Complexity is the coward's way out
Loyalty programs are supposed to offer "feel-good" rewards that solidify the emotional bond between customers and companies. However, all too often, the complexity of the program feels more like bondage than bonding. Companies who allow their loyalty programs to become too complicated to use, or too confusing to understand, are turning a real opportunity into fodder for complaint and dissatisfaction.
A recent NY Times article pointed out the convoluted rules of frequent flier programs and a variety of formulas to compute them, suggesting that qualifying for tiered status levels required a "Ph.D."
However, airlines are not the only offenders.
Since every coffee chain, hotel, credit card, office supply, hardware store, clothing retailer, pharmacy, rental car company, and restaurant has a loyalty program, and even an advanced degree would not be sufficient. Who has the time or inclination to learn twenty schemes?
When program participants do not redeem rewards because of complex procedures and rules, they are missing out on the value of the program and are likely to feel that complexity was a deliberate rather than inadvertent hurdle. As one colleague said to me: "There were too many rules, and the terminology for different elements of the program was confusing. It was too complicated and not worth the hassle."
"Hassle" is not the descriptor that should be attached to a loyalty program. Hassle means a company seems as inconsiderate, inconvenient, and impenetrable. None of these feelings makes you want to stick with a company and buy more of their brands.
Terms and conditions set the wrong tone. The typically long terms and conditions that govern loyalty programs, written in legalese and riddled with exclusions and caveats, foster a feeling that the member is a scammer from whom the Company must be protected. Terms filled with phrases such as, "capacity control changes," sound impersonal and ominous. Similarly, opening ten pages of rewards program terms and conditions with a list of "take-backs" sets the wrong tone.
"We [the Company] could:
· Change the number of points required to get rewards;
· Impose caps and fees on earning and using points;
· Increase program fees; and
· Cancel rewards."
Immediately, it feels like an imbalance of power between the Company and the customer and makes a consumer question the value of the program—membership turns from inclusion to exclusion.
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 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, regardless of what the companies are selling:
· empathize with customers,
· distill program rules to their essence; and
· clarify redemption procedures.
Panera Bread does an excellent job of empathizing with customers by merely recognizing that people who visit their restaurants like to eat! Their servers tell you when they see a free drink, sandwich or bagel available in your account as you are ordering and let you take advantage of it at the moment. You don't have to carry your loyalty card; you can punch in your phone number to earn points. Simple, customized, and easy to act upon—it feels like an honest thank you, not a medal only achievable by running a marathon.
Customized interactions seem more caring. A consumer who receives a 10-page set of program rules, only two pages of which apply to their circumstance, is being sent a message that the Company doesn't recognize them as an individual. If the Company knows I have a premium card but doesn't take the time and effort to send me only the terms that are relevant to my account, there is no emotional connection. I am simply one of the millions of faceless customers. Similarly, greater recognition of what motivates me could also lead to customized rewards. Convenience might be essential to one member while another focuses only on cost savings. Asking me what I want would show greater empathy and lead to higher 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. Don't overlook moments of human connection as an aspect of value in a loyalty program.
Don't kill the buzz. Companies must realize that loyalty programs are founded 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." Researchers from the Netherlands set out to measure the effect that vacations have on overall happiness and how long it lasts. The study showed that the most significant boost in happiness comes from the simple act of planning a vacation, and the effect of vacation anticipation boosted happiness for eight weeks. Loyalty programs would do well to remember this.
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 essential. 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?
Accept the simplification challenge
We challenge every industry that has a loyalty program 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 plans. Adopt a genuinely 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 like people.
Don't turn rewards into punishment.