For most companies, acquiring new customers is paramount for sustained business growth and revenue. Increasingly, however, companies are realizing that engaging with existing customers and consequently, retaining them, is as, if not more, important. The reasons for this are manifold:
- It costs 7x more to acquire new customers compared to retaining an existing one
- Converting 5% more of one-time customers into repeat business increases profitability by up to 75%
- Repeat Customers have a 10x higher LTV as compared to one-time customers
That companies have woken up to this reality is reflected by the fact that 63% of global B2C marketing decision-makers are increasing their spending on relationship/loyalty marketing in 2024.
In order to successfully execute a seamless & holistic customer engagement & retention strategy, setting up the right loyalty program is paramount. Consequently, the choice of loyalty program software becomes all-important!
Here, then, are some tips for companies who are looking for that perfect loyalty program software!
How to Choose the Right Loyalty Software
1. Understanding the Unique Customer & Business Needs:
As with everything related to marketing, the first and most important step is to look inward! Some questions, therefore, that need to be asked:
- What is important to a particular company?
- What are the specific objectives and measurable goals that a business is looking to achieve?
- What specific business nuances must one keep in mind while choosing the loyalty program software?
- What is it that the customers want? What are their current behaviors and journeys like?
- How does the competitive landscape look – is the loyalty program software going to achieve competitive parity, or will that help in differentiation; is there a way to achieve both?
You’d think that the best loyalty program software should be able to address these questions, right? I’d beg to differ, however! The best loyalty program software should be able to ask these questions, cajole the answers out of key stakeholders in a company, drive first or third-party research for validation, understand customer journeys and behaviors, and then use all this information & data sciences to setup the right program structure & design.
Research indicates that the #1 reason for loyalty programs failing is because the program was not designed in accordance with the business in the first place! It therefore makes sense for marketers around the world to have this as the first consideration – ensure that the loyalty program software is capable of designing the optimized program for their business.
2. Credibility & Experience
It always helps if the loyalty program software has “been there, done that”. Companies should choose loyalty program software that has achieved demonstrable and measurable success with similar companies and use cases, both in size & scope. The key factors to look out for here are:
a. Experience in a Similar Industry Vertical
Each industry has its unique nuances, and sometimes, these are lost to the outside world. If a loyalty program software has worked with 5 other automotive companies, chances are that the platform knows (more than) a thing or two about that industry, correct?
b. Handled Similar Use Cases
Unrelated to the above point is familiarity with specific use cases. For example, receipt scanning has been in vogue now for a while, but this use case could be applicable across multiple industries. A loyalty program software that has previous experience and success with receipt scanning would be in a much better position to define associated customer journeys, ROI tracking, adoption, fraud prevention et al.
c. Have Experience in the Same Geography
If you’re in Europe, GDPR is the guiding light and you’re likely to need more than one language in the loyalty program. Wait, you’re in the USA? I bet CCPA is more important, and you’re probably going to need to do less customer education! Now imagine that the loyalty program software has experience of driving all of this in the past! Enough said 🙂
d. Worked With Companies of a Similar Size & Scale
This is often overlooked but is equally important. Large, global companies have their unique ways of working – typically with complex internal ecosystems, departments, approval processes, technical infrastructure & data flows – and they need to be handled differently from an SMB. Also, scalability requirements are way more important. The loyalty program software needs to be cognizant of this.
3. Relevant Features
Yes, of course, features are important! – but even more importantly, businesses need to ensure that the loyalty program software under consideration has all the necessary features that are relevant to their specific use case(s). Therefore, a loyalty program software that does a membership program very well may not be the best fit if you’re looking for a points program.
In addition to the here & now, a company should also evaluate the features of the software through the prism of future requirements. Every company should have, at the least, an idea or a vision of their loyalty program for the next 2-3 years, and the software must have the inherent flexibility and ability to cater to that vision.
4. Support, Service & Ongoing Strategic Consultation:
You’d expect a loyalty program SaaS software to provide certain levels of support, wouldn’t you? But in this day and age, with consumer behaviors & preferences changing all the time, coupled with external factors (read: the cookieless world of the future, for example), a company should carefully evaluate the type of support and service that a loyalty program software provides – for example, is there a dedicated person and/or team that truly understands the relevant use cases, requirements, and industry? And if yes, what sort of communication & operational mechanism, cadence, and SLAs would be applicable? If the answers to these two questions are inadequate, think again!
Arguably, the more important question to be asked is – how would the loyalty program software vendor ensure that the program achieves what it had set out to in the first place? This is what I would coin as “Strategic Consultation” – essentially, going above & beyond the support/service to make the program truly successful. A loyalty program software worth its salt should be able to act as an extension of the company marketing team as a strategic partner – manage the evolution of the program, imbibe industry best practices, make recommendations, help with customer segmentation & personalization, optimize the program, et al.
Zinrelo, for example, provides ongoing strategic consultation, helping brands like Western Digital continually optimize their loyalty programs to align with evolving business goals and market trends.
5. Technology – Security & Performance:
This really is one of the “check-boxes” (albeit, a very important one!) that has to be ticked. Compliance with relevant security, data privacy, and regulatory standards is a no-brainer; but companies should also ensure that the software has a proven track record in terms of overall performance – availability, periodic security/vulnerability assessments, strong data & information security practices, and an inherently robust architectural framework.
6. Price & Cost Models:
The pricing structures of loyalty program software vendors differ quite a bit; each with its own pros & cons. Here are a few things that companies should carefully consider:
a. Transparency
As mentioned above, the pricing models may vary, but it’s important that those models are transparent. The last thing you’d want is to ask for additional funds from your CFO a few months into signing a new contract with your software vendor! Predictability in future pricing, as well as transparency in annual price increases, is something that few loyalty program software vendors provide; but ironically, that is an important consideration for companies!
b. Scalability
The pricing model should be scalable enough to cater to future volumes and planned growth; and ideally, offer economies of scale as well.
c. “Reasonable” Discounting:
This seems to be a tad counterintuitive, right? But I’m sure most companies have come across that one vendor with those “crazy” discounts – and that should raise a few eyebrows. If a loyalty program software offers a 70% discount, it could mean one of two things – their pricing was inflated in the first place (and therefore, not transparent enough), or their only value proposition is a low price (which is not a good look on their ability to address the other pointers in this document!) – both of which should raise a few alarm bells!
7. How Do They Make You “Feel”?
Last but certainly not the least, are the so-called intangibles! You would not take the decision to sign up with a loyalty program software lightly. You would likely engage in several conversations – so a “good fit” and “the right vendor” oftentimes boils down to how you feel about that software provider. But let’s try and make it a tad more objective, shall we?
- Are they asking the right questions? Did they ask about your objectives and success criteria?
- Do they care about your success, or are more concerned about getting that agreement sent over for signature?
- Are they willing to put some skin in the game? Were their cross-functional teams and senior stakeholders readily available during the sales cycle?
- Are they willing/happy to offer a free, no-holds-barred trial?
If you have satisfactory answers to the above questions, then something good is afoot!!
Conclusion
Choosing a loyalty program software is the first and the most important step toward realizing your customer engagement & retention goals. It’s not just about the features, but also about understanding your unique needs, evaluating the provider’s experience, and ensuring robust support and strategic consultation. Remember, the right loyalty program software can significantly enhance customer loyalty and drive sustained business growth. Take the time to choose wisely and set your company on the path to success.If you follow the steps and criteria outlined above, you’ll likely have made the right decision!
