To Drive Value, Loyalty Program Interactions Must Be Useful & Easy

In recent years, the size and scope of loyalty programs have grown to the point that nearly every customer interaction—from commerce transactions to core product/service usage—is intrinsically tied to either a loyalty program earning scheme or a reward. It’s impossible to shop at a major grocery or drugstore chain without seeing discounts exclusively for members. Most customer-facing point of sale systems are programmed to ask for program identification (like a card swipe or phone number entry) before proceeding to payment screens. And if you’re a frequent flier, every moment that your derrière is in an airplane seat gets you that much closer to a free flight—unless, of course, you paid for your current flight with miles.

As this trend continues to grow, marketers must make sure that they design their loyalty programs to deliver a great experience. The earning scheme and rewards of a program are the core building blocks of that experience. When properly calibrated —“What I’m giving is fair for what I’m getting”—they’re the primary drivers for making the program useful to customers.

The time lapse between earning and rewards also plays into usefulness. Loyalty programs were originally devised to incentivize long-term behavior, and so long-term rewards were naturally the norm. But consumers’ increasing need for instant gratification is changing that. My husband recently signed up for the loyalty program at clothing retailer G-Star after the clerk informed him that his current purchases qualified him for an instant $50 discount. And the free-shipping benefit of Amazon Prime is available as soon as a customer pays her $99.

As loyalty programs get increasingly complex, marketers must also make their programs easy for customers to understand and use.

For example, American Express offers two very similar cash back cards: the Blue Cash Preferred Card and the Blue Cash Everyday Card. To make it easy for customers to understand the difference between these programs, Amex created a page with four simple sliders that prospective customers can use to estimate their monthly spending at supermarkets, gas stations, department stores, and everywhere else. As the user adjusts the sliders, the page clearly shows the estimated cash back reward for each of the two cards, making one stand out as the clear winner.

The visibility of earning status and available rewards also impacts ease of use. In a world of gamification, badges, and leaderboards, customers want to know where they stand in the loyalty program—and what they have to gain. My husband really has no way to know how far he is from another G-Star discount without calling the company or asking when he’s in the store. And that uncertainty gives rise to negative emotions, no matter how mild. In contrast, I know exactly how many miles I’ve flown on United this year (117,519 to be exact) and how many global upgrade certificates I have to redeem in 2015 (8). This visibility gives me a sense of calm and clarity, while simultaneously pushing me to “achieve” even more.

How can you make sure that your loyalty program is delivering a useful and easy customer experience? That will be the subject of my next post.

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Kerry Bodine is an independent customer experience consultant and the co-author of Outside In: The Power of Putting Customers at the Center of Your Business. She’s a regular contributor to the Underline blog, so look here for future posts. Kerry also tweets at @kerrybodine.