The Key To Highly Successful Loyalty Programs? A/B Testing

Whether you're looking to attract new customers, boost revenue from existing clients, or cultivate brand loyalty over the long term, running a customer loyalty or rewards program is a key strategy to utilize for meeting business goals.

However, the importance of getting these programs right means brands can't rely on intuition alone when designing and launching their loyalty programs. Especially when it comes to key decisions that need to be made for the program - you should award points for purchases yes, but what should the payout be exactly? Or how can you know what rewards or incentives will drive user engagement?

If you want a more structured, more strategic customer loyalty program, you’ll have to consider more complicated questions. This is where utilizing a pilot loyalty program for A/B testing can be put to good use to ensure your program is ready to go before a full program launch. 

What is A/B Testing?

By segmenting customers into groups (A and B), businesses can compare the performance of different loyalty program features, such as rewards, incentives, or communication strategies. Analyzing the data from the pilot program enables businesses to make data-driven decisions and optimize different loyalty program elements for maximum effectiveness.

Moreover, A/B testing provides a cost-effective way to experiment with new ideas and gather customer feedback in real-time. It allows businesses to identify potential issues early on and make necessary adjustments before expanding the loyalty program to a larger audience.

Why Do Brands A/B Test A Loyalty Program? 

When designing and implementing a loyalty program, A/B testing a pilot version of the loyalty program can be a valuable strategy to ensure its success. A pilot program allows businesses to test different variations of the loyalty program on a small scale before a full rollout. This approach can provide insights into what resonates with customers, work out potential issues, and ultimately improve program success rates. Some of the most common reasons are: 

• To fine-tune core program elements, such as rules structure or rewards
• To test reactions among target customer audiences 
• To give internal stakeholders or the executive suite more confidence in the program objective and execution

What Are The Benefits of A/B Testing a Loyalty Program? 

Understand what resonates best with customers

Using A/B testing for a loyalty program can help a business create a more engaging and rewarding customer experience. Brands can see what factors influenced customer engagement versus what didn't result in any engagement at all.

One example of loyalty program A/B testing is offering different types of enrollment incentives to see if a particular incentive drove more customer sign-ups than another. 

Help ensure the loyalty program will be financially sound

A pilot program allows companies to test different versions of their program with a sample of users before fully implementing it and thus without the risk of launching a program that may not yield the desired ROI.

Data from A/B testing lets businesses make informed decisions on how to optimize their loyalty program to maximize its success and impact on their bottom line.

Capture valuable customer feedback

Inviting customers to participate in a pilot program has the dual benefit of collecting valuable customer feedback and benefiting from customers who are more forgiving about any roadblocks or issues they encounter.

While an everyday customer might be frustrated if they have issues with their loyalty program account, pilot program customers know they’re helping to test the program. As a result, they’re more understanding and forgiving if and when they run into issues - it’s all part of the experience after all.

They’re also more prepared to give constructive feedback from the start, which is beneficial for improving your loyalty program.

Test how the loyalty platform technology performs

Pilot loyalty programs allow you to identify and work out any kinks in the technology side of the customer loyalty program before the official launch day. This allows you to minimize the risk of a server crash or other technology failures during critical moments on your big day. 

Best Practices for A/B Testing A Customer Loyalty Program

1. Clearly Define What You're Testing & Why

We already mentioned a few reasons why brands A/B test a loyalty program. Your reasons for running a pilot program are important because these will determine both A) what your goals are and B) how you’ll structure the various tests. For example:

• If you want to test a potential rules structure, then you’ll need to build the test into your pilot program for that purpose.
  
  
• If you want to test different loyalty program rewards, then you’ll structure the pilot program for that goal.
  
  

2. Establish a Timeline

The next step in creating a plan is to settle on a timeframe for running the pilot program. A common duration is 90 days - long enough for participants to cycle through the process of buying, earning, redeeming, and other engagement opportunities like special promotions or offers. 

As you're approaching the end of the pilot time period consider your results: 

• If the results show clear winners among your various tests, you don’t need to continue the pilot anymore. If you have all the results and program data you need, you can start preparing for a full program launch. 
  
  
• If you decide you need additional data, start planning to extend the pilot program longer. 
  
  

3. Make Sure to Include the Pilot Program in Your Terms & Conditions

Every loyalty program will have Terms & Conditions, including your pilot loyalty program. Since the pilot program's purpose is to A/B test different loyalty program elements, you want to clearly establish that there might be changes made to the pilot program during the trial period. 

Being transparent that certain elements of the final loyalty program can or likely will change because of testing will help mitigate any confusion on the customers’ end and help build trust. At a minimum, it will help disprove any accusations of wrong-doing or cheating. 

4. Decide How You Will Select the Customer Pool 

The exact criteria of your participant pool will vary on a number of factors. Overall you want to target repeat customers as these individuals are more likely to participate and provide the feedback you want. Another decision to make is if you want to limit pilot program enrollment to only invited individuals or if you want to open it to say, the first 2000 users to sign up.

Both choices have pros and cons, but one thing to remember is that customers typically respond favorably to receiving personalized invites to a new brand initiative. Being selected to participate in a pilot or tester program can make customers feel they are part of an exclusive community and valued by your brand, especially when you make it known that you want their feedback.

Overall, customers will likely be glad to be invited and eager to participate in the pilot program. They can feel a part of something the brand is doing, and happy they played a role in creating something unique and fun. 

Tips For Inviting Pilot Program Participants

Make sure to invite a participant pool large enough to get actual results

• If there are too few participants then you’ll have a difficult time getting a legitimate evaluation of how the program performs
  
  
• Running an enrollment campaign and sending reminders can help. Also, you can utilize sign-up bonuses the same as you would with a normal program - you could even test different enrollment bonuses to see what performs better. 
  
  

Disclose to participants that this is a pilot program with an end date

• Even though these customers will be grandfathered into the final loyalty program, you should communicate to them what will happen after the pilot program ends and what they should expect.
  
  
• This is important because you want to make it clear to them that the final, fully launched program might not follow the same experience that they had during the pilot phase. For example, customers might see a different points distribution amount or types of rewards. This will help prevent any confusion or disappointment if customers experience a different loyalty program than they did during the pilot.
  
  

5. Ask For Participant Feedback & Utilize Surveys

One of the core benefits of a pilot program is gaining valuable customer feedback and reactions that you can use to improve the program or fix issues. You must establish feedback channels from day one of the pilot program launch, and supplement these channels with planned surveys towards the end of the initial pilot run. 

Tips for Collecting Feedback

Keep surveys as simple as possible

There are several ways to utilize customer surveys but a good practice we like to follow is to make them simple as possible. Too long of a survey or too many complicated questions can discourage a participant, which means you lose out on valuable feedback. 

A simple format to follow is one question with a rating on the program overall, and then an open comment section that allows users to add their own comments. 

One method to try is including a section where customers can write their own comments; this takes the hassle of trying to write the right questions out of your hands. You don’t have to try to guess what the most effective questions would be, just encourage users to write their honest feedback: what they liked, what they didn’t like, what they especially enjoyed, what surprised them, and so on. 

One way you can encourage honest feedback from participants is by making the wording of the survey genuine and more tailored to this specific situation;  don't fall into the generic “we value your feedback” messaging that could come from any brand.

Instead use wording like: “Thank you so much for trying out our pilot loyalty program. Please let us know what you think about the program overall and how your experience has been so far.” 

Collect and document every piece of feedback, even if it’s not program-related

There’s a high chance your survey response will include feedback, comments, or requests that are unrelated to the pilot program. These could include opinions on products, requests for discontinued items, or other topics. 

These customer comments aren’t directly related to the performance of your pilot loyalty program but that doesn't mean you should discard them. Instead, ensure each piece of feedback is documented and sent to the appropriate customer service or product departments. 

Remember, your pilot program participants are some of your core customers - any feedback they have about any aspect of your business can be useful for improving customer service, or possibly reveal opportunities to create new products or services. 

Show gratitude and appreciation

The customers who participate in your pilot program are invaluable. They’re likely part of your core demographic and high-quality customers. You want to make sure you show them appreciation and gratitude for their participation in helping make a better program. Showing appreciation can help nurture loyal customers into becoming more active brand advocates and ambassadors to your wider audiences. 

• Reach out to individuals who reported or experienced issues during the pilot, thank them for their help, and give them a small bonus or gift. How you treat them now will make them more open to participating in similar experiments later on, like new product trials or referral programs. 

If you're looking for guidance on how to leverage pilot programs and A/B testing to ensure your loyalty program's success, we can help! Reach out to us today to learn more about we can help your business increase customer satisfaction, retention, and ultimately drive success in your loyalty initiatives.