An engaging, successful loyalty program can differentiate you from your competition and create brand advocates.
In a world where 70% of consumers agree that their loyalty is more difficult to retain than ever before, having the right program is critical.
Ninety percent of retailers say enhancing or expanding their loyalty programs is a priority but launching (or revamping) and running a successful program is a massive endeavor with lots of moving parts.
Some brands take this on in-house and see success, but many struggle. Every brand is different. Every loyalty program has different goals and different customers, and every brand has different internal skill sets.
So, should you work with a loyalty program vendor? And how do you find the perfect partner to assist you in building customer engagement?
We hope to help you answer those questions below.
Step 1: Assess Your Abilities to Launch and Run a Successful Loyalty Program
In assessing whether you should tackle a loyalty program in-house or work with a partner, there are several questions that you need to ask yourself that can be broken down into two buckets: People capabilities and technology capabilities.
Do you have the people in-house to strategize around issues like:
- How are our best customers performing over time?
- What are their pain points? What are their habits? What drives them?
- What would provide them with more value?
- Do you have a loyalty strategy team to figure all of that to develop the program construct a plan for acquiring and retain members over time?
- Is your Marketing team equipped to promote the program and nurture members to keep engagement up? And does your Creative team have the resources to execute on it?
- Do you have the IT personnel to not only build the program initially but make future enhancements? And who will own analyzing the date you collect from members, analyze it, and recommend ways to optimize your program?
Here is a list of the main services you’ll need to launch, manage, and optimize a loyalty program:
Loyalty Strategy Team: This team is responsible for several key areas, including stakeholder alignment, your loyalty baseline, defining critical elements of the program, potential limitations, and program concept and ideation.
Ensuring stakeholder alignment is critical because it puts everyone on the same page from Day 1. Once you have that, figure out a loyalty baseline – what you’re doing today or have done in the past, assessing what your competitors are doing, and aligning on the most critical elements of your program – goals and objectives, KPIs, and what a successful program looks like to your brand.
Client Services: When working with a loyalty vendor, this department plays a key role in the success of your loyalty program.
Weekly check-in meetings are held to monitor your program’s performance and progress, along with member data analysis.
From your initial launch to ongoing support, to quarterly business reviews, client services is there to make your loyalty program a success.
Creative Services: Your loyalty program is an extension of your brand. That’s why Creative Services is so important. Creative Services helps with brand identity guidelines to make sure every element is on-brand down to the colors, fonts, image styles, and tone of the copy.
The same goes for the in-store experience. Creative Services can design promotional cards, counter mats, and signage for retail partners.
Marketing Campaign Management: After your loyalty program launches, you’ll need to market it effectively. A loyalty partner can help with loyalty marketing campaign management to make sure your customers are not only aware of the program but receive regular communications to keep them engaged.
Data & Analytics: Regular reporting and analyzing the data generated from your loyalty program is crucial. It’s important for your partner to be transparent with you on the successes and struggles the program is experiencing.
Make sure you know how often your loyalty management partner will provide reporting metrics, and what those metrics will be. This is an area where your loyalty partner can offer expert advice based on the results generated in your program.
Customer Service & Billing: These services are typically specific to premium loyalty programs. Since your best customers are paying to be members of this type of program, customer service and billing are critical.
There’s a tremendous amount of work involved in running a successful loyalty program and it’s a companywide commitment. If you’re a large brand, then you may have the internal teams to tackle this.
The other side is technology.
To better understand if you have the technical resources for a successful loyalty program, ask yourself:
- Is my current or desired future platform a standard, off-the-shelf solution, or is custom-built for my brand?
- Do we have all the resources and technological capabilities to build a custom loyalty program that is unique to our brand? And optimize it over time?
- What does the integration look like from a timing perspective and what are the costs associated with it?
- Is my current loyalty program flexible, updated easily, and easy to use? Or for a future launch, will it be all those things if done in-house?
- What about promotions, social kickbacks, and other forms of incentivized engagement tied to the platform?
- Will our platform need to be integrated with your POS or other transactional software?
In addition to your technology platform itself, who will run the technology behind the scenes?
It’s important to understand how you will manage the technical end of your program. This is clearly an important item to consider when assessing whether you should work with a loyalty vendor.
Step 2: Determine the Type of Loyalty Program Partner That Makes Sense for Your Brand
If you’re considering hiring a loyalty program partner, there are several categories of companies to consider based on your assessment above.
1. Loyalty Agencies
A loyalty agency can assist your brand in setting KPIs (Key Performance Indicator) that help your internal teams leverage customer data from your loyalty program. It also offers recommendations based on your program’s performance over time.
While loyalty agencies offer a range of services, including consulting, market research, building and managing loyalty programs, measuring performance, customer relationship marketing, and operational support, most prefer to work with existing platforms.
Loyalty agencies can help your brand focus on acquiring and retaining customers through incentivized engagement tactics.
To summarize, if you’re looking for advice, consulting, or help managing an existing technology platform, an agency may be worth talking to.
2. Loyalty Technology Platform Vendors
These vendors build and sell (usually as a SaaS solution) loyalty technology platforms. Some vendors selling loyalty technology platforms offer services such as implementation, integration, analytics, and support, usually at an additional cost. With others, you’re on your own once you buy the platform.
Some may also offer design services, but most outsource this to other agencies and third-party vendors. Loyalty platform vendors typically charge not only an annual or monthly licensing fee, but they also charge for consulting and setup.
Those costs can often soar into the six figures. The licensing fees can be even more. If you have the people resources to run a SaaS platform, this could be the way to go for your brand.
3. End-to-end Loyalty Program and Customer Engagement Solutions Providers
These vendors offer the most comprehensive picture of your loyalty program because they can help you with as much or as little as needed and are involved every step of the way.
They combine consulting, technology, and services capabilities that include everything from strategy, custom platform build, program management to customer engagement, data measurement and analytics and optimization.
They are involved with your loyalty program and accompanying engagement strategies from Day 1 and monitor and manage your program daily after it launches.
They provide end-to-end services that focus on managing your program, so you don’t have to. Most of these vendors charge similarly to platform vendors.
According to the 2021 Loyalty Industry Data Study, 51% of retailers cite challenges including lack of internal resources or IT support as the main reasons for not launching loyalty programs.
If your people and technology resources and invested in other areas of the business, chatting with an end-to-end loyalty vendor could be a smart move.
Step 3: What Traits Should You Look for in a Loyalty Partner?
If you’re thinking about working with a loyalty vendor, there are certain traits you should look for to ensure the success of your loyalty program no matter what type of partner makes sense for your brand.
Is My Potential Loyalty Program Partner Experienced?
Make sure your loyalty program partner is well versed in current customer behavioral trends, thoroughly understands your customers’ expectations, and works with you every step of the way to create a seamless customer experience.
Your internal teams know your customers better than anyone, but it requires a special set of skills and experience to build a great loyalty program.
Do They Take a Holistic Approach to Loyalty and Customer Engagement?
An experienced loyalty partner must be capable of building you a complete, turnkey solution. That means from discovery to ongoing support, your custom loyalty program should be built, managed, and optimized under one roof.
When a loyalty program is handled entirely by one team, your customer is given a completely on-brand experience with no gaps.
Since a loyalty partner is an extension of your brand, reflecting the company’s best qualities to consumers, taking a holistic approach is critical for success.
From marketing to design to IT to customer service, a loyalty program touches so many points within your business. And it all needs to work together seamlessly to give your customers the best experience possible.
After all, a great loyalty partner has just as much at stake in the program as your company does.
Your loyalty program partner should offer a full range of expertise that includes program design, implementation planning, product development, creative services, and ongoing program performance evaluation.
Is Your Potential Loyalty Program Vendor Focused on Your Customers?
Your ideal loyalty partner will have experience building programs in your industry and will take the time to discover everything about your business, including what benefits your customers will see the most value in.
Engagement is also critical.
It’s one thing to attract customers to your loyalty program, but what happens once they are a part of your ecosystem?
Traditionally, acquisition alone was the prime objective for companies, but companies are realizing that retaining and growing existing customers is the key to stable, long-term success.
Make sure your loyalty partner feels the same way and continues to offer enhancement as the program evolves over time.
Are They Data-Driven?
Consumers today expect brands to know them and cater to their wants and needs while providing exceptional value which is why good data is so vital.
GameStop’s PowerUp Rewards is a prime example of this. GameStop uses the data collected from its premium loyalty program to personalize offers for members which in turn drive three times the sales of non-members.
No matter what industry you are in, you need to use your data to make the best possible business decisions and you need a loyalty partner that can help you collect and interpret this data.
Are They Forward-Thinking?
It’s not enough to understand what works now.
You need to collaborate with a company that is constantly researching, learning, and evolving and knows what’s coming down the pike.
Your loyalty partner should drive engagement through personalization, provide a true omnichannel experience and collect the best data on your best customers.
Make sure they are laser-focused on the future and how to win in a world where competition is fierce, and consumers have more choices than ever before.
Your Loyalty Partner Should Be an Extension of Your Brand
So, should you consider working with a loyalty program partner?
That depends on many factors, but if after you assess your resources you decide that they’re better spent elsewhere, it may be time to work with someone.
If that’s the case, choose the right type of vendor based on your resource needs and make sure they are aligned with your overall brand.
A good vendor will listen to everything you have to say about your customers, your loyalty program, your overall goals and how to best achieve them. Find a loyalty partner that puts your customers’ interests first and walks every step of the journey with your brand.
If you need help building or running a loyalty program, or just want to chat about strategy, contact us here.