Congratulations! You’ve likely come across this page, because you have decided to implement or relaunch your customer loyalty program and are searching for the right loyalty program software.

A very wise decision! A customer loyalty program fueled by the right tech stack can become your key strategic initiative to deeply understand and profitably drive customer behavior and retention.

Loyalty Program Software Buyer's Guide

Let’s look at what leading business magazines and advisory firms have to say in this context:

  • According to Harvard Business Review it costs 5 times more to acquire a new customer than to keep an existing one.
  • According to Forbes
    • Loyalty leaders grow revenues roughly 2.5x as fast as other companies in their industries.
    • 87% of consumers are open to brands monitoring details of their activity if it leads to more personalized rewards.
    • 75% of consumers say they are likely to make another purchase after receiving an incentive.
  • According to a study done by KMPG, 76% of consumers surveyed, confirm they increase their spend when being part of a company’s loyalty program.

In a nutshell: Businesses that focus on driving customer loyalty via a dedicated customer loyalty program based on data will have an extremely effective revenue and profit lever at hand.

BUT: to reap all the benefits that a well-designed and consistently maintained loyalty program can give you, it’s essential that you choose the best loyalty program software to fuel it.

Consider This Analogy:

If you are planning to climb up a steep, challenging mountain trail you wouldn’t hike wearing flipflops and a handbag. You’d equip yourself with high-quality, functional hiking gear like proper boots, clothes, a backpack, and maybe even a GPS to get you to the top in one piece.

It is the same with your loyalty program journey! You need an effective gear-set to bring you to that mountain top with success. From a technical perspective, this gear-set boils down to one main point: your customer loyalty program software.

Without wanting to sound too daunting, the choice for your loyalty technology indeed has the power to make or break your loyalty program success. Which means: it is very wise to invest sufficient time and research into your decision for a loyalty program software best suited to your needs!

As we know how difficult of a task this can be, we have compiled a comprehensive 8 Step Loyalty Software Buyer’s Guide for you.

The 8 Steps You Need to Identify Your Ideal Loyalty Program Software

Deciding on the best loyalty software depends on your individual business needs, industry, customers, and what you’d like to accomplish with your loyalty program.

The key factor here: it has to make sense for YOU and YOUR customers. This is why you typically take the following 8 steps to arrive at a well-informed decision:  

Step #1: Set Your Loyalty Program Goals

Every end destination involves a particular journey to get there and building a successful customer loyalty program is no exception.

To know what you require for a successful journey, start off by defining what “success” means in your customer loyalty project: Which goals do you want to accomplish?

Based on this, you can identify the loyalty program design, tools and features you need to drive these goals, in order to then define what you need to look out for in a loyalty software.

Do you need help in defining your customer loyalty program goals?

No matter which angle you approach it from, clear goals heavily influence the success of customer loyalty programs. While the typical goals can vary depending on industry and company type, it is a general best practice to start off with just a small, clearly prioritized goal-set and expand on this after a couple of months.

So if you have a small number of clearly defined objectives ready – that’s great! In case you need more help, here are a few more resources related to setting loyalty program goals:

Customer loyalty is no different from any type of loyalty – no matter whether it’s with your family, friends, or partner. People stick around because they find something unique within us that is valuable for them.

When it comes to your business, customers become “loyal” when they have a reason to choose you over your competition, and a loyalty program can greatly add to this reason: customers will not only receive your great products and services but also the additional program benefits and rewards.

Loyalty Program Software

By the way: in the best-case scenario, the loyalty program is so attractive that it doesn’t only give your existing customers a reason to stay but can even help you with new customer acquisition.

Put yourself in the shoes of your potential buyer: if you had various comparable choices in front of you but one company offered you the additional advantage of a customer loyalty program, which one would choose? A loyalty program with great benefits and rewards could in this case become the decisive factor for why you are chosen over your competition even by new customers.

And of course, there is the highly valuable word-of-mouth effect: if customers feel truly valued and rewarded, this can greatly increase your customer satisfaction levels and referral rates – the most effective and efficient type of advertising in existence.

So overall, the foundation for your loyalty program should be to set yourself apart from the competition in a manner that is of value to customers, which then inherently motivates them to behave in a way that grows your business.

What does that mean for your loyalty program software needs?  

To say it simply, the best loyalty software:

  • … gives you access to a rich bouquet of features that deliver value to your program members, such as benefits, rewards, tier levels, surprise & delight elements, virtual currencies, personalized communication and more.
  • … allows the configuration of these incentive mechanisms to perfectly suit your individual business and customer needs.

Due to recent data privacy regulations (especially GDPR in Europe), obtaining and being allowed to use customer data has become more difficult.  

This is the precise reason why so many companies have implemented loyalty programs: you can use it as an effective incentive to motivate customers to opt-in and – yes – to literally hand over their data on a silver platter.  

With a well-designed customer loyalty program, your members become accomplices in building a 360° view of their behavior: they happily identify themselves at all the relevant touchpoints in the customer journey and at each sales channel as only then will they receive the program’s rewards and benefits attached to their behavior.

Once you have this data, you become equipped with the knowledge you need to create highly effective methods of direct marketing.

And of course, you can use the data to optimize your business across all levels: from product to category & innovation management, to pricing strategies, as well as customer service improvements.

So again, what does that mean for your loyalty software selection criteria?

The best loyalty software:

  • … gives you access to an effective set of incentives to motivate member opt-ins into data collection and usage.
  • … allows easy (and GDPR/data privacy law compliant) opt-in management.
  • … enables you to track and incentivize all desired customer behavior – both transactional (i.e. purchases, bookings etc.) as well as non-transactional (such as leaving a product review, taking part in surveys, sharing additional profile information, subscribing to a newsletter, downloading your app, social media engagement or customer referrals).
  • … allows you to use the data for effective data-driven promotions and campaigns as well as in data analysis to deeply understand your customers’ behavior and use this knowledge to optimize your entire business.

Another typical goal of your loyalty program is to establish direct communication channels with your customers – via email, personalized online and mobile experiences, text messages (or WhatsApp), mobile push notifications, even direct mail. 

The basic idea is to continually stay on top of your customers’ minds – and ideally close to their hearts (emotional loyalty) with relevant and personalized communication and content, so that when the next purchase decision is around the corner, they will remember and choose you.  

You also want to use your communication channels to communicate data-driven promotions and campaigns, which we will talk more about in the next typical loyalty program goal.

And finally, you need to make the communication a two-way street, meaning you will also want to listen to your customers to get insight on what you need to improve, where you can innovate etc.

So again – which features do you need to look out for in a loyalty software based on this goal?  

  • As mentioned above, the loyalty software needs to give you access to an effective bouquet of loyalty incentive mechanisms. These need to be so irresistible and relevant to your customers that they happily share their contact information and their opt-ins in return for being able to take part in your loyalty program.
  • The best loyalty program software also enables easy opt-in and membership account management, and gives you access to 360° customer data, as the basis for effective, personalized communication.
  • And finally, the best loyalty software also enables multi-channel communication, by seamlessly integrating with your existing communication channels (such as web, app, email) and/ or new channels you create specifically for your loyalty program.

Your business functions based on your customers, so the behavior you seek from customers should align and compound both with what grows your business and what your particular customers find the most valuable.  

Another goal of establishing a loyalty program is to have access to an efficient and effective tool to drive customer behavior along all desired dimensions – while also avoiding wasteful marketing tactics such as price wars via discounts and mass advertising. 

One of the typical customer behavior dimensions you want to foster is transactional: For example, you would like your customers to spend more, meaning spend more on certain product categories and shop more frequently. 

Other relevant dimensions are the social and emotional ones: you want your customers to become happy, active brand ambassadors – be it via direct referrals or indirectly via positive brand engagement on social media and sharing product reviews. 

Again, this goal directly translates into specific loyalty software features that you need to include in your set of selection criteria, including:

  • The best loyalty software needs to be able to track and incentivize all the customer behavior types you would like to foster (transactional and non-transactional).
  • The best loyalty software gives you access to a rich set of data-driven incentive mechanisms to drive the desired behavior, including for example virtual currencies (points-based loyalty program), tiers, benefits, rewards, promotions and campaigns, gamification, as well as surprise & delight elements.
  • The best loyalty software allows you to configure these incentive mechanisms to your needs so that you can use them as effective AND efficient tools to drive your business goals.

The above-mentioned goals of course all pay onto the overall goal of driving your company growth, revenue, and profits.

You do this by fostering various sub-KPIs such as:

  • Increasing customer satisfaction
  • Reducing customer churn rates and increasing retention rates
  • Increasing repurchase rates
  • Increasing customer lifetime value
  • Increasing basket sizes
  • Increasing purchase frequency
  • Cross selling
  • Upselling
  • Increasing marketing efficiency
  • Increasing profit margins
  • Saving costs
  • Aiding customer acquisition

Again, you will require certain loyalty software features to drive these financial goals, such as:

All the features listed under the other goals:

  • the ability to track, analyze and incentivize the relevant customer behavior in a targeted manner.
  • the rich bouquet of data-driven incentive mechanisms.
  • the powering of all relevant communication channels.

All of the program tools and tactics should be based on data, which must be enabled by your loyalty software.

Let’s look at 2 simple examples:

  • The value of the benefits and rewards provided to your members should increase with customer value to ensure a positive ROI. With a data-driven loyalty software you will know which customer segments are most valuable to your business and can therefore qualify for higher value incentives.
  • In your promotions you should focus on incentivizing incremental behavior (i.e. a positive behavior change) instead of giving out high-cost rewards for a behavior that would have happened even without the promotion. Again, this can easily be done with a data-driven promotion engine, which your loyalty software should provide you with.

Finally, your loyalty program should not only focus on revenue, but also the comprehensive value that it sustainably provides to your business. You can do this by: 

  • …. defining goals around customer satisfaction, (e.g. measured via the Net Promoter Score) which will not only foster customer loyalty but also drive the most efficient and sustainable form of marketing you can wish for: word of mouth!  
  • … actively motivating your customers to co-create your brand (e.g. via social media, referral mechanisms, product reviews and inviting them to surveys and focus groups to gain insight for business optimization and innovation potential).  
  • … allowing your loyalty program to inspire a company-wide transformation towards data-driven customer-centricity. 

For more information about business sustainability and loyalty programs, we have written an in-depth whitepaper for you, that you can download here!

Which loyalty software features do you need to accomplish the above?

By now you are familiar with most of them, but here is another summary:

  • The best customer loyalty solutions offer a broad range of rewarding mechanisms that deliver real value to your customers and improve customer satisfaction. The goal is to make your customers feel cared for, valued and special. Their loyalty matters to you and you should clearly demonstrate this appreciation towards them at all times.
  • The best customer loyalty solutions enable you to carry out personalized communication to foster emotional bonding to your brand.
  • The best loyalty software integrates seamlessly with all of your customer communication channels to deliver a great customer experience.
  • The best loyalty software offers a great customer service functionality to ensure you foster customer satisfaction also over this communication channel.
  • The best loyalty software allows you to incentivize and drive non-transactional behavior which improves the sustainability of your business (including word-of-mouth advertising and brand co-creation with your customers).
  • The best loyalty software delivers a great reporting functionality so that all team members are trained in a data-driven view on marketing and customer-centric business optimization.

Step #2: Select Your Loyalty Program Design

Once you’ve outlined your goals, you can now begin to consider what type of loyalty program makes the most sense for you. The best loyalty software empowers you to design the exact loyalty program that drives the goals you have set for yourself.  

A few of the typical and most effective loyalty program types are: 

Perks/ Privilege Loyalty Program 

Points-Based Loyalty Program 

Tier-Based Loyalty Program

Surprise & Delight Loyalty Program

Gamified Loyalty Program 

Referral Program 

Paid/ Subscription-Based Loyalty Program

Coalition/ Multipartner Loyalty Program

Cash-Back Loyalty Program

Combination/ Hybrid Loyalty Program 

These are just a few options of out endless possibilities, especially because you can combine elements of different programs and customize them. 

Need Help with Designing a Powerful Loyalty Program?

Contact Our Loyalty Experts Today!

    Step #3: Outline the Features You Need to Implement Your Loyalty Program Design

    As a next step you can outline all the loyalty software features you need to set up your desired loyalty program design.

    Remember that the best loyalty software should ideally:  

    •  … Offer your desired loyalty program features out of the box. 
    •  … Allow you to easily configure them to your personal needs. 
    •  … Allow you to mix and match all the desired loyalty program types and features as you desire. 
    •  …. Offer you complete flexibility to change configurations and add/ remove features as desired.

    There are big differences between both the features and the flexibility offered by the various loyalty software available. We highly recommend a loyalty software that not only caters to your requirements now, but also allows you to expand on your loyalty program design and features in future.

    You can read more about the highly important loyalty software selection criteria of “future fitness” here.

    To best assist you in compiling your list of desired features, we have prepared the following:

    • The list of loyalty software features you should always look out for no matter which program type(s) you choose.
    • The most effective loyalty program types alongside some specific features to check for.

    1. Loyalty Program Set-up

    • Enables a quick-time-to market with a fast and worriless set-up of your desired loyalty program.
    • This includes easy configuration of all loyalty program features to suit your individual business needs.
    • Also includes the set-up of all data structures to reflect your specific data structure needs.
    • If you would like to read more details on this, click here.

    2. Loyalty Business & Reward Rule Configuration

    3. Loyalty Reward Types

    4. Loyalty Marketing & Promotion Engine

    • Offers a sophisticated, data-driven promotion engine to carry out targeted promotion.
    • The promotion engine should have sophisticated customer segmentation & targeting capabilities.
    • The marketing engine should also enable event-triggered loyalty communication.
    • If you would like to read more details on this, click here.

    5. Customer Behavior Tracking & Incentivizing 

    6. Loyalty Member Account Management  

    • Enables easy enrollment of members.
    • Enables audit-proof management of the members’ points/ benefits accounts.
    • Enables audit-proof management of member opt-ins.
    • High scalability of software to suit your member growth.
    • If desired: Offers a member “householding” functionality.
    • If you would like to read more details on this, click here.

    7. Customer Service Functionality 

    • Offers a comprehensive member dashboard to see specific loyalty data such as points balance statement, points expiry dates, status level, eligibility for benefits etc.
    • Allows the customer service team to perform manual actions, such as points transfer or account merge or manage card-related issues.
    • If you would like to read more details on this, click here.

    8. Reporting & Data Analysis Functionality 

    9. Accounting Functionality:

    • Powers audit-proof documentation of points/ benefit liabilities for accounting.
    • Includes cross-partner/ cross-departmental settlement in a coalition/ more complex loyalty program.

    10. Loyalty Software Integrations

    The best loyalty software allows easy integration e.g. via OpenAPIs with:

    11. Loyalty Software User Interface 

    12. Loyalty Software Rights & Roles Management

    13. Loyalty Software based on Enterprise-Grade Technology, which offers

    Basic Mechanism: All loyalty program members receive access to a certain package of perks/ privileges (such as free Wi-Fi Access, birthday surprises etc.)

    Features required:

    • Features listed in the general feature list above.
    • And: Assigning, processing and managing the privilege accounts of members

    Basic Mechanism: Members collect a virtual currency (such as points, miles) for designated customer behavior and can redeem these for rewards.

    Features required:

    • Features listed in the general feature list above.
    • And:
      • Virtual Currency Rule Configuration: Easy configuration of all desired virtual currency-, earn-, and redemption rules
      • Points Engine: Ability to process, calculate and manage points earn and burn (redemption) processes in real-time according to your rule-set
      • Member Account Management: Assigning, processing and managing the points accounts of members
      • Redemption Management: Allow your members to redeem points in real-time for a rich set of reward types including vouchers, coupons, cash-back, physical rewards, digital rewards, pay-with-points, donations.

    Basic Mechanism: Members can reach a certain status level based on their behavior and receive a growing amount/ value of benefits the higher their tier.

    Features required:

    • Features listed in the general feature list above.
    • And:
      • Tier Level Configuration: Easy set-up of your desired tier level structure including upgrade and retention rules and assigning of benefits to the respective tier levels.
      • Member Account Management: Reliable management of the tier benefit accounts of members according to your rule-sets.

    Basic Mechanism: Members receive a surprise reward or benefit once a they reach an internally predefined but externally undisclosed interaction level with your company.

    Features required: 

    • Features listed in the general feature list above.
    • And:
      • Surprise & Delight Rule Set Configuration: Easy set-up and configurability of your desired surprise & delight rule sets
      • Member Account Management: Reliable management of the surprises according to your rule-sets.

    Basic Mechanism: Members can earn digital badges for their behavior (e.g. “Brand Lover” of the month for the member with the most social media engagement) and receive benefits/ rewards with these badges.

    Features required: 

    • Features listed in the general feature list above.
    • And:
      • Gamification Rule Set Configuration: Easy set-up and configurability of your digital badge rule sets including attached rewards/ benefits, validity etc.
      • Account Management: Reliable management of the badges and benefits for your members according to your rule-sets.

    Basic Mechanism: Members can earn benefits or rewards for referring new members or new customers.

    Features required:

    • Features listed in the general feature list above.
    • And:
      • Referral Rule Set Configuration: Easy set-up and configurability of your desired rules for the referral program. Some Examples:
        Option 1: If a member A refers a member B, member A receives reward X
        Option 2: If a member A refers a member B, member B receives reward X
        Option 3: If a member A refers a member B AND member B makes the first purchase, member A receives reward X and member B reward Y
      • Member Account Management: Reliable management of the benefits for your members according to your rule-sets.

    Basic Mechanism: Customers pay a fee to take part in your loyalty program or members pay a fee to gain access to a premium level of your loyalty program. In return for their fee they receive access to a great set of benefits.

    Features required:

    • Features listed in the general feature list above.
    • And:
      • Setting up of the subscription rules including benefits
      • Reliable management of member access to the premium loyalty program benefits based on their payment.

    Basic Mechanism: Members can not only earn and use benefits with you but also with partners you invite to take part in your loyalty program.

    Features required:

    • Features listed in the general feature list above.
    • And:
      • Setting up of partner-individual data structures if desired
      • Settling of points/ reward liabilities across your partner network
      • Setting up of partner-specific earn & redemption rules
      • Partner-individual reports
      • Partner-individual loyalty software access

    Basic Mechanism: Members can link one or more payment methods (e.g. credit cards) to their loyalty profile, and upon use of that payment method at a qualifying merchant (store), they will earn points/ benefits at the advertised earn rate.

    Features required:

    • Features listed in the general feature list above.
    • And: A loyalty software that is integrated with the Payment Card Networks and enables:
      • Payment card registration with the member profile
      • PCI compliant card verification, token-based secure identification
      • Connection with and storage of participating merchants
      • Assignment of earn rates at a merchant, brand or category level
      • Processing qualifying transactions real-time through PCNs

    Basic Mechanism: Members receive a direct cash-back as a reward for their purchases.

    Features required:

    • Features listed in the general feature list above.
    • And: Calculation, processing and management of the cash-back rewarding

    Basic Mechanism: To make your program exciting for members we recommend combining loyalty program types – for example you can introduce a points based loyalty program with tiers including a premium tier which members can have access to by paying a subscription fee.

    Features required:

    • Features listed above.
    • And: A loyalty software that is highly flexible in combining & configuring loyalty program types and features to your individual business needs.

    Want to See Prime Cloud’s Loyalty Software Features in Action?

    Book Your Personal Demo Today! 

      Step #4: Estimate Your Program Size

      Now that you have made your list of desired loyalty software features, you need to get clear about your planned program size.

      If your loyalty program will be fairly small in member size, a simpler loyalty software might suffice, but as you program grows, you need a loyalty software that scales with it. The importance of this cannot be overstated: imagine having implemented a loyalty software that isn’t made for a high volume of members and data flows, leading to long response-times or even software crashes. Your loyalty program is bound to fail.

      Your best choice is a loyalty software that allows you to start small with a smaller price tag and scale to an unlimited size based on your individual needs!

      Do You Need Help in Estimating Your Loyalty Program Size?   

      Your program size is based on the number of members in your program now (or how many you would like to join from the beginning), as well as what your target is for the future.

      A well-known loyalty program rule of thumb for this is: “Enroll broadly, reward smartly.”

      • Enroll broadly: Only when you have won your customers as loyalty program members, can you put all of the great loyalty program tools and tactics to work for them and also richly feed your program’s gold mine, namely the customer behavior data base. This is why it usually pays off to have as many members as possible enrolled in your loyalty program.
      • Reward smartly: Your loyalty program needs to yield financial results of course, which is why the concept of “the more the merrier” only applies to the member count, but not the rewards. Your rewarding and incentive strategy needs to be set in way that delivers an ROI. This means that you want to reward and foster the behavior you seek in a smart, data-driven way!

      Step #5: Evaluate Your Budget

      As a fifth step, you need to get an idea about your available budget. The best loyalty program software you choose needs to match this budget and most importantly deliver value that is worth the cost.

      Determining your budget for the cost of a loyalty program considers a few key factors:

      • Expected number of members
      • Types of features within your loyalty program
      • How much you give to customers as incentives
      • How much you spend on your program marketing and member communication
      • Personnel required to implement and manage the program on a regular basis

      While we can’t estimate your own personnel and marketing costs upfront, we can provide a clear picture of how much a loyalty program software costs with our pricing calculator to help you get started: 

      Learn the Details of Loyalty Prime’s Software Pricing

      Step #6: Make a List of Selection Criteria

      Now it is time to condense all the information gathered in the steps above into a nicely structured list of selection criteria, which will help you narrow down which loyalty program software provider best fulfills your needs! 

      The List of Selection Criteria to Choose the Best Loyalty Software for Your Business Should Contain:

      • Required loyalty software features and functionalities: everything you need to enable your desired loyalty program design and your loyalty program goals.
      • Related characteristics of the loyalty software: technology related aspects such as performance, reliability, scalability, configurability, security as well as a great usability/UI.
      • Characteristics of the loyalty software provider: all qualities that are of importance to you, such as the vibe you get from the provider’s team and their geographical availability.
      • Budget & quality match: the check whether the loyalty software aligns with all your needs regarding your program size, complexity, and budget.

      Step #7: Investigate Suitable Loyalty Software Providers

      Equipped with your list of selection criteria you can now investigate which customer loyalty platform provider delivers best on this. 

      We recommend to always book a product demo so you can analyze the different features that the loyalty software provides, fully compare the selection criteria, as well as get a feel for each provider’s customer service processes. The best loyalty software should meet your needs and expectations both through the product itself, as well as the people you’ll work with! 

      If you’d like to get an overview of how Loyalty Prime works, you can book a free demo below:

      Is Loyalty Prime the Perfect Loyalty Software Provider for You?

      Contact Our Loyalty Experts to Find Out!

        Step #8: Finalize Your Decision

        In the end, only you can decide who is the best customer loyalty platform and provider for your individual business.  

        In summary, the software you choose…

        • … should enable you to design and implement the exact program you and your customers need in the most efficient and sustainable manner.
        • … should support all the loyalty features that we help you drive your business forward.
        • … should support you with a quick time-to-market.
        • … should fit your budget.
        • … and should also support your future plans around your loyalty program (e.g. scalability for member growth and adding new loyalty features).

        Beyond this, trust your gut! You know what will be the most worthwhile for YOUR business and YOUR customers. 

        But Wait... There’s More!

        In order to make the decision process easier, we’ve compiled further in-depth information about how to choose the suitable loyalty software for stakeholders across your entire business. Click on the icons below to take a deeper look: 

        MARKETER’S GUIDE

        The Top Questions Marketers Need to Ask to Identify the Best Loyalty Program Platform.

        marketer-176x176

        IT, SECURITY & LEGAL GUIDE

        The Top Questions IT, Security and Legal Need to Ask to Identify the Best Loyalty Program Platform.

        Loyalty Program System Requirements IT

        FINANCE & ACCOUNTING GUIDE

        The Top Questions  Finance & Accounting Need to Ask to Identify the Best Loyalty Program Platform.

        finance-people