactions from the people that you meet on your happy nudist walk. It’s socially deviant and, according to Fogg’s model, it’s not simple. A loyalty program that requires members to ‘ask’ for things in a socially awkward way is experienced as less simple.

 

Non-routine: The more we do something, the easier it gets. People usually learn while doing. A behavior that isn’t simple for one person might be quite simple for another one because they’ve practiced it more. It might be wise to turn this one around: which routines can you tap into to make the program’s features feel simple to its members?

 

This list about how to achieve simplicity provides loyalty marketers a clear framework for designing loyalty programs experiences (and features), contributing to its success. When designing a Program Story, uniqueness is an important driver for success of the program.

 

Let VEMT help you design the best loyalty program for your organization! These lessons come with the team that has experience in applying them.