{"id":1272,"date":"2022-03-29T06:03:54","date_gmt":"2022-03-29T06:03:54","guid":{"rendered":"https:\/\/gratifii.com\/staging\/profit-from-the-seven-zones-of-loyalty-program-performance-copy\/"},"modified":"2023-09-14T07:04:46","modified_gmt":"2023-09-14T07:04:46","slug":"wheres-the-sludge-in-your-loyalty-program","status":"publish","type":"post","link":"https:\/\/gratifii.com\/staging\/wheres-the-sludge-in-your-loyalty-program\/","title":{"rendered":"Where\u2019s the Sludge* in your Loyalty Program?"},"content":{"rendered":"\n<h6 class=\"wp-block-heading\">Guest Post:&nbsp;<a rel=\"noreferrer noopener\" href=\"https:\/\/thepointofloyalty.com.au\/adam-posner\/\" target=\"_blank\">Adam Posner<\/a><\/h6>\n\n\n\n<p>*Inspired by the book \u2013 <a href=\"https:\/\/www.amazon.com.au\/Nudge-Final-Richard-H-Thaler\/dp\/014313700X\" target=\"_blank\" rel=\"noreferrer noopener\">Nudge: The Final Edition (2021) \u2013 Thaler and Sunstein<\/a>, chapter 7.<\/p>\n\n\n\n<p><em>(From my point of view it\u2019s a brilliant book and a must read for all loyalty program managers).<\/em><\/p>\n\n\n\n<p>Sludge is (as defined by Thaler and Sunstein) \u201c\u2026<em>any aspect of choice architecture consisting of friction that makes it harder for people to obtain an outcome that will make them better off\u2026\u201d.<\/em><\/p>\n\n\n\n<p>To answer the \u2018Where\u2019s the sludge\u2026\u2019 question, let\u2019s ask ourselves another question:<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What are the&nbsp;Signals of Sludge&nbsp;in your Loyalty Program?<\/h2>\n\n\n\n<p>Here are five (of many more):<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>A declining trend in customers not becoming members<\/strong><\/li>\n\n\n\n<li><strong>Member activity is declining<\/strong><\/li>\n\n\n\n<li><strong>Redemption is reducing<\/strong><\/li>\n\n\n\n<li><strong>Mountains of data, molehills of relevant and personalised action<\/strong><\/li>\n\n\n\n<li><strong>Program profitability is not living up to its potential<\/strong><\/li>\n<\/ol>\n\n\n\n<p>For each I have provided:<\/p>\n\n\n\n<p><strong>Sludge Status<\/strong> = digging deeper to identify the status of sludge.<\/p>\n\n\n\n<p><strong>Nudge Knowledge<\/strong> = actions or small steps (nudges) to reduce or remove the sludge.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Signal of Sludge #1: A declining <a href=\"https:\/\/gratifii.com\/staging\/are-you-leveraging-the-growing-loyalty-management-market\/\" data-type=\"post\" data-id=\"1169\">trend<\/a> in customers not becoming members<\/h2>\n\n\n\n<p><strong>Sludge Status:<\/strong><em>&nbsp;(each needs further investigation)<\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The onboarding experience is clunky and customers experience friction and frustration in joining<\/li>\n\n\n\n<li>The team are not selling the program and customers are not aware of the benefits of the program<\/li>\n\n\n\n<li>The proposition is bland, boring and members are bit \u2018blah\u2019 about the program<\/li>\n<\/ul>\n\n\n\n<p><strong>Nudge Knowledge:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Review each step of the onboarding experience and identify the \u2018sludge moments\u2019.<\/li>\n\n\n\n<li>Reinvigorate your teams\u2019 belief and buy-in to the program so you have a team of loyalty champions. Consider a mystery shop strategy to benchmark the team sludge.<\/li>\n\n\n\n<li>Nudge your program proposition out of the sea of sameness. Start by <a href=\"https:\/\/gratifii.com\/staging\/profit-from-the-seven-zones-of-loyalty-program-performance\/\" data-type=\"post\" data-id=\"1266\">evaluating the proposition<\/a> vs the six currencies customers care about.<\/li>\n\n\n\n<li>A competitor review is a nudge to improve your knowledge of your program\u2019s <strong>uniqueness<\/strong>.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Signal of Sludge #2: Member activity rate is declining. Previously actively earning and redeeming members are now dormant<\/h2>\n\n\n\n<p><strong>Sludge Status:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>If the \u2018active\u2019 rate of members (defined as those earning and redeeming) is declining, this could be a signal of a program that\u2019s become expected, bland, and boring. Or the threshold to earn a reward based on the behaviours required (transaction and interaction) may be too much of stretch for some members.<\/li>\n<\/ul>\n\n\n\n<p><strong>Nudge Knowledge:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Look deeper at which value segments are not as active as they were.<\/li>\n\n\n\n<li>Stimulate relevant earning and redeeming through moments of unexpected delight, bonus offers and reduced thresholds to rewards.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Signal of Sludge #3: Redemption is reducing<\/h2>\n\n\n\n<p><strong>Sludge Status:<\/strong><\/p>\n\n\n\n<p>When there is a high level of built up earned rewards without redemption, the signal of sludge could be the rewards are not enticing, exciting and worth redeeming for.<\/p>\n\n\n\n<p><strong>Nudge Knowledge:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Reinvigorate your reward portfolio.<\/li>\n\n\n\n<li>Nudge your members to tell you what they care about.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Signal of Sludge #4: Mountains of data, molehills of relevant and personalised action<\/h2>\n\n\n\n<p><strong>Sludge Status:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>If the terabytes or even petabytes of data gathered by programs is not used to its capacity and capability to add value to the life of a member and return value to the business, then there is a data sludge problem.<\/li>\n<\/ul>\n\n\n\n<p><em>(A recent example of data sludge I personally experienced with a client was the generation of a monthly loyalty program results report that was never read by the leadership team. The data presented was a mash of numbers, graphs and charts, tables and statistics, with no insights or recommendations. Apathy by the leadership team towards the program was the signal of data sludge\u2026)<\/em><\/p>\n\n\n\n<p><strong>Nudge Knowledge:<\/strong><\/p>\n\n\n\n<p>There are multiple facets to use data for a good nudge \u2013 both for members and the business.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Stating the obvious, for members it is about using data to make their lives better (simpler, more enjoyable, and joyful).<\/li>\n\n\n\n<li>For the business, it\u2019s about insights to action business growth such as (not limited to) insights to create more money, insights to improve merchandising, insights to initiate innovation and insights to make smarter decisions (insights are better than opinions)!<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Signal of Sludge #5: <a href=\"https:\/\/gratifii.com\/staging\/how-to-get-a-better-roi-by-offering-unique-personalised-loyalty-experiences\/\" data-type=\"post\" data-id=\"1262\">Program profitability<\/a> is not living up to its potential<\/h2>\n\n\n\n<p><strong>Sludge Status:<\/strong><\/p>\n\n\n\n<p><strong>Sludge Status:<br><\/strong>There are many signals a program is experiencing profitability sludge (not achieving net profitability). The two key signals are:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Program revenue is declining.<\/li>\n\n\n\n<li>Program costs are increasing.<\/li>\n<\/ul>\n\n\n\n<p><strong>Nudge Knowledge:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Initiating a full financial fitness assessment of the loyalty program is a good place to start increasing the nudge knowledge of profitability<\/li>\n\n\n\n<li>A fit and healthy loyalty program financial ecosystem has&nbsp;dynamic and connected profit and loss, balance sheet and cash flow models for real-time insights. The financial models need to continuously ascertain the revenue, costs, profitability, balance sheet implications and cash flow effects of the loyalty program<\/li>\n\n\n\n<li>Reviewing your financials will identify the sludge and nudge you towards improving the profitability.<\/li>\n<\/ul>\n\n\n\n<p>In summary, identify the&nbsp;<strong>Signals of Sludge<\/strong>&nbsp;in your loyalty program by initiating a \u2018<strong>Where\u2019s the sludge in our loyalty program?<\/strong>\u2019 working session with your team. Then investigate those Signals of Sludge and build out your \u2018Nudge Knowledge\u2019 to reduce or remove the sludge.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Guest post: Adam Posner (The Point of Loyalty).<br \/>\nDo you know how to identify the &#8216;sludge&#8217; in your organisation?<\/p>\n","protected":false},"author":2,"featured_media":1464,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[19,25],"tags":[],"class_list":["post-1272","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-loyalty-strategy","category-top-tips"],"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/gratifii.com\/staging\/wp-json\/wp\/v2\/posts\/1272","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gratifii.com\/staging\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gratifii.com\/staging\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gratifii.com\/staging\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/gratifii.com\/staging\/wp-json\/wp\/v2\/comments?post=1272"}],"version-history":[{"count":12,"href":"https:\/\/gratifii.com\/staging\/wp-json\/wp\/v2\/posts\/1272\/revisions"}],"predecessor-version":[{"id":1779,"href":"https:\/\/gratifii.com\/staging\/wp-json\/wp\/v2\/posts\/1272\/revisions\/1779"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/gratifii.com\/staging\/wp-json\/wp\/v2\/media\/1464"}],"wp:attachment":[{"href":"https:\/\/gratifii.com\/staging\/wp-json\/wp\/v2\/media?parent=1272"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gratifii.com\/staging\/wp-json\/wp\/v2\/categories?post=1272"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gratifii.com\/staging\/wp-json\/wp\/v2\/tags?post=1272"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}