Investing in customer loyalty pays off. Loyalty leaders with high customer satisfaction rates grow roughly two and a half times faster and, over time, their returns are five times higher than those of industry peers.
Customer loyalty is intertwined with almost every aspect of your business. Be it by delivering a great customer experience or through a concrete loyalty program. Putting loyalty into practice can be troublesome, however. Especially large and growing companies can run into difficulties while implementing a large-scale digital loyalty platform.
On this page we share what drives loyalty and discuss the most common loyalty programs. Finally, in our Loyalty whitepaper, we discuss which solution best suits your organization; a connected or integrated loyalty platform. Do you want to know what’s the best fit for your organization? Download the whitepaper below to get started.
Download loyalty whitepaper
Customer loyalty and your business
Creating a loyal customer base has been an important goal of many companies for ages now. It’s one of the most thoroughly examined aspects of marketing and it remains one of the hardest things to achieve. This is because, in the end, in a competitive market, it all boils down to having an excellent customer experience. Making your customers love and cherish you is influenced by several aspects:
- Obviously, the first one is your proposition. The products or services that you sell for a certain price must be appealing, match demand and deliver on their promise.
- Your customer service processes have to be next to none. The way you treat customers both online or offline must be in line with modern communication methods and always as friendly as can be. Every product or service has its flaws and dealing with that appropriately will build a lot of trust. Be approachable.
- Then, there are your (digital) channels. How easy is it to interact with your company? How user friendly are your touchpoints? Do your customers have a seamless (omnichannel) experience between touchpoints ?
- Offering a loyalty or membership program can also be an important aspect of customer satisfaction. Showing appreciation to loyal customers goes a long way and there are several ways to do so.
- Finally, there is the brand experience, which is mostly a sum of the quality of the previously mentioned aspects but topped-off with a strong brand story and careful marketing.
This is just one way to describe the different aspects that influence loyalty. The first three points of this list are directly related to the core business processes of any company out there. However, they are not always geared towards retention. The moment a company wants to actively focus on loyalty, the question arises: “How can I organize and track customer loyalty and make it manageable?” This is where a loyalty program can help.
Getting a grip on customer loyalty
It’s perfectly possible to boost customer loyalty by improving your product and service experience, and then hope your available analytics will show signs of returning customers. However, you won’t really be in control. By actively showing appreciation towards loyal customers, you will be able to steer and influence such behavior through deploying customer loyalty programs. These are some very common types of loyalty programs:
- Purchasing loyalty: Give away incentives or discounts to returning customers. Like gifts and coupons for new customers. In certain industries this is so common that it’s almost impossible not to participate. However, it’s also considered to be a relatively weak loyalty creator, since it feeds bargain hunting and – as all retailers know – bargain hunters might be the least loyal of all.
- Membership programs: Providing increasing benefits for people who display loyal behavior. This is where reward systems and/or membership levels come in. By rewarding specific behavior, companies can strategically retain customers and influence their business outcomes. Some examples are Air Miles, Amazon Prime and gold/platinum credit cards.
- Personalization: Building a relationship with customers by using data to increase relevance through targeted communication. This is what big tech focuses on. Instagram and Youtube have you hooked because they feed you what you want to see. A tailored customer experience taps directly into loyalty without investing money per customer. The only downside here is that it is difficult for companies to not cross the thin line between being relevant and being spammy and annoying.
Although it’s possible to operate a loyalty program completely offline, we would strongly advise going online, since the customer experience of the 21st century is almost exclusively online, especially during the pandemic. Even straightforward programs like coupons or discounts are expected to have an online version. Add to that the huge benefit of online measuring and personalization and it’s a no brainer. In any case, you will need a dedicated loyalty platform for your loyalty marketers to do their thing.
Connected vs integrated loyalty platforms
A loyalty platform is an (online) environment from which you can manage the way your loyalty program works, access loyalty-related customer data, run campaigns and much more. There are a lot of different platforms or platform extensions out there that have a lot of great features straight out of the box. These ‘out of the box’ platforms are usually Software as a Service (SaaS) solutions, often with pricing models connected to features and the number of customers you want to manage. Larger SaaS loyalty platforms usually offer integration with a specific list of other software systems.
As mentioned earlier, customer loyalty programs should ideally be present throughout the entire customer journey. Therefore, you want to be able to control loyalty aspects throughout all customer touchpoints, as well. Think of (personal) incentives, display points or status levels, alternative content or pricing, doing measurements and so on. Also, don’t forget that several departments of your business will also touch your loyalty platform one way or the other. For example, customer support for questions, marketing for campaigns, possibly finance for invoicing, IT for applications, CRM for customer data and so on.
Therefore, we believe it’s good to make the distinction between loyalty platforms that are merely ‘connected’ on a technical level versus platforms that are truly ‘integrated’ with your business and systems. Both can be good for you, but it’s good to make the distinction.
- Connected loyalty: You can add an ‘out of the box’ SaaS platform (or app/module offered by one of your existing systems) to your current IT landscape, which will give you access to a well-developed platform for loyalty management. It’s a quick way to ascertain a lot of professional features that, depending on your provider, can plug in or ‘talk’ to your current systems. ‘Out of the box’ usually means there’s features you don’t need, and that the ones you do need might be a bit more flexible than suggested. You should also be aware that once implemented, it might not be so easy to change to another provider. If you are able and willing to work around how the system is designed, SaaS platforms can be an easy and powerful option.
- Integrated loyalty: You can also approach loyalty in a more agile way. Leverage the power of your existing IT landscape by complementing it with a small, custom-made platform in between. This allows optimal integration with your IT systems and will also integrate seamlessly with your existing business processes. You will be able to exactly design your loyalty program the way you want it to work. While this option comes with an extra initial investment for building the platform, you can start small and learn in iterations. The system will evolve as your loyalty program grows. You will only build features you need. Consequently, you will not have doubled features or data in your loyalty system, nor will you be dependent on the provider’s backlog when you need something they don’t yet offer.
Does ‘integrated loyalty’ not mean you’re reinventing the wheel?
To an extent, the whole point of this article is that for large companies that operate at scale, most of their loyalty platform will be custom-built anyways. Your existing system already has part of the features you will need and the bit that remains is not that hard to make. Take, for instance, the customer-facing systems you already have. You just need a platform that counts points and manages rules, which does not have to be complex if you build it just for you. Integrating such a system into existing business processes and IT systems is a lot easier when you build it with a clear purpose in mind from the start. You can start small and agile and have the platform grow together with your loyalty program and team. You can set up loyalty rules management in such a way that it aligns with your organization’s business processes. You can create flexibility where it’s needed and cut corners when you are sure something will never change anyway. All of this makes a custom, integrated platform an attractive option when operating at scale.
How do I choose between a connect or integrated loyalty platform?
Both types of loyalty platforms have their merits and can be right for your organization. Every company is different and there is no right or wrong. Find the solution that best fits your situation. Would you like to know how you can decide which is better for your organization? Please download the whitepaper below with ideas that might help you decide.