The arms race in the software development industry is speeding up at a breakneck pace, and this has also affected customer loyalty programs. B2C and B2B companies in all industries have had to go digital and reinvent themselves to keep up with ever-changing consumer behaviors. The main battlefield has become the user experience (UX). Improving UX has enabled businesses to retain customers and focus on scaling. To stay ahead of the competition brands need to be quick in implementing changes, including constant improvements in the shape of the loyalty programs.
That’s why giants like Nike, Target, and United Airlines are ditching their legacy systems to jump on the "headless bandwagon" and break free from the limitations of the monoliths. Monolithic architecture is the main blocker for scaling business, shaping unique UX, extending systems, and adjusting them to the target group's needs. Brands are looking for a future-proof technology that will allow them to implement changes in the design of the UX in a quick and cost-effective way. That’s why, in terms of technology, more and more companies have started following the MACH approach.
Why have they made that decision? In this article, you’ll learn more about MACH (microservices, API-first, cloud-native, and headless) system architecture, what the benefits of this approach are, and how it can speed up the process of developing customer loyalty programs.
MACH is about to reshape loyalty program development
For over a decade, big monolith systems ruled the IT world. The term "monolith" applies to all kinds of systems, like customer relationship management (CRM), eCommerce, loyalty programs, marketing automation, and content management systems (CMS).) In these systems, all features and services are tightly coupled. They were reliable, robust, and comfortable because clients got "all-in-one" solutions. That meant that all features and services, those that were needed or not, were delivered as one piece of coupled software. There was no option to cut nonessential functionality for the sake of, for example, performance or add others in the name of better UX. The system was "closed" by design, which when the industry accelerated, turned out to be a huge drawback.
Drawbacks of monoliths
- Monoliths are challenging to update because every, even the tiniest, improvement on the front-end application, like a loyalty program application, could interfere with the back-end system. This can potentially cause the whole platform to go down.
- They require back-end and front-end developers to work together. With all the changes, this causes difficulties in organizations because of high costs and slow time to market.
- Changes in monolith systems demand prolonged, in-depth tests to run with every change.
- Monoliths are sluggish in terms of performance, because the optimization was challenging, and the maneuverability of the organization.
- Monoliths, despite providing "all" features, don't guarantee the highest quality.
From the perspective of the business, it may seem tempting to have an “all-in-one” monolithic platform. Some large companies are reluctant to take the risk of needing constant updates to their massive system.
The problems start to appear when customization or changes in the design of the loyalty program need to be done. They also occur when higher performance of the system is required.
The shape of the loyalty program application needs to follow customer expectations and always be in motion. The threat of staying static and losing the race is severe because customers' behavior and preferences are never set in stone.
“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
Developing loyalty programs with MACH architecture is the answer to the drawbacks of monoliths
The drawbacks for developers with monolithic systems started to be evident years ago, but businesses were not so eager to change their approach. Change always takes some time, especially since we’re talking about enterprises. For enterprises, every decision must be evaluated and approved by a long line of decision makers.
To accelerate the changes and provide businesses with good reasons to make the change, commercetools, Contentstack, EPAM Systems, and Valtech brought to life the MACH Alliance.
MACH stands for microservices, API-first, cloud-native, and headless. The MACH Alliance aims to help companies explore modern, flexible, and effective technologies by delivering educational materials. The organization has popularized the modern, agile approach to IT among developers and helps business people understand the business value that sits behind it.
The MACH acronym is an umbrella term for pieces of technology that are built with these four approaches in mind:
- Microservices are individual pieces of business functionality that are independently developed, deployed, and managed.
- API-first means all functionality is exposed through an API.
- Cloud-native means it leverages the cloud beyond storage and hosting, including elastic scaling and automatically updating.
- Headless is the front end of the system presentation that is decoupled from back-end logic and channels and the programming language, and is framework agnostic.
MACH architecture allows businesses to compose their systems from the best tools available on the market and then adjust for their individual business needs. Open Loyalty supports the MACH approach and provides a set of flexible building blocks for developing custom loyalty programs of any shape.
Open Loyalty supports the MACH approach and provides a set of flexible building blocks for developing custom loyalty programs of any shape.
What businesses should choose MACH technology as a default option?
MACH software can easily be seen as a go-to solution for enterprise-scale businesses. That’s because composing a system from a variety of vendors requires some level of technological maturity. However, it would be a great simplification to consider MACH as an approach limited to enterprises.
Even mid-sized companies can benefit from MACH when they opt for, for example, a decoupled mobile application or API-first loyalty engine to connect with the currently used back end. MACH no longer requires fully re-platforming or building expensive custom-made solutions. The approach can be implemented gradually and align with the growing and changing needs of the business.
Why is personalization a crucial success factor in building loyalty programs?
The ultimate goal of every loyalty program is to keep existing customers coming back for more. There’s no secret that, today, giving them precisely what they want is the most reliable means for doing that. Because of that, personalization is the key for building a loyalty program, and this has been proven in the field. Successful loyalty programs constantly evolve because businesses need to adapt to new buying patterns and shopping behaviors in order to motivate and engage customers to achieve business goals.
Here are three examples of successful companies that created personalized loyalty program applications. They also constantly work on the customer experience to attract loyal customers:
Starbucks's loyalty program is praised as the best example of a reward system. They have over 19.3 million members. What's its secret? The company made it all about customer experience. Starbucks wanted to deliver personalized offers across their coffee shops and their mobile app. To do that, they used Formation's Offer Optimization Platform to create tailor-made offers in real time. Their pretty basic, at the core, program became unique to each customer with personalization.
The core of a successful customer loyalty program is based on the mixture of loyalty and payment. Loyalty program members can add points to a digital payment card and use it to make any purchases. Starbucks strongly encourages its clients to use the mobile app and rewards customers who pay with it by giving them additional bonuses.
The mobile application is the main communication hub for the company. Its UX, as well as the whole purchasing process, is constantly improved to increase the customer lifetime value and attract new customers.
Nike, on the other hand, is building customer loyalty by engaging the community around its products. Interaction with customers takes place via an online store and various mobile apps. The Nike Membership loyalty program gives users access to many types of benefits, including member-exclusive products and exclusive services that make customers feel valued.
Read more about the program in the article "Meet the 10 Best Retail Loyalty Programs"
Among the top loyalty programs, Amazon's Prime membership program can't be missed. Members get access to unlimited free shipping and other perks, such as Amazon's Prime Video and Prime Day sales, for a flat annual fee. The core of Amazon’s growth comes from its premium loyalty program, Amazon Prime, which has been hugely successful. This strategy is working since Prime members spend an average of four times more than other Amazon repeat customers.
Just like in the case of Starbucks, the Amazon loyalty strategy has been changing over time. Initially, it focused on the needs of Amazon’s best customers, but later it addressed shipping costs, the most significant pain point. Then, the benefits were enriched with access to the video-on-demand (VOD) platform, personalized offers, and promotions. Here, you can read more about it.
Customers constantly monitor the changes in the rules of the program. The company takes their feedback into consideration while shaping its UX and the mechanics of its loyalty program.
Why does MACH architecture allow users to cut the time to market for implementing a customer loyalty program?
The core assumption of MACH architecture is its API-first nature. This can be considered a foundation of its flexibility.
With an API, extending the system with any desired services or tools is easy and safe because no operations can jeopardize the integrity of the system. Services, such as payment, search, or loyalty programs, can be attached, unfastened, and replaced at any given time. This increases maneuverability for even the largest companies.
The API-first strategy allows businesses to constantly adapt their systems to their users' needs. That’s never been more essential than now. Now, longer IT initiatives have given way to shorter-term, multi-iterated projects that deliver quick return on investment (ROI). MACH is a way to tackle this challenge. It allows buying or building of any needed front end, attaching any required third-party apps to it, and connecting it all to the currently used back end. Given that the front end is the space where UX is created, the benefits of the MACH approach are clear. On top of that, by implementing loyalty programs with a cloud infrastructure, clients can gain full scalability on the one hand. On the other hand, it doesn't limit the possibilities of on-premise implementation with an appropriate setup based on Kubernetes.
What does building a loyalty program look like when MACH architecture is used?
As I mentioned earlier, MACH architecture can be implemented gradually by exchanging particular elements one by one. However, to make all the processes smooth and in line with the business, the whole operation must start with analyzing the functional demands and setting up the vision.
During this initial process, every system's responsibilities need to be set up and then connected with every possible user story. Within the highly-specialized MACH approach, the loyalty program is accountable for counting loyalty points and tiers, managing rewards, promotion distribution, etc. The other operations are carried out by other systems, such as email marketing or marketing automation platforms, CMSs, analytic tools, etc. Each of them is attached to the front end via the API gateway, which can be considered a bridge between the back-end platform and front-end apps.
MACH architecture can speed up your loyalty program development and gives your organization flexibility to develop custom solutions, improve UX, and scale your business. The big companies around the world, like Amazon or Starbucks, have already started using MACH architecture to develop complex loyalty programs for thousands of thousands users. If you are looking for means to follow customer expectations and keep your technology in line with business - you should consider MACH architecture.