Don’t Get Lost in the Loyalty Space:

How to make sure the Effort v Reward ratio is right for your B2B loyalty program

By Ko de Ruyter, Debbie Keeling and David Cox

Many B2B channel loyalty programs are known for their ‘star’ rewards - the stuff that dreams are made of: a trip to Vegas or the International Space Station on Virgin Galactic and a $100,000 gift card are likely to speak to anyone’s imagination. But does it speak to your business sense? Offering your loyalty program members the opportunity to become an astronaut will set you back by at least $250,000. This would be quite a challenge to your program ROI.

Conversely, we have encountered programs where members’ points balance (based on their annual sales performance) was just about enough to get a $200 pair of Maui Jim sunglasses. Needless to say, the future of these programs is not looking too bright either. Admittedly, the value of B2B loyalty programs does not solely depend on extrinsic rewards. Soft benefits, such as the respect of colleagues and peers as well as learning certificates and their impact on individual careers are motivational forces to be reckoned with.

Most importantly, and as we have written in previous blogs, the value of programs is determined by the invested effort that members need to put in to get rewards. This effort is reflected in the time it takes to earn points (e.g., the sales cycle), the process of registering activity (e.g., claim a sale) and validation (e.g., check against compliance rules).

Black holes v supernovas

Programs need to ascertain that there is a balance between effort and reward. This balance is based on the social principle of reciprocity, or in plain English ‘tit-for-tat’, or in old Scottish ‘giffgaff’ (and yes, the latter is also a UK mobile phone network). Or, in galactic terms, ‘black holes’ v ‘supernovas’. You do not want your members to feel like they are sucked into a black hole when they put in a lot of effort and the return value isn’t enough to let them fly back out of it! At least occasionally, they want to feel like they are supernovas. The possibility of being regarded as a supernova is what keeps members motivated and loyal. So, you need to include the stardust of aspirational rewards, but make sure they can realistically be achieved.

Effort-reward ratios are pivotal to driving member perceptions of the value of loyalty programs. At Motivforce, we use effort-reward ratios as an actionable program diagnostic for both learn and earn incentivisation.

So, how do you know you are getting your effort-reward ratios right and make sure that your members are engaged at the right ‘price’?

All Science, No Fiction

Last month we conducted our annual business partner engagement survey for one of our multinational clients. We surveyed over 500 business partners and matched the survey data to sales performance and training data. Here are some of the study’s highlights.

●       Sales as a reward-earning activity:

in this respect, we found that the overall effort-reward score was 0.8, which signals that members feel that the program’s rewards are worth the effort.

●       Respect from colleagues and peers is a pivotal booster:

in search of more detailed diagnostics, we dug deeper and found that while effort was significantly associated with ‘demanding T’s & C’s’, it had only a moderate impact on program engagement. On the reward side, our results revealed that the respect received from colleagues and peers is perceived as a pivotal booster of member engagement and sales performance. We take this as another piece of evidence of the importance of integrating programmes closely with social channels.

●       The importance of positioning sales learning as part of a career-build strategy:

we also examined the effort-reward ratios for learning (i.e., completing certifications based on a collection of online modules.) The overall effort-reward score for learning certification was 1. As is often the case with learning certification, a large majority of respondents (80%) recognise that this activity demands a huge time commitment on their part. At the same time, this has only very marginal impact on program engagement. This is reflected on the reward side by the realisation that ‘my achievements positively impact on my career prospects’.

Effort-Reward Ratios are Crucial for KPIs

This research vignette illustrates that effort-reward ratios are crucial KPIs for evaluating the performance of your program. Their diagnostic value far exceeds generic parameters, such as member satisfaction or net promoter scores. Tracking the balance between effort and reward over time allows you to tap into the motivational force behind member engagement, focus on relevant design issues that support engagement and improve your program ROI.