Curating the perfect mix of rewards for your loyalty program

Finding the right mix of rewards for your loyalty program.

Freedom of choice
When we think of choice, we think of freedom. The freedom to decide in or out, left or right, to do or not to do. The power to say, "this one" over "that one". As an abstract principle, you could say that choice is a good thing. It's empowering for individuals to chart their own course and determine their own destiny. This is also true in our world of motivating and engaging people with incentives and rewards. Most of our clients appreciate that we offer programs with a choice of offers. In fact, our Rewards Hub has thousands of options that can be included in a loyalty or engagement program. So how many choices is the right number? And how do you select the right rewards or incentives to offer?

The paradox of choice
We assume that more choice means better options and greater satisfaction. In 2004, Barry Schwartz wrote The Paradox of Choice, postulating that too much choice is actually a bad thing. He explores, "at what point choice—the hallmark of individual freedom and self-determination that we so cherish—becomes detrimental to our psychological and emotional well-being".

Schwartz warns of excessive choice. "Choice overload can make you question the decisions you make before you even make them, it can set you up for unrealistically high expectations, and it can make you blame yourself for any and all failures. In the long run, this can lead to decision-making paralysis, anxiety, and perpetual stress." That might be taking things too far, but the idea is valid. More can actually represent less. I daresay that at one time or another most of us have been faced with the daunting experience of too many choices.

Our experience at Augeo, developing reward or incentive options for clients and the insights we derive from a database detailing millions of redemptions has taught us that there is no exact answer to the optimal number of choices. Generally speaking, however, success is more likely when the entire selection experience is simple. In addition to a choice of rewards, the user interface, instructional information, selection guides, all play an important role in user satisfaction.

Offer choice but help people choose
Keep in mind, most people selecting an incentive or reward don't really want "choice", they want "their choice". They want something that is personally relevant, useful, helps, or for some reason brings happiness. Program design not only involves developing a catalog of relevant redemption options, but includes helping users make the right choice. There is a growing body of evidence that today's consumer will almost always opt for simplicity. Take this lesson to heart. Help people choose what they want by making the process of choosing simple.

Let's say that you serve a diverse population and having a wide diversity of options is the only way to ensure people find what they want. The most critical factor to simplifying the redemption experience is with a robust search capability. In fact, search is the great neutralizer of complexity. It enables a user to sift through hundreds of choices with a click or tap. We offer a premium function called concierge search. We use that name because it's like having an expert lead you directly to your answer. Diversity of selection, made simple.

One of the most popular redemption items in rewards programs are gift or debit cards. The proposition is simple–choose from a list of well-known retailers. Simple, flexible, and doesn't force the user to fully commit. They choose a gift card over specific merchandise because it preserves the flexibility to choose at a later date, when their needs are more clearly defined. In a way, a gift card is a choice to choose later.

Simplify a sea of complexity
Another great way to simplify choice, yet offer a wide selection, is by filtering. It's hard to know what users might want, so to ask them as they begin the redemption process. Many successful programs feature a very wide range of offers (to accommodate a diversity of tastes) but keep the selection process relatively simple. Think about presenting users with 5-10 categories of items (gift cards, travel perks, local savings, events, merchandise, charitable giving, etc.). In each category offer a "manageable" number of choices. As a final filter, users often like to choose a price range to narrow the focus based on their point total or spending currency.

Offering user ratings or reviews is another way to make choosing easier for users. Sharing peer-level opinion helps people navigate the selection journey and validate their choice. This is common practice in online shopping, but not nearly as prevalent in reward redemption sites.

A rewarding experience
The intent of most incentive or reward programs is to motivate higher levels of engagement. They are designed to encourage certain behaviors that help organizations achieve their goals. For customer programs it might be driving purchasing behaviors. For employee programs it's motivating some form of increased productivity. For organizations it's fostering elevated membership participation. Often times, rewards go unredeemed because the redemption process is too complex. The incentive or reward never achieves its mission and behaviors are not affected by the incentive.

Designing journeys that combine the freedom of choice with a simple to choose experience will encourage more people to participate in your programs, better engage users, and help you achieve your organizational goals.

Quick tips to making choice simple.

• Most users won't know what they want when it's time to redeem. Some will, but most people like to "shop around". Design your user experience to facilitate shopping as well as redeeming. Design features such as my favorites, wish lists, save for later, etc.
• Don't assume users understand how to navigate your redemption system. They might redeem only 1-2 times per year. Treat every experience as if it is their first. Provide instructions, guidance, and easily accessible help.
• There is no perfect number of choices, but most studies agree that choice overload is worse than lack of choice freedom so start simple and grow from there. Choice overload causes anxiety, but we also know that people have a single option aversion. A deep catalog of options is a good idea if you can simplify the experience with filters. People like choice but they like "their choice" best. Help them find that choice with speed and simplicity.

The best way to find the answer is to experiment. Your circumstances and users will help you choose the best number of choices to offer.

*Barry Schwartz is the Dorwin Cartwright Professor of Social Theory and Social Action in the psychology department at Swarthmore College, Swarthmore, Pennsylvania, where he has taught for thirty years. He is the author of several leading textbooks on the psychology of learning and memory, as well as a penetrating look at contemporary life, The Battle for Human Nature: Science, Morality, and Modern Life.