What is a customer loyalty software and what does it do?
In essence, a customer loyalty software is loyalty management system used to launch, manage and analyze the performance of loyalty programs.
It empowers your company to not only manage data in a compliant and structured way, but also to be able to efficiently deliver targeted, personalized experiences at scale across the entire customer journey, so that you can understand your customers and drive more sales.
It can either be an in-house built solution, a function built into your CRM system or a separate platform that can integrate with your existing software.
More often than not, Enterprise Retailers prefer to have dedicated software that offers more capabilities, flexibility and customization than a rigid, monolithic and difficult to operate alternative.
How to choose the right loyalty platform provider for your retail business?
Not every loyalty management software is equal and selecting the right one for your retail business might be a tricky and grueling process.
Bear in mind that choosing the right provider shouldn’t be something you do in between meetings. Sitting down and digging deep into the different functionalities and options in the market will definitely be worth your time and effort.
First define your goals and priorities. If you are looking for a holistic solution, choose a loyalty platform that goes beyond earning and burning points, but can effectively act as your Customer Data Platform or integrate with your current provider – and offer you a modular, scalable solution that grows with you.
Now let’s do a deep dive into the specific features a good Loyalty Management Software should include:
Using different IT components for different tasks is a common practice. But as your retail business functions expand, enterprise retailers may become overwhelmed by lots of disjointed tools that can’t share data or work together. That’s when system integration comes to the rescue.
System integration is the process of joining software and hardware modules into one cohesive infrastructure, enabling all pieces to work as a whole. Seamless integrations allow for better experiences and help eliminate any information silos because they connect the data sources of each interaction.
To connect your loyalty campaigns with customer data, you need to make your customer loyalty program management system aware of them. This means that you need to be able to seamlessly sync it with your current customer data platform or customer relationship management tools.
WHAT IS IN IT FOR YOU:
- Increased productivity
- More accurate and trustworthy data
- Faster decision-making
In essence, your marketing team will no longer be forced to wait on overburdened IT departments to make things happen.
With an advanced set of filters, marketers can split the customer base into fine-grained groups. This means every customer that meets the requirements will be assigned to the appropriate segment and targeted in personalized campaigns.
A segmentation engine will add your customers to the relevant segment based on their data, whether it is around identity, transaction history, interests, behaviors, activity or consent.
WHAT IS IN IT FOR YOU?
- Develop consumer insights
- Improve loyalty campaign results
- Drive higher ROI
- Identify niche markets
- Improve customer retention
- Increase monetization opportunities
Overall, dynamic segmentation helps marketers target specific customer segments in real-time, saving them time on doing the segmentation manually.
As an example, you will be able to isolate customers that:
- Bought X diapers
- In X POS
- During X weekend
- In the previous month
- But have not bought diapers this month
This ultra-specific segmentation feature is key to personalize effective offers that contribute to your bottom line.
3. Cross-country and cross-currency management
For Enterprise Retailers with an international presence, cross country loyalty programs are the answer to faster time to market and more value in day-to-day operations. This allows for better customer experience, as they are able to shop, earn and redeem points when traveling for business or pleasure. Still, to prevent huge headaches you want to avoid designing a separate reward system for each country you operate in.
A critical feature for cross country loyalty programs is currency management. Audiences expect to see offers, coupons and discounts in their local currency.
In addition to this, you need to consider the customer’s experience when purchasing from your brand in multiple countries, as they will expect to earn points when shopping in different locations.
4. Extensive rewards catalog
Your customer loyalty program management system should support the following reward types:
- Points – marketers should be able to define how customers earn points, whether it is through purchase of specific products or brands, in specific shops or dates, or through other types of desired actions, like downloading the app, referring a friend, etc. You should also have a possibility to choose between fixed and proportional points assignment (for example, give 200 loyalty points for every 20€ spent).
- Rewards – as personalized rewards are the best engagement artifacts, your loyalty software should cover several types: coupons, gift cards, store discounts, cashbacks, any “currency” specific to your brand and/or 3rd party rewards such as Netflix, Spotify, etc.
- Gamification – the system should be fun and engaging for the customer, to make sure that he uses the loyalty program again and again.
WHAT IS IN IT FOR YOU?
Having simple but powerful reward options helps you meet your business goals, reduce slow seasons and achieve exceptional ROI in your promotional campaigns.
BONUS TIP: A BIRD’S VIEW OF BEST REWARD TYPES
- Financial benefits: Either percentage based or fixed amount based discounts (for example 5% off or €5 coupon or free shipping coupon). Financial benefits can come from either your inventory or a 3rd party (e.g. Shopify/ Netflix credits, partner gift cards).
- Physical items: Any kind of physical product that you grant to the customer. It can come from your own inventory or from a 3rd party.
- Service related benefits: Makes the shopping experience more convenient from a customer’s perspective, for example: free shipping, express shipping, extended return, money-back guarantees, free alterations, early access, expert recommendations, gift wrapping, priority customer support, etc.
- Events or experiences: Any kind of experiences (party invitations, concert tickets, hotel stays, free lunches), that either you organize or are coming from a 3rd party.
- Custom rewards: Any other benefits that you can’t categorize above, for example badges, etc.
5. Flexible eligibility rules
A good customer loyalty software lets you set up fine-grained validation rules. It is not enough to set the rules and hard-code them once. You should be able to change them as you learn more about your customers and for special promotions.
You can also allow or forbid discount combinations that give you even more space for personalization. For instance, you can offer two types of loyalty rewards: discounts and gift card credits and disallow using both for the same order. You should be also able to define which loyalty rewards should or shouldn’t be combined with other promotions.
Another critical point is to define who precisely and on what conditions should get the offer. Opt for loyalty program software that allows you to quickly impose and change up redemption rules based on new customer trends, product and order attributes, and budget constraints.
WHAT IS IN IT FOR YOU?
Data validation provides accuracy, details and clarity.
Over time you and your team will gain experience and insight over what promotions and campaigns have worked for you best – and this is information that you want to use to easily improve your processes and achieve business goals.
6. Tiers, levels & gamification
Tiered programs are similar to point programs because they allow customers to gain points with their purchases. The main difference is that the customer’s status (= tier) will increase as they accumulate more points.
Depending on the customer’s tier, they are eligible for different, more desirable or exclusive rewards including free gifts, discounts, early access to new products or experiences.
Creating tiers can help make your customer loyalty program more interesting for the customers, adding a gamification effect. Customers could be qualified to various loyalty levels based on their purchases or custom events.
The levels could differ by:
- The rewards catalog – for example, 2 rewards to choose from for the basic tier, 6 rewards for the VIP tier.
- The rewards worth – for example, samples for the basic tier, full-size products for the VIP tier.
- The earning rules – for example, 2x the points for VIP tier.
- Expiry dates – for example, longer expiry dates of the points for higher tiers.
WHAT IS IN IT FOR YOU?
- New ways to engage customers
- Enhanced customer-brand relationships
- Elevated competitive spirit
- Shield yourself from the competition
7. Omnichannel distribution
An omnichannel approach to loyalty campaigns isn’t an option for retailers anymore – it’s a must, whether it’s coupons printed in your physical POS, in-app messages, personalized landing pages, email communications, SMS or a combination of the above, you need seamless integration in order to avoid confusing or incoherent communications with your customers.
A great feature of excellent customer loyalty software is smart reminders. To cut through the noise and avoid being accused of spamming your customers, you should send relevant and informational notifications about your reward program details or their progress. Smart reminders are based on real-time customer attributes and are timely displayed non-intrusively on a device of choice.
Your software also needs to afford customizable communications that align with your brand. If your clients are used to a particular look, style, and feel of your messages, make sure that your loyalty provider allows you to use your own brand guidelines and vibe. When scanning the functionalities of different loyalty software, keep an eye out for white-labeling possibilities.
WHAT IS IN IT FOR YOU?
Omnichannel distribution allows you to send out campaigns for relevant news and local marketing, use purchase behavior to deliver relevant coupons, send out SMS with personalized landing page links or emails based on points accumulation.
The options are both unlimited and super simple to set up.
8. Returns management
Returns cost retailers hundreds of billions of dollars each year. When effectively managed, returns are also an exciting opportunity to recover lost profits, while delivering an experience that makes customers want to come back.
Examples include connecting return shipment data to messaging channels to let them know when their return is received and their accounts are credited. Feedback can also be incorporated to their customer profile at this point to make future purchases more successful.
In addition to this, loyalty programs need to take into account the cancellation of points earned from products that were eventually returned by a customer.
9. Customer self-service portal
Apart from development effort, running loyalty programs used to require lots of costly resources from the customer service department. In the past, customer agents had to answer dozens of customer questions related to terms of conditions, rewards and more.
Bear in mind that launching a program is the easiest part, followed by a tidal wave of requests, questions, inevitable complaints, and support tickets. Manual redemption, returns and addition of points or withdrawal of a batch of coupons or points is yet another pain in the neck for your customer support agents.
To reduce the load of these tasks, your rewards system should provide customers with an easy way to participate in your program, accurately monitor their points and to redeem rewards.
Because there’s a high chance people will be visiting it often, marketers can use this space to advertise other, relevant offers.
10. A/B testing and advanced analytics
Retailers need to understand quickly what’s driving their business, so they can make great decisions.
That is why you need a data-driven tool that organizes insights in a clear and useful way for smooth decision making.
You might want to track and compare sales and transactions performance across different subsidiaries or countries, measure identified and unidentified sales, or share specific data with your supplier to encourage future deals.
WHAT IS IN IT FOR YOU?
Bear in mind that every marketing campaign is an experiment. That’s why you will want to run multiple A/B tests and iterations to try out different variations of your rewards program before the launch.
It starts with a hypothesis, goes through a small-scale test in the field, and ends up with a global launch. That’s why you need a tool that allows for multiple tests to see what incentives and what kind of workflow has the biggest chance of success for your particular audience.
Iterations are made possible by detailed monitoring and tracking tools that should be transparent and readable for both marketers and developers.
11. Modularity & scalability
Scalability isn’t a “bonus feature.” It’s the quality that determines the lifetime value of software, and choosing a software with scalability in mind saves both time and money in the long run.
Setting up a new software tends to be hard, especially if you have been working with other (incomplete) solutions before. You might fear the huge effort of migrating data, the possibility of losing part of it, or the cost of such a process. You would not take such a decision lightly, and it is easy to postpone because it never seems that the time is quite right.
Scalability is an essential component of enterprise software. Prioritizing it from the start leads to lower maintenance costs, better user experience, and higher agility.
12. Legal compliance
Yes, this is the least sexy part of marketing, so make sure you work with a software that has your back.
First of all, your platform should ensure data privacy, especially if you operate in the GDPR or CAN-SPAM applicable regions. Opt for loyalty software that allows you to handle customer data in a transparent way. Also, go for a loyalty provider that lets you create and manage marketing permissions and opt-in consents. Otherwise, you can expect a big chunk of your messages going straight to the spam folder.
Last but not least, your software should allow you to create clear and concise terms and conditions of your incentives.
When it comes to loyalty program software, you should look for a holistic solution that goes the extra mile and allows you to do more.
Invest in software that can act as your Customer Data Platform. Choose more holistic solutions that let you collect, unify, segment and act on customer data so that you can unlock the true potential of your customers.
The best loyalty program platforms are SaaS, subscription-based platforms with the cost calculated based on the usage. This offers cost predictability and usually means no upfront costs, as opposed to building a loyalty platform from scratch or purchasing yearly licenses on all-in-one, monolithic software.
It also gives you the flexibility to downgrade, upgrade or cancel the subscription at any time, depending on your needs which makes cost management easier.
A good customer loyalty software helps you launch, manage, and track your loyalty program quickly and without much development effort. It lets you quickly change the validation rules, launch timed promotions, change your distribution channel, re-segment your customers, and much more. It helps you to protect yourself from fraud and supports you with optimizing and saving your budget. An excellent loyalty management system enables you to maximize your ROI and minimize your headache.
Sit down with your IT team and discuss how well you can leverage your customer data right now with your current solutions. Sit with your marketing team and discuss which loyalty management software features are a must-have and which are optional for your use case.
You can use the checklist we have presented in this resource as a menu of possible features to cherry-pick from. Compare different providers. Find the right customer loyalty software provider that will tick all of the boxes.
Remember, needs change over time.
If you choose an out-of-the-box customer loyalty software provider, make sure their software is flexible, modular and scalable to adapt to your future choices of the technology stack and distribution channels.
Loyal Guru is a cloud based Customer Data Platform with unbeatable loyalty and personalization capabilities, focused on helping Enterprise Retailers create the best customer experience by harnessing the power of data.
Our platform, trusted by leading retailers such DIA, SPAR, MANGO and DECATHLON, solves the unique challenges of developing retail business with next-gen loyalty initiatives, personalized offers at scale, advanced retail analytics and new opportunities for monetization. Chat with our team to learn what Loyal Guru can do for you.