If loyalty isn’t a core competency, your loyalty program won’t move the needle

Having a loyalty program is a great way to create value for engaged customers while increasing margins and reducing customer acquisition costs for the business — but only if it is planned and executed as part of a larger loyalty management strategy.

The incorporation of loyalty technology into products is a common practice among businesses, but it can sometimes result in frustration among developers, product managers, and marketers.

The key to a successful loyalty investment is having the flexibility to adapt to your customer behavior. Whatever your business’s core competency is, building a loyalty scheme as an add-on functionality risks poor performance — and a low return on investment. 

The following insights enable you to create a future-proof loyalty program that performs well as a value-sharing tool between you and your customers.  

A loyalty program is NOT a nice-to-have promotional device or a short-term fad. It’s an effective tool to bring in and nurture members that will become a company’s most profitable customers in the long run. That is why 69% of brand executives say they’ve increased loyalty investment over the past few years.

The increase in loyalty investment makes total sense in the context of an inflationary environment where businesses offer more loyalty perks to help their customers fight climbing prices. 72% of American respondents to a survey say they cushion the inflation effect by shopping from companies that have a loyalty program.

So, the current loyalty landscape is marked by:

The story of building a loyalty program usually starts with one use-case or a set of ideas. You detect a trend or a problem in your business (for example, climbing customer acquisition cost) and you decide to solve it using a loyalty program. You want a set of functions and nothing more.

Through testing — and interaction with real users, however, you end up having a loyalty program that is nothing like the initial idea you had in mind. That’s not the end of the story though. 

Integrating a flexible promotion tool like Talon.One into your system enables you to update your loyalty program by tweaking a few rules. However, when everything is hardcoded in a bespoke loyalty function, then every single update means months of back-and-forth, mission-creep, and budget overruns.

To top that off, developing a loyalty program isn’t only about having the technological capability. Dev teams can build a loyalty scheme based on the guidelines of the business teams of a company. However, since loyalty isn’t their core functionality, it nearly always ends up not meeting the needs of the team as they evolve — and rarely generates the returns they were expecting.

Designing an effective loyalty program requires the tech ability as well as the promotion knowledge to create a fine balance between various features including:

Executing a cutting-edge loyalty program requires not only the knowledge of combining all these elements but also the agility as well as the resources to respond to many inevitable updates once the program is live. 

While integrating a third-party solution always has some complexity trade-off, working with a reliable loyalty partner gives you:

Many businesses invest the majority of their resources on customer acquisition, paying little or no attention to activation and retention. Integrating a loyalty program into your tech stack brings you loads of zero-party data. However, companies often fail to leverage the same data to enrich their activation and retention campaigns.

The resulting data silos threaten the effectiveness of your loyalty program in the long run, leaving customers feeling left out and frustrated and minimizing your customer lifetime value (CLV).

Treating your loyalty program as a business’ core competency helps you break down these silos because it’s able to incentivize customer activities at different stages of their journey. A well-designed loyalty scheme is able to connect all the pillars of customer journey, creating a bridge between acquisition, activation and retention.

Reacting to customer actions in real-time is a must-have for a successful loyalty program. Building your loyalty scheme outside your core competency may result in latency in your response to customer activities. The longer the latency, the higher the possibility of customer inconvenience.

On top of that, when your loyal customers see the effect of their actions in no time, they’re less likely to create traffic on your customer support team. This was one of the reasons the mobility company SHARE NOW worked with Talon.One to build their loyalty program.

A flexible loyalty program is a key functionality when companies decide to select best-of-breed microservices to develop their composable toolkit. Once integrated into your tech stack, your loyalty scheme works in sync with other services in your stack, including payment apps, partners, online shops, physical stores, social media, etc.

Adding a best-of-breed loyalty program to your ecosystem gives your tech team the freedom to focus on optimizing your core competency while giving you the confidence and assurances that your loyalty scheme delivers best results in no time.