The Intricacies of Loyalty Program Design - Part 2

Have you read part 1 of this series? Go here!

Enrollment and Participation

In Part 1 of this 3-part series we surveyed the importance of bringing focus and clarity to your objectives and articulating a differentiated value proposition.

Now, we turn our attention to some finer points of program design by tackling these two areas:

• Eligibility and Enrollment
• Membership and Renewal

What are the most important considerations and what questions will you face in making decisions in these areas of loyalty program design?

Eligibility

Who is eligible to become a member of your program is very closely intertwined with your program objectives and strategy.

Here’s the first decision you must take regarding ELIGIBILITY – Is the program inclusive or exclusive – or somewhere in between? This is a strategic decision that the brand needs to take.

• If you want your program to be INCLUSIVE, then you may have an eligibility criterion that states that anyone who buys can become a member.
• If you do want to have a less inclusive program, the next step is to set a THRESHOLD that is easy to understand and communicate.

Program entry thresholds are most often set based on:

1. Value spent in a specified period (normally 12 months but it would depend on the category)
2. Frequency of transaction in a specified period
3. A combination of the above - value and/or frequency.

The crucial factor here is that eligibility criteria need to be clear and transparent.

Enrollment

How do you enroll members into your program? Whatever methods you use, whatever processes you follow, ensure they are simple and don’t require the customer to jump through hoops. Keep enrollment flexible whilst ensuring legal compliance.

Auto or Solicited

Members can be auto enrolled or solicited for enrollment. There are legal implications of Auto Enrollment that you need to keep in mind – more so if your program has a currency.

Channels of Enrollment

Use multiple channels in tandem so that there is choice. Online enrollment is a must-have option for these days. And social enrollment (through social media channels) is a growing method as well.

Track the channel of enrolment so that you can later identify which has proved the most efficient, the most effective, which gave you the most numbers etc.

Data Collected

Use enrollment as an opportunity to collect customer data – especially important if you are building a database from scratch. It is important to categorize data as MANDATORY, NEED TO KNOW AND NICE TO KNOW. This ensures you keep enrollment simple and easy by collecting only mandatory data at the point of enrollment. Use future points of contact to fill in on the “need to know” and “nice to know.”

Membership

Free or Fee

The first decision point in terms of membership is whether membership is FREE or there will be a FEE charged. This is a strategic decision to be made and heavily linked with the program objectives.

As with all decisions, there are pros and cons to consider.

Membership fee charged by programs is often offset by immediate delivery of value to the member that makes the equation appear attractive.

Some programs have a hybrid option of free and paid membership – the paid membership is for an elevated set of benefits.

Other Membership Decisions

A set of other decisions that need to be taken on membership include:

1. Who is the membership entity – individual, household, business unit?
2. What is the membership identifier? Mobile, email, membership number?
3. Are you going to have a membership card?
4. Are you going to have HOUSEHOLDING OF MEMBERSHIP? Householding is when all currency earned by all the members of the household is pooled into a central household account. This allows for greater cumulative velocity of earning.
5. How long is the membership valid for?

Renewal

Linked to membership validity are the terms for membership renewal. In order to ensure legal compliance – and also to separate the wheat from the chaff (improve program metrics and activity levels) – membership renewals are an important process to follow. Members who are less involved, inactive, low users etc will tend not to renew and this ultimately improves the overall health of the member base.

There could be auto-renewal of membership for active members - and this will be built into the program T&Cs. This reduces process and administrative hassles to a great extent.

Renewal terms may be set to easier thresholds than eligibility terms so as to minimize extreme leakage of membership.

The key principles to follow to define eligibility, drive enrollment, set membership rules and motivate renewals are:

• Keep it simple
• Ensure transparency and clarity

And always keep your objectives in mind

About the Author

Mala Raj is a Certified Loyalty Marketing Professional™ and faculty member of the Loyalty Academy™. A Management post- grad from IIM Bangalore, she is an experienced loyalty marketing practitioner having worked for over two decades in the field across clients, audiences, and verticals.

Mala has designed many of the successful loyalty programs running in India today. She has authored research on Loyalty as well as been a jury member for Loyalty Marketing awards in India and internationally. She can be reached via rajnmala@gmail.com and +919821041171.