Why Your Customer Loyalty Program Design Should Be as Simple as Possible
Discover the Key for Successful Loyalty Programs: The Design Rule of Simplicity!
Written by Anja Zschoernig & Stephanie Patchev, PhD
July 01, 2020 | Reading Time: 20 Minutes
Our customers often ask us in the context of loyalty consulting projects which success factors we prioritize in our customer loyalty program design framework. Today we would like to introduce you to one of the core principles that you should definitely consider for a successful rewards program: the principle of simplicity – often summarized as the KISS (Keep it Simple, Stupid!) Rule!
To explain the meaning of this principle, let’s start with a little fable:
A fox came upon a grapevine and had a sudden taste for grapes. The grapes hung from a high branch, and the fox had to jump for it. After a few unsuccessful attempts, the fox gave up - looking at the grapes in disgust and telling himself they would have probably tasted sour anyway.
Fable by the ancient Greek poet Aesop
The emotional state of the fox in the fable is described by the socio–psychological concept of cognitive dissonance. The fox finds himself in a mental quandary: He wants the grapes as he knows they must be very tasty, but he can’t get to them without considerable additional effort. To overcome this uncomfortable condition as quickly as possible, the fox tells himself that the grapes surely would have tasted sour anyway and walks off.
Replace the fox in the fable with your customers, replace the grapes with your loyalty program design, and you’ll know what you want to avoid at all costs in your loyalty program design: hurdles, that make it difficult for your customers to sign-up to your loyalty program, to understand your loyalty program and to use it to their advantage.
So, how do you manage to avoid cognitive dissonance with your rewards program? You might have guessed – you need to follow the KISS principle of simplicity in your loyalty program design!
Table of Contents
- What Does Cognitive Dissonance Have to Do With Loyalty Program Design?
- How a Simple Loyalty Program Design Helps Avoid Cognitive Dissonance
- 6 Examples How to Achieve Simplicity in Your Loyalty Program Design
- Example 1: Make the Enrollment Process for Your Bonus Program Easy & Convenient
- Example 2: Make Your Loyalty Program’s Benefits World Clear and Simple to Understand
- Example 3: Implement Clear and Straight-Forward “Earn” Rules and Make the Earn Process Simple and Convenient for Your Members
- Example 4: Implement Simple Redemption Rules and Make the Access to Rewards and Program Benefits Easy and Convenient
- Example 5: Deliver Excellent and Easy-To-Access Help to Address Questions & Concerns
- Example 6: Make It Very Clear and Transparent How Data Is Used Within Your Loyalty Program (Especially Relevant in Europe With GDPR)
What Does Cognitive Dissonance Have to Do With Loyalty Program Design?
What is Cognitive Dissonance?
Cognitive dissonance occurs when we:
- have two contradictory cognitions (perceptions, thoughts, opinions, attitudes, values, or intentions),
- act contrary to our beliefs, or
- are confronted with new information that contradicts our beliefs.
This creates an uneasy feeling of inner tension. Similar to the fox in Aesop’s fable, the smoker is another classic example: He knows that smoking is harmful but doesn’t quit. Or consider the couch potato who, despite the ambitious resolution to become more active, spends his evening on the couch.
When Does Cognitive Dissonance Occur in a Customer Loyalty Program?
In customer loyalty programs cognitive dissonance can occur when the loyalty program design does not follow the principle of simplicity and transparency. Consider the following examples:
- Customers feel an initial desire to sign up for your loyalty program but are then confronted with hurdles that make sign-up difficult.
- Customers would like to receive the benefits of your loyalty programs but are concerned about their data privacy and whether they have full control over how their data is used.
- Customers sign up for your loyalty program but their initial enthusiasm is dampened because:
- they do not understand the program rules
- they are unclear about how to receive rewards and benefits
- they feel they do not get as many benefits as expected out of your loyalty program
- they have any other unanswered questions or worries about the program
What Are the Consequences of Cognitive Dissonance?
When humans experience cognitive dissonance, they try to resolve the inner conflict as quickly as possible. Hence, cognitive dissonance leads us to:
- change our behavior so that it conforms with our belief (i.e. the couch potato goes outside instead of lingering on the couch);
- give up or change our beliefs by adding more information, considerations and justifications which conform with our behavior (like the fox, we sugarcoat our opinions: “The grapes would have been sour anyway”);
- or give the dissonant information less weight in order to justify our actions (in the case of the smoker: “It is better to live a short enjoyable life than a long life full of restrictions.”).
What Are the Consequences of Cognitive Dissonance in Loyalty Programs?
Likewise, if your loyalty program design causes any kind of cognitive dissonance in your customers, they will take action to overcome this inner tension. This can lead to the following consequences:
- Your customers do not sign up for the loyalty program at all (“the grapes would have tasted sour anyways”).
- Customers sign up but then do not use the program actively. As a result, you will not achieve your loyalty program’s goals such fostering brand loyalty and driving the desired customer behavior (such as increased customer spends, more referrals etc.).
- Customers use the program sometimes, but do not give it importance and do not actively recommend it to others.
How a Simple Loyalty Program Design Helps Avoid Cognitive Dissonance
In order to be successful with your loyalty program, you must therefore avoid provoking the state of cognitive dissonance. Set your grapes too high, and your customers may become annoyed and dismiss your program entirely.
But do not worry. To avoid cognitive dissonance there is one key principle you need to adhere to: strive for simplicity and transparency in your loyalty program design!
- Make it very easy for your customers to understand all the benefits of your program and they will be thrilled to sign-up.
- Make signing up simple and convenient and you will achieve high enrollment rates.
- Implement straight-forward rules for earning and receiving rewards & benefits and your customers will happily use the loyalty program.
- Make using your loyalty program a convenient, rewarding experience and build satisfied members, that will happily recommend the program to others.
There is of course an abundance of possibilities for how you can shape your benefits program. Depending on how your company is set up, you may encounter complex issues that must be taken into account (e.g., different products and product groups, a diverse customer base, different departments with different goals, varying touchpoints with the customers etc.).
Your goal is to consider all of these complexities and translate them into a loyalty program design, that still is very easy for your customers to understand and make use of.
The Design Rule of Simplicity
The design rule of simplicity, known as the KISS principle (“Keep it Simple Stupid”), was coined in 1960 by spy plane engineer Clarence Johnson. The basic message of the KISS principle is widely used in software development and has been similarly expressed by many famous artists, scientists and intellectuals:
“The definition of genius is taking the complex and making it simple.”
Albert Einstein (1879-1955)
“Simplicity is the ultimate sophistication.”
attributed to Leonardo da Vinci (1452-1519)
“Brevity is the soul of wit.”
William Shakespeare (1564-1616)
“Perfection is achieved not when there is nothing more to add, but when there is nothing left to take away.”
Antoine de Saint-Exupéry (1900-1944)
6 Examples How to Achieve Simplicity in Your Loyalty Program Design
Now how exactly can you apply the KISS principle to your customer loyalty program? How can you achieve simplicity in your loyalty program design to ensure member satisfaction and active participation? We have summarized 6 practical examples for you:
Example 1: Make the Enrolment Process for Your Bonus Program Easy & Convenient
If your enrollment process is rather complex and overloaded with various data requests, the entry into your loyalty program will seem too much of a hassle for many customers. We therefore recommend making the sign up to your program as easy as possible:
- Make it explicitly clear which criteria your customers must fulfill, and which data is required for them to enroll as a member.
- Only make basic data mandatory for enrollment (such as name and email address) to minimize barriers to entry (you can enrich your member profiles with data over time).
- Offer your customers a flawless, seamless sign up experience across all relevant channels (e.g., online or through a mobile app, via in-store terminals, or also through a paper application form).
Remember: The more clear, simple, and practical the enrollment process and user experience is, the better your registration rate will be – and the quicker you can build your membership base.
Example 2: Make Your Loyalty Program’s Benefits World Clear and Simple to Understand
No matter which goals you want to achieve with your bonus program and which loyalty strategy you employ in detail, the basic principle will remain the same: By using a variety of effective incentive strategies (rewards, benefits, points, tier levels etc.), you want to motivate certain customer behaviors (“reward the behavior you seek”; for example: generating additional revenue, building personal customer relationships, getting positive product reviews, getting more customer recommendations, achieving a higher social reach, etc.)
This will be successful if you make your incentives, your loyalty program “benefits world”, very clear to your customers and (potential) members from the beginning and all the way through. Your customers will be motivated, satisfied, and positive about your loyalty program, if they understand very quickly which advantages it offers and when and how they can receive them.
To achieve this, we recommend using all relevant touchpoints and communication channels to regularly remind your members and potential members about the great value your rewards program delivers (be it online, mobile, via email marketing or through print materials in your store/branch locations).
We also recommend a personalized, clearly structured members’ portal (which ideally is available online, mobile, and in-store e.g. via POS terminals and accessible via a convenient login method for users). This will become the go-to place for your members to understand and make use of your loyalty program’s benefits in a convenient manner. It also opens up an excellent opportunity for regular multichannel communication and interaction with your members.
The members’ portal/ personal member account could include the following:
- Personal points account (current number of accumulated points) or other status reports (e.g. number of completed purchases or total value of previous purchase values)
- Current status level with information on how far away the next highest status level is and what your member needs to do to reach it
- Information on the program benefits your member already has unlocked and benefits he can unlock soon including the information how to do so
- A personalized rewards shop, which enables easy access to all relevant benefits and rewards (see also example 4)
- A section with all personal information (such as name, address and date of birth), that can easily be updated in a self-service manner
- A section that allows simple self-service management of opt-in choices (newsletter subscriptions, opting-in and out to data collection & usage etc.)
- Especially relevant for EU: all information on how GDPR data privacy and protection is adhered to by the loyalty program and access to related rights for the member (see also example 6)
- Help with problems and questions (see also example 5)
Example 3: Implement Straight-Forward Rules for Earning Rewards and Make the Earn Process Simple and Convenient for Your Members
Directly related to your “benefits world” are the rules for earning rewards and points (in a points-based loyalty program). Also here, applying the KISS principle is a key to success:
- Decide on the simplest earn rules possible, so that they are easy to understand and simple to be memorized (for example: “Earn 1 Point for each $1 spent”, or “Unlock a special benefit after every 100 $ spent”).
- If you need to exclude certain products for earning points or rewards (e.g. in Germany, it is prohibited by law to incentivize the purchase of cigarettes) make these exceptions very clear and try to keep them to an absolute minimum.
- To motivate your customers to redeem the collected points and make use of the earned benefits, you may opt for an expiration date. In this case, make the expiration rules as simple as possible and communicate them very clearly.
- Make it as easy as possible for your customers to earn their points and benefits:
- If you have an online shop, for example, ensure an optimal user experience wherein your customers collect points/ benefits automatically when they are logged in with their user profile and make a purchase.
- When shopping in brick and mortar stores it should be equally convenient for your members to earn their points and benefits. Quickly identify them e.g. via a physical or mobile loyalty card that is scanned within seconds to not waste your customers’ time. Ensure that your cashier teams proactively remind your customers to present their loyalty identifier, so that they never miss an opportunity to earn points and benefits.
- To make the earning experience a great one, your customers should ideally receive their points and benefits in real–time.
- We also recommend congratulating your members right after they collected points/ benefits.
- The points collected during shopping offline can be shown on the cashier receipt for example (alongside a motivating message, such as “Congratulations. You just earned 100 points with your purchase”).
- In your online shop you can display them on the shopping cart overview and within the order confirmation.
- You can add to this by sending out a mobile push notification or an email congratulating your member on his newly earned points or unlocked benefits.
- Finally, it is highly important to get the “earning velocity” right:
- It must not take too long for you members to unlock relevant benefits and rewards. In other words: your grapes must not hang too high, or you will definitely end up in the “sour grapes trap”!
- The perfect solution for this is a motivating combination of “attainable” (rewards that can quickly and easily be reached) and “aspirational” (takes more time/ effort) rewarding.
Example 4: Implement Simple Redemption Rules and Make the Access to Rewards and Program Benefits Easy and Convenient
Regardless of whether your program members must collect points or must meet a certain purchase threshold to receive rewards and other benefits, make the redemption rules as simple as possible and make sure that your customers can access their rewards and benefits at any time and via their preferred channel(s).
A great way to do this is a personalized rewards shop or portal (see also example 2), that gives your members convenient access to all relevant benefits and rewards. Some golden rules to consider for this:
- Your members should first see the rewards and benefits that are already available to them, followed by those that they will soon be able to reach. This creates a positive incentive and motivation without falling into the “sour grapes” trap!
- Personalize the types of rewards that you display based on the purchasing behavior and individual interests of the member.
Example 5: Deliver Excellent and Easy-To-Access Help to Address Questions & Concerns
Despite the transparency and simplicity in the design of your loyalty program, your members will occasionally have problems or questions. Here, again, it is key that your members receive easy and convenient access to help when they need it!
You can use a combination of inexpensive help-to-self-help elements (e.g., detailed, clear FAQs and chatbots) and a personal, excellently trained customer service. Contacting the customer service should be easy and convenient for your members.
Also remember that your customer service team is an important brand and loyalty program ambassador. Make sure they convey kindness, passion and positivity! An excellent customer service will contribute significantly to a great customer experience and customer satisfaction.
Example 6: Make It Very Clear and Transparent How Data Is Used Within Your Loyalty Program (Especially Relevant in Europe With GDPR)
Keeping data protection and privacy laws (such as GDPR in Europe) in mind, ensure your customers have complete clarity and transparency on the usage of their personal data within the loyalty program. Also allow them to make use of their GDPR rights in a convenient manner.
A simple, effective, and transparent solution can be the opt-in management within the personal member account (see also example 4), alongside clearly outlaying all the information on which data is collected, stored and how it is used within the loyalty program.
To round off, a final reminder: When designing and implementing your loyalty program, always refer back to your strategic basis – particularly to your program objectives and the point of view of your customers and regularly ask yourself:
- What do I want to achieve with my rewards program?
- How can the KISS principle help me achieve these goals?
- Who are my customers and what do they desire and prefer?
- How can I make their life as easy and convenient as possible within my loyalty program?
As Steve Jobs said, “simple is harder than complex”. But thanks to Apple, we see first-hand how much it pays off to strive for simplicity.
An extremely useful tool for this is the famous “elevator-pitch-test”: Can you outline all of the central benefits and elements of your customer loyalty program design within 30 seconds?
Then you are on the right track to create a rewards program that adheres to the KISS principle and successfully avoids the cognitive–dissonance-trap!
- Cognitive Dissonance: https://www.cleverism.com/understanding-cognitive-dissonance-and-why-it-occurs-in-most-people/
- KISS Principle: https://en.wikipedia.org/wiki/KISS_principle
- Picture: ErikMclean On Unsplash
About The authors
Head of Marketing | Loyalty Prime
With her 10+ years of experience in the loyalty industry as well as in digital product management and marketing, there is no question for Anja: excellently set-up customer loyalty programs, motorized by the right tech stack, make the heart of every data-driven marketer sing! As Loyalty Prime’s Head of Marketing, she loves to inform and inspire about the great possibilities of powerful customer loyalty programs and Loyalty Prime’s award-winning technology!
Stephanie Patchev, PhD
formerly Content Specialist | Loyalty Prime
Stephanie is truly passionate about outstanding, well-researched content that inspires people. With her background in Neurosciences, she has a deep understanding about the bio-psychological basis of customer behavior and customer loyalty.