A bumpy ride for tiers – 5 tactics to manage loyalty program tier status downgrades without demotivating your participants
by Dr. David Cox
Many loyalty and incentives programs have built status tiers to segment and reward their most active, profitable, engaged and loyal participants. Indeed the success of tiers in fostering loyalty, growing share of wallet, distributing hard and soft benefits and driving incremental purchases has been highlighted in the academic literature, industry case studies and award winning programs.
Whilst the success stories pull a number of program sponsors and architects towards deploying a tier structure, there are a number of pit falls that destroy the integrity and motivational pull of loyalty programs if the tier strategy is not properly planned.
Recent studies and indeed our own observations show that the number one problem with tiers is how to manage those participants that no longer qualify for a tier (either due to their purchase level falling, disengagement or change in their personal circumstances). Research, both academic and undertaken by Motivforce, shows that when a participant has been bumped to a lower tier they active cultivate anti loyalty behaviors and start to actively engage in variety seeking behavior to engage with a competitor program. The feeling of failure in not being able to maintain a higher status tier and resentment manifest itself in disloyal behavior.
So the challenge to loyalty program managers is how to soften the “tier downgrade” and instill the required motivation to help the participant to reclaim their higher status level. Many program managers have now realized this affect and have developed tactics such as grace periods, whereby participants’ tier status is extended for another year as a gesture of goodwill, giving them opportunity to undertake sufficient activities to re-qualify for the elite tier status without losing any soft or hard benefits.
Whilst grace periods have proven to be very successful in B2C programs, they need to be complimented by a resource tool kit in B2B programs, as business partner disengagement (manifest in dwindling sales, laggards in embracing new products and technology, lack of product knowledge and skills development) are symptoms of bigger problems within that business partner firm.
We recommend the following Top 5 Toolkit Tactics, before simply downgrading a B2B participant’s tier status:
- Use your detailed program analytics to try and pinpoint the areas of performance decline. These analytics will help craft a bespoke tool kit solution to try and reinvigorate the business partner
- With the analytical assessment schedule visits to the Business Partner to discuss the analytics and gain further insights into the challenges that Business Partner may be facing,
- Provide access to request generators and online support to provide ongoing assistance,
- Fine tune co-funded marketing activities or other tactics to help generate sales and value added activities
- Renewed focus on skill development and product education.
Simply downgrading a once prominent and high achieving program ambassador to a lower tier, without cushioning the blow and providing suitable tools to reverse the decline only serves to push them into the arms of your competitor.
The future of loyalty programs is mobile. This mantra has been reiterated across many loyalty marketing industry trend reports. It is a mantra that clearly has face value. In fact, it is a no-brainer, as much of our life now revolves around our little handhelds. Most loyalty programs are migrating to mobile platforms, allowing their members instant access any place, any time. Being able to check your points balance, the latest reward additions or quickly swiping through a learning module in a client’s parking lot definitely ups the convenience factor. But, it does not guarantee an engaging mobile program experience. That is why a number of forward-looking brands have started to engage their members by inviting them to share their ‘must-share-moments’ with the brand and explore the face value of the mobile camera.
For the third year in a row Motivforce has struck gold at the 2017 Brandon Hall Excellence Awards with its Know Your IBM channel incentive program, winning the Gold Award for Best Sales Training Program for Extended Enterprise and Gold Award for Best Unique or Innovative Sales Training Program.
In addition, Know Your IBM received a Silver Award for Best Results of a Learning Program; and Bronze for Best Advance in Creating an Extended Enterprise Learning Program.
In our conversations with organizations that are assessing B2B loyalty and incentive programs, a number of negative perceptions inevitably surface.
Here are the top 5 myths about loyalty programs and our evidence as to why they simply aren’t true.
Over the past 20 years, the structure of B2B loyalty programs has grown from simple sales incentives that reward for achieving sales targets to rewarding for profile performance. Profile performance is the concept of creating the ideal participant profile and rewarding for all behaviours that a participant demonstrates in adopting this profile.
There are many variables to consider when creating the ideal channel loyalty program participant profile and these are broadly classified into the following 5 types of loyalty program participant profiles:
Our research has shown greater loyalty (measured by sales and other valued added behaviours) amongst program participants who are active in enablement tasks, compared to those who are not. In looking at correlations between those participants who have undertaken enablement tasks, versus those who have not, we have observed three traits....
A term that we commonly use in channel loyalty and incentive programs is the effort advantage ratio. This is the study of consumer loyalty programs and the effort a participant must undertake to achieve a loyalty program reward and how this effort impacted on attractiveness of the loyalty program for their continued participation.
These are 7 things to consider when weighing up the Effort Advantage Ratio.
Technology is now defining the route which companies need to take in order to stay relevant and is changing at a rate so fast that organisations and to some extent, society is struggling to keep up.
And whilst digital transformation can start with the introduction of new tech, business transformation is inevitable, which can mean a complete overhaul in a company's products, positioning and ultimately, business goals.
Are you thinking; "do enablement & incentive programs build loyalty with Channel partners and resellers?"
If so then here are some key questions to consider if you're thinking about launching a B2B Loyalty Program or even how to re-engineer an existing one
Is a loyalty program right for your business?
Like any marketing strategy, loyalty programs have a place and an ideal environment in which they should be deployed and managed. So, it is important for firms to undertake a detailed diagnostic assessment to see whether a loyalty program is the best marketing strategy for their product or service, as opposed to rushing to set up a program in the hope that it will solve all your business challenges.
Here are 3 reasons why a loyalty program may not be right for your product or industry:
Try these 3 tactics to accelerate the journey from enrollment to engagement in your loyalty program and thus minimize the period that a newly enrolled participant spends in the chasm of disengagement and go into "Walking Dead" status.