Choosing the right technology to launch your loyalty program is tricky. We often have in-depth discussions with our clients about what technology is the best choice for their projects. One of the things we’ve learned is that implementing a customer loyalty programs at enterprise-level companies requires extreme flexibility. It also requires the ability to match the new piece of software to the rest of the existing infrastructure without drastically increasing the tools that are already in place. We know that, in most cases, it’s not about having thousands of features but, instead, building a technological stack with scalable infrastructure for future growth.
In this article, we explain what variants of customer loyalty software are available on the market. We also provide advice on three of the most important things to remember while choosing loyalty technology.
What kind of loyalty platform providers are there on the market?
The companies who want to introduce a loyalty program often start with the question, “Should we develop bespoke loyalty program software or build it on top of existing loyalty technology?
Developing a dedicated loyalty program from scratch with an internal team or agency provides the guarantee that the solution will be tailored to the expectations of the business. The disadvantages of this approach are a long time to market, high costs for current development and future maintenance, and difficult extendability of the solution.
On the other hand, SaaS provides a ready-to-use set of features that can be used right away to create the loyalty program. Unfortunately, the SaaS approach is less flexible than bespoke software. As a result, sometimes the business needs to adopt the vision of the loyalty program to the capabilities of the SaaS platform.
Loyalty SaaS solutions vary in their set of features, scalability, and technical approach. The biggest companies look for loyalty software with the most flexible loyalty program API. With this, they can create a loyalty program exactly as planned and easily integrate the new tool with existing systems. The brands with the highest security requirements often choose on-premise loyalty program software that can be installed on the internal IT infrastructure. This approach provides full ownership of the data stored in the loyalty program.
Choosing customer loyalty software should be based on the strategy of the loyalty program. It should also be based on current and future business and technical requirements.
3 things to remember while choosing a loyalty vendor
To help you choose the right loyalty engine, we’ve prepared a list of three things every CTO, CEO, and CMO should consider while looking for customer loyalty program providers.
Clarify the loyalty scheme and write down business and technical requirements
Questions to answer:
- How would you like your loyalty program to work?
- Should it have earn and spend capabilities that will distinguish it from the loyalty programs your competitors run?
- How likely are you to evolve its features and mechanics over time?
- Which systems are needed to cover the key use scenarios?
- What are the technical and security requirements for the customer loyalty program software?
If you’re looking for a customer loyalty software provider, you probably already have an idea for the loyalty program. Preparing a detailed request for proposal (RFP) that describes the business and technical requirements will make the whole process of choosing the software vendor much easier. It will also help you clarify your vision for the loyalty program.
The best practice to clarify the requirements of the loyalty program is to prepare a list of detailed user stories along with all the business and technical expectations for the loyalty program software. It’s also useful to map the responsibilities of the systems and to explain which system and how it should be engaged to cover every user story. Here’s a good article about how to write good user stories and how to prioritize them on the roadmap.
From the technical perspective, it’s crucial to define how existing systems will be engaged to cover the business requirements of the loyalty program. It’s always a good idea to engage a technical person, like a CTO, system architect, or business analyst, into the process of mapping and optimizing the responsibilities of the system. A few examples of the systems to consider while mapping responsibilities are eCommerce, point of sale (POS), marketing automation, email marketing, business intelligence/analytics, the mobile application, and enterprise resource planning (ERP).
To make the technology used for building a loyalty program cost effective, the loyalty engine shouldn't double the responsibilities of the other existing systems. Those other systems include a data warehouse, email marketing software, eCommerce, or business intelligence. On top of that, to avoid errors in data synchronization, there should be one system that plays the role of the single source of truth. Here you can read more about how to optimize costs of loyalty technology.
The most common types of technical requirements for the loyalty engine are the security of the system, flexibility, good documentation of the API, data ownership, extendability (how the features of the customer loyalty program can be extended now and in the future), speed, (the customer loyalty software can handle seasonal pics) and scalability of the system.
Define long-term total costs of ownership (TCO) but start small
Questions to answer:
- Do you consider customer loyalty a critical factor in your operations?
- Is customer retention in the top three priorities for the year?
- How will the loyalty program change in the future?
Figuring out the answer to these questions will most likely help you assess the level of investment you should consider when choosing the right loyalty technology. If you’re operating in a highly competitive industry, it might make sense to gain a competitive advantage over your competitors with a tailor-made customer loyalty program. Take a look at your customer-centric metrics, do simple math, and you’ll get an answer about whether even a small increase will generate enough value to justify the spending.
Almost always, it’s a good idea to start small and extend the loyalty program over time. At Open Loyalty, many of our clients begin with creating a simple proof of concept (PoC) to validate the idea for the customer loyalty programs. They also determine how the loyalty engine will be connected with the other tools.
If the customer loyalty program may evolve over time, it’s important to choose loyalty program software that allows for this by providing a good API. It’s especially important for cases where the interface of the customer loyalty program, in other words, it’s design in the eCommerce or mobile application, will change.
Invite the tech team into the process and understand their capabilities in the context of customer loyalty program
Questions to answer:
- Is there a need for an on-premise solution?
- Do you have an in-house IT team or a partner you work with?
- Will they have enough time to handle the new software?
- Is there a dedicated team already maintaining the rest of your applications?
While considering on-premise or SaaS software, the IT component is critical. Medium and large organizations will most likely have many more resources to deploy customer loyalty solutions. Some of them have dedicated positions to manage the company’s data centers or a data lake. If you’re running a small business and your development team consists of your friend who’s coding after hours, you might be better off with software that doesn’t require secret knowledge to run.
“Application leaders should secure for the future of their digital commerce strategy by developing a composable commerce platform. Gartner estimates that by 2023, organizations that have adopted a composable approach will outpace competition by 80% in the speed of new feature implementation.”
Senior Analyst at Gartner
Before making the final decision, be sure you’ve thought about all of the above because it could bring tremendous benefits to have all the answers early on. In the end, remember that the technology you choose will determine the set of tools that will be available to you. However, even the best one will never replace a well-designed loyalty strategy. These two need to come together for your program to succeed and provide real, tangible value to your customer base.
How to choose the right loyalty vendor?
Choosing the right, top customer loyalty vendor and loyalty program software is a strategic matter. Consider it from the angle of current and the future needs. Realize what level of agility you need and how you would like the loyalty solution to evolve.
Also, think about the ownership of the loyalty program software, how you see it in the organization, and who will work on the solution in the long term. While analyzing the costs, investigate the true TCO of the loyalty solution including costs of the license, hosting, maintaining, updating, and extending the solution in the future.