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The Ultimate Guide to Loyalty Management

With so many different loyalty platforms, consultants and vendors out there, the topic of loyalty management can be daunting.

Your loyalty program touches so many parts of your customer experience. Not to mention, every brand is different and your loyalty program needs to be tailored to your unique customers.

From your website to your stores to your backend resources like development, marketing, customer service and finance, loyalty is complex.

Do you tackle it in-house? Do you find a specialized loyalty partner to work with?

Whether you already have a loyalty program that needs some updating, or if you’re thinking about launching one for the first time, there is a lot to think about — and a lot of questions to ask potential loyalty vendors.

Whichever bucket your company falls into, this guide will show you everything you need to know about loyalty management and help get you started on the path to building more customer engagement.

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Table of Contents

What is Loyalty Management?

Loyalty management is the strategy, tools and tactics around how your company acquires, engages and retains customers.

This includes your loyalty marketing strategy, loyalty program platform and all of the managed services that are required to build and run a successful program.

This is not only about acquiring new program members. It’s also about retaining existing program members and maximizing your relationships with them.

  • How can you entice them to join with the right marketing?
  • Once they’re in, how to keep them engaging?
  • Is the loyalty program experience consistent with your brand? Are your in-store associates properly trained on selling the program?
  • How are you able to upgrade your program over time? Who’s running the day-to-day?
  • Do you have the internal resources to manage it all or should you outsource it?

The answers all lie within loyalty management.

And one of the biggest considerations is choosing the right software.

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How Do You Choose the Right Loyalty Management Software?

Choosing the right loyalty management software requires defining your program goals and your target audience, deciding on your must-have features, setting your budget and researching potential partners if you don’t plan to do it in-house.

The best place to start is by asking these questions:

If you have an existing platform, ask yourself:

  • What are its pros and cons?
  • What does it do well and what could be improved?
  • How well is it currently helping me achieve my company’s loyalty goals?

And whether you have a platform already or are looking for a new one, ask yourself:

  • Is it flexible enough to support the loyalty currency my customers want?
  • Can I use it to send marketing communications and promotions that are personalized for my members?
  • Does it do a good job of collecting zero-party data that can be analyzed to improve and personalize the program over time?
  • How easy is it to update and enhanced to over time?
  • Can it be customized to look and feel like my brand?
  • How much of a lift are implementation and ongoing maintenance from a technical resource standpoint?
  • What does my budget look like?

For example, if you wanted to offer a subscription loyalty tier where you best customers pay to sign up for instant, elevated benefits, you need to make sure your platform can support it. This would include the ability to offer discounts, cashback and free shipping. Plus, it would need a billing engine to handle the recurring membership fees.

Loyalty programs should never be set-it-and-forget-it. You want to make sure your platform can be enhanced over time. If you go with an out-of-the-box-solution, it may be difficult or extremely costly to upgrade it in the future.

Whether you partner with a company or manage your loyalty program internally, choosing the right loyalty management software can make or break your success. Make sure you’re looking at it with your customers’ expectations in mind.

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When is it Time to Partner With a Loyalty Management Company?

Now that you know what questions to ask when looking for software, you have to decide whether or not it’s time to partner with a loyalty management company.

Some retailers have taken this on in-house, but struggle.

The truth is, there is a lot involved in managing a loyalty program and every brand is different. Each has different goals and different customers as well as different skill sets internally. That’s why this is a tough one to answer.

The best place to start here is by assessing your needs. Ask yourself these questions:

  • Have my best customers been engaging with my program?
  • Have I revamped my loyalty program within the last year, or has it gotten a little stagnant?
  • Do I have the budget to work with a partner?
  • Can I afford to take my time with a launch or revamp?
  • Is my program very unique and not at all like that of my competitors?
  • Does my ambition align with current capabilities?
  • Are my customers evangelizing for my program?
  • Can I wait for changes and updates to be made?
  • Does my program have robust data and analytics capabilities?

If you answered no to many or even some of these questions, it’s time to start thinking about working with a loyalty management company. Loyalty agencies specialize in all the above areas which takes all of those responsibilities off of your teams so you can focus on your business.

We live in the age of the customer and their expectations are changing constantly and rapidly. ebbo’s 2023 Loyalty Programs Data Study found that 91% of consumers agree that many loyalty programs feel similar and are not that differentiated.

That’s why it’s so important to analyze data and be able to enhance your program nimbly over time, making it more personalized and more engaging.

Your loyalty program should be a differentiator. If managing a program with internal resources is challenging, considering looking for a loyalty partner that can build a custom program that your best customers will love that’s within your budget.

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What Loyalty Management Services Should You Expect from a Partner?

There are a staggering number of partners out there. Not all of them are created equally.

And while they all offer various loyalty management services, what matters for your brand may be different than another. Yet there are seven essential services that you should vet any potential loyalty agency on.

  • Loyalty strategy
  • Technology services
  • Creative services
  • Marketing campaign management
  • Data and analytics
  • Customer service and billing (for premium loyalty programs)
  • Client services

You already know that a one-size-fits-all loyalty program doesn’t work.

That’s why loyalty strategy is so important. Your partner should hold a stakeholder meeting right away to assess what everyone’s’ goals are for the program. This is also a great time to understand any possible budget or technology constraints, perform a gap analysis and iron out what the program is going to look like.

You also should know upfront about how your partner will handle the technology aspect of your program. Integrations, custom work and ongoing maintenance should all be handled by their technology team. Many loyalty partners can give you access to an API Developer Portal so your tech team can understand just how easy, or challenging, implementation will be.

Once all of the technical details have been ironed out, it’s critical that your partner understands your brand and carries it through seamlessly in your program. Members of your program need to have a seamless experience while interacting with all touchpoints of your program. Make sure your partner adheres to your strict brand standards.

Once your program is launched and in the wild, you have to attract and retain members. Your partner should be able to assist with this. From marketing messaging to acquiring members to ongoing communication to keep existing members engaged, make sure you’re not on your own once the program is live.

As the program runs and members interact, you’ll start collecting zero-party data on your best customers. Ask your potential partner if they have an analytics team that acts as a source of truth for your program. The data that’s collected should act as a barometer for future improvements and optimization.

And if you’re thinking about a subscription loyalty program, make sure your partner is experienced in billing and customer service. After all, your best customers are paying for membership. If an issue ever arises, they should be offered VIP customer service. And when dealing with credit cards, make sure your partner is PCI compliant with a security team.

All of these managed services go back to a great client services team. They are your loyalty liaison and are the go-between for all the other services. They know your brand, your customers, and your goals.

Related Content: 7 Loyalty Management Services You Should Expect from a Partner

How do You Choose the Right Loyalty Management Partner?

Aside from offering the right services, the right loyalty management partner also needs to be a good fit for your brand — both from a business and culture perspective.

From a resource perspective, how much of your program do you want to manage?

If you’re looking for consulting, help with implementation or even ongoing program management, you may want to talk to a loyalty agency.

Loyalty agencies can manage most of your program, but most of them do not have their platform. Instead, they usually work with a host of different existing platforms. Some can even do customization.

If you’re set on managing your program in-house, but don’t have the technical resources to build your technology platform, you may want to look for a loyalty platform vendor. These vendors typically build and sell their SaaS-based platforms but that leaves most of the heavy lifting and ongoing management on the brand.

If you’re looking to work with one partner who does it all, look for an end-to-end loyalty partner. These companies combine the best of both worlds.

They have their own loyalty platforms and also completely manage the strategy, build, implementation, marketing, analytics and optimization to make sure your program is successful over time.

If you’re looking for an end-to-end solution and a true partnership, this is worth exploring.

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How Can You Leverage Loyalty Management Data to Increase Engagement With Your Best Customers?

Now that you have a good understanding of loyalty management, platforms and partners, it’s time to think ahead to after your program launches or relaunches. One of the most important benefits of having a loyalty program is the data that it can collect on your best customers.

But what data matters most? What loyalty program KPIs should you be working towards?

Here are ten KPIs you should be thinking about to keep a pulse on your program performance and figure out how to further optimize it over time.

  • Join count
  • Conversion rate
  • Member retention rate
  • Churn rate
  • Member engagement rate
  • Purchase frequency
  • Average order value (AOV)
  • Incremental margin
  • Customer lifetime value (CLTV)
  • Refunds – for premium loyalty programs

These KPIs will show you whether your value proposition makes sense and whether your marketing is breaking through to your customers.

For example, if your join count is low, it could mean that your marketing strategy is resonating with customers. Or, maybe your program just doesn’t seem enticing enough to join.

If your churn rate is high, that means your members aren’t finding enough value to stay active in the program. Then, it may be time to reevaluate the benefits and rewards you’re offering.

If purchase frequency and AOV are going up, it means that you’re loyalty members are engaging with your brand and the loyalty program is driving value to your bottom line.

It’s important to not only track these metrics but also analyze them. Your loyalty partner should act as a source of truth when it comes to data. They should constantly look at this data to figure out what’s working and what can be optimized.

Related Content: What Your Loyalty Management Data is Telling You

Loyalty Management Doesn’t Need to be Overwhelming

There’s no way around it.

Managing customer loyalty is a massive undertaking with many moving parts. But with the right platform and partner, it doesn’t have to feel so intimidating. It can be very rewarding for both your brand and your customers.

The important thing is to put your customers at the center. What would they value the most in your loyalty program?

From there, think about your biggest goals, your ambitions and your resources. Download the Ultimate Guide to Loyalty Management.

If you ever have any questions about loyalty management, please feel free to contact us at any time.

Paul Wolfer

Paul is our Senior Manager, B2B Marketing. He works closely with the leadership team on strategic positioning, messaging and branding. When he's not posting on LinkedIn or working on the newest data study, he can usually be found adventuring to breweries or attempting to learn a new song on his guitar.

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ebbo™ is an all-in-one loyalty company. With our data driven strategy, full-service approach, and the unwavering support of the people behind the platform, our dedicated team will work with you to understand your loyalty goals, innovate solutions and help you build customer engagement on repeat.

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