How to design loyalty program rules that deliver the right results for your B2B loyalty program or sales incentive

by David Cox

There are lots of different reasons why a B2B loyalty or sales incentive program may not deliver the results you are looking for. You could be targeting the wrong type of participant, or maybe the level of rewards isn’t worth the effort of taking part.

But did you know that one of the key reasons could be because the rules or T&Cs of your program have been badly designed? There is a vital connection between the rules and the ROI that the program delivers.  If the rules are not designed effectively, the loyalty program or incentive can work against your business objectives and cause the program to fail.

There are three common mistakes that program designers often make when devising rules, which will leave participants feeling dissatisfied with your program and impact on their engagement.

1.     The rules don’t make sense 

Loyalty and incentive programs focus on participants’ expectations, and you need to meet those expectations. If you don’t have the right rule structure, then those expectations can vary. For example if participants don’t understand how and when they will be rewarded, the timeframe for redeeming points, or the metrics being used to measure their sales performance, then the program can collapse into disarray. It’s ironic that one of the most common trouble spots in a program is clearly communicating what a participant is supposed to do. Good rules for an incentive program need to be mutually understood and generally agreed upon by everyone involved.

 2.     The rules are too complicated

In trying to make sure that everything is covered in the T&Cs, rule designers fail to keep the rules simple and straightforward. They try and ensure that it covers every angle and every behaviour, when in actual fact you need to streamline rules to cover what’s going to drive the greatest value and hence the greatest ROI. Don’t make a long list of prohibitions, things that participants aren’t allowed to do. The reality is that most participants aren’t going to cheat. That doesn’t mean you need to be totally laid-back about the rules, but don’t come at them from the perspective of negativity. 

3.     The rules aren’t relevant to your business objectives or participants in the program.

 When rules lack relevance, participants become disengaged and drop off. Program design needs to focus on metrics and behaviours that are relevant to the program’s goals. Rules shouldn’t only focus on the results but on the processes and the behaviours necessary to achieve those results. That isn’t always easy. Matching up specific behaviours and the appropriate measures to the specific business objectives can be difficult, but rewarding. Sometimes programs get designed with only the finish line in mind and fail to take into account the distance the reps need to traverse to reach that finishing line.

So what are our top four tips for designing rules that will support your program objectives and deliver ROI?

1.     Write rules in a way that are familiar to the audience you are trying to engage: the data, timing, eligibility, trends in the business, metrics, all of these things should be transparent and available to the participant. Write your rules clearly so that there can be no arguing after the fact. Do your rules clearly identify who is in, what is being counted, and when the measurement period starts/ends?

 2.     Keep it simple: it’s not enough to just read the rules, the participant needs to understand them. Just like any type of sport, all the players need to know how to play by the rules, or otherwise the match or game would be chaos. The rules are the plasma that drives a loyalty program. But simplicity is key and will benefit both designers and participants.

 3.     Make sure the rules are relevant: the principles of likeness and similarity are essential for engagement. We are more comfortable with people in our ‘tribe’ or team. More people will participate at higher levels if they feel that the rules pertain to them. If program designers use themselves as the frame of reference for the average participant, that’s a recipe for disaster. Make sure the program rules focus on the actual demographics of the participants.

 4.     Think like scientists: test, measure and develop new ways of looking at the problem you are trying to solve. There is more than one way to deploy a program. For example, test using growth targets, points for a specific product, versus no incentive. Try this with a control group and a treatment group.

 There’s no doubt that sales incentives and B2B loyalty programs require rules. But follow our advice and create rules that will have a positive impact on your program’s performance. You need good rules, if you are going to get good results.