Loyalty Programs in the Digital Age

In order to prove competitive in the modern economy, many companies focus more and more on customer benefits.

Although business wisdom has long proclaimed that “the customer is king”, the real turn to customer focus only resulted from increasing competition and the related necessity to retain loyalty, up-sell and increase turnover per customer.

Loyalty programs are both well-known and handy ways of achieving these goals. Long-time favorites of large-scale retailers, loyalty programs have spread not just among businesses operating exclusively on a B2C basis, but now also include B2B applications.

Since they have proven to be effective, loyalty programs have grown and can now be found almost anywhere business is conducted. This brought in inevitable legal regulations and complications. The abundance of services providing loyalty-based solutions also started a competition of sorts. Providers of such programs need to ensure reliability, profitability and proper structure in order to address customers’ preferences and requirements.

This situation managed to further complicate loyalty programs, many of which were quite intricate to start with. The web of regulations set up to cater to different circumstances in different industries that employ such programs does not help to make loyalty management simpler.

Digital Loyalty

Loyalty solutions, like many modern business processes, have been digitized. Nowadays, all the aspects of loyalty marketing can be integrated and presented as a one-shop solution. Thanks to various CRM systems, business to client communication, product distribution and accounting data can be integrated with adherence to legal regulations.

There are just as many loyalty programs as there are many business models. Their general purpose may be similar, but the way their goals are achieved differs drastically from company to company.

This is why many operators feel the need to create loyalty teams that provide in-house, tailor-made solutions.

While this approach is popular, it is incredibly costly and time-consuming. They may also be restrictive for the company, as critical parts of sales and marketing operations are delegated internally, separate departments are created, and the volume of bureaucracy increases. This complicates internal processes, may infringe on security, and requires additional adherence protection.

Outsourcing Retention

Fortunately, there are third-party contractors that can provide out-of-the-box solutions that are suitable to any industry.

The key is modularity. A loyalty management package is comprised of several interlocking elements that can be altered in order to fit a client’s requirements. Of course, creating such a product requires a lot of market experience.

Companies proficient in loyalty programs often boast about know-how from many different market branches, which lets them offer out-of-the-box thinking or outside solutions that can provide a competitive edge when striving for customer retention.

When employing an outside solution for loyalty management,a company may take full advantage of several benefits. Most importantly, working with an experienced partner means that all legal requirements are secured by the provider of the system, which is also true for all IT and communication security issues.

Furthermore, all data are protected and data handling may also be delegated outside. This alleviates the need for complicated security procedures and further lowers the costs and stress on internal structure and procedures.

Reliability is also an important consideration. Rather than building self-made solutions from the ground up, it is much more reasonable to rely on proven products that integrate through API and can work in synergy with the current company set-up. There is much to be said for convenience, cost effectiveness, security and the ability to integrate programs rapidly.

There is simply no need to make loyalty program management more complicated than it already is. It is better to fall back on the experience and help of third parties to avoid potential problems connected with the implementation and upkeep of customer retention.