A loyalty program is a system of rewards, both tangible and intangible, aimed at transforming random customers into regular ones. Regulars go shopping more frequently to purchase more expensive products. This is the essence of how loyalty programs bring value to businesses.
There are many types of loyalty programs created by different brands from various sectors. Software solutions that orchestrate loyalty management have become a norm these days. They offer numerous features, both general and individual, to boost purchases. Custom loyalty software provides the lenses through which one or another company sees the behavior of loyal customers.
There is no one-fits-all solution able to satisfy the marketing needs of every brand. However, the variety of use cases available on the loyalty software market enables us to find out some key capabilities of loyalty software solutions applicable to any business. We will consider successful examples of loyalty management systems from famous brands to save your time when deciding what must-have features are worth having in your tailor-made loyalty solution and why.
How customer loyalty program works
A customer loyalty program is synonymous with bonus cards for many people. However, discounts represent only the tip of the iceberg. The main objective of customer loyalty solutions is to build long-term relations with clients. Heartfelt consideration enabled by individual approaches can encourage clients to stay with you for a long while.
A properly created customer loyalty program enhances many important metrics such as customer lifetime value (LTV) and net promoter score (NPS). In other words, it can nurture the brand advocates who themselves bring new customers to a brand.
Any loyalty program is about business and marketing, after all. And like anything in commerce, this is about profit. The following profit-generating capabilities reveal how the very mechanism of action of successful loyalty solutions works:
- Recurrent purchases. Loyalty programs provide customers with various stimuli to buy from you more frequently. The famous 20/80 rule (Pareto principle) is here to help: 20% of your active customers represent 80% of total sales. Just loyal customers tend to spend more money for a favorite brand over a longer time frame.
- New referrals. A loyalty program is a perfect tool for rewarding regulars who bring new buyers to a brand. One of the marketing studies from McKinsey shows that referrals yield twice as many sales as paid advertisement does.
- Positive feedback. Enthusiastic reviews of loyal customers represent an effective vehicle to reach new audiences. About 80% of customers trust online feedback of other customers more than whatever brands can tell about their products themselves.
It is not enough to have a loyalty program as such to compete successfully nowadays. Efficient means of loyalty management should be available in the system. The means imply some unique tactics that add value to your business. Hence, it is worth spending time and effort to consider what you need and can do to create an exciting program able to guide your customers over the whole lifecycle of your business. At the end of the day, the tactics should find expression in particular must-have features of your customer loyalty software.
Tentative steps towards loyalty management software
Before you provide software engineers with clear terms of reference, the following topics should be the subject of your brainstorming. By the way, loyalty software vendors with decent portfolios can never hurt to assist you.
- Analyze your current customers. Surveys, round-ups, polls, and interviews conducted with your target audience can reveal what expectations your customers have. Find out what your clients would like to get in reward. This is a crucial insight to realize whether your future loyalty program will work.
- Define your goals. What results do you expect from the program? The increase in sales, better brand recognition, boosting your site’s traffic, as well as any other specific goal, should stay before your eyes when the development of your loyalty program begins. For example, if the average purchase frequency of your customers is three times a year, your goal is to be 3.3 times that adds 10% turnover to your business.
- Choose your rewarding algorithm. Your reward system should bring value to your customers. At the same time, it should meet your customers’ expectations without overstressing the profitability of your business.
- Determine the type of your program. The type should reflect the primary purpose of your program. For example, if the goal is boosting your site’s traffic, giving points for signing up sounds reasonable.
- Set up your budget. Your loyalty program budget should be divided into two parts: one part is for your current customers, another one is for newcomers. It is unlikely both budgets are equal. Prioritize one of them according to the aspects mentioned above of your reward program.
- Provide impetus for joining the program. Rewards for joining your program should be as clear to grasp as easy to earn. An instant 10-dollar bonus for the first purchase or a 10% discount for the first visit to your e-store can reflect the approach. Such supportive steps can rapidly launch your loyalty program.
- Assess the results. After your program starts working, getting feedback from your customers allows you to understand how correctly their expectations have been predicted. Therefore, a new scheme with better results appears easier to create.
Customer loyalty software: How digital solutions facilitate loyalty programs
Whatever physical gift cards you can offer to customers, the capabilities of your loyalty program remain limited to a certain extent. Some mind-blowing reward initiative relevant to the current moment becomes futile if its implementation takes too long. Even the excessive budget of your loyalty program goes down the drain if there is no real-time tracking of your customers’ behavior.
These and other hurtful issues can never arise if your loyalty program runs under a corresponding software solution. What unique advantages can customer loyalty software provide?
- Let your customers go digital. Losing your gift card is no longer a problem for your customers if your loyalty program is accessible via smartphones and computers. Cardless loyalty management is what the present digital era requires you to have. Loyalty program software makes your rewards virtually omnipresent. Such convenience is hardly achievable beyond digital space.
- Make your program particularly flexible. Design your loyalty management according to the individual features of your business. Multiple reward structures and various conditions to earn rewards can have as many implementations as you need within a single loyalty software solution. Don’t limit your creativity by anything when it comes to your loyalty management.
- Collect data on customer behavior. A loyalty program that effectively encourages customers to buy from you, again and again, is possible to create only if you know exactly how they behave. Software algorithms of data aggregation provide you with valuable insights on what customers appreciate in your business most of all. Your customers’ data analyzed with loyalty management software allows you to see your business through the lenses of your clients. Focus on your pros and avoid cons.
- Automate your reward management. Hundreds and thousands of customers who take some actions under your loyalty program every minute require a degree of responsiveness going far beyond human capabilities. No delay in reward distribution is affordable at the same time. Only software solutions can cope with loyalty management automation in a 24/7 mode. AI-powered chatbots are here to help.
- Customize your loyalty program. The context of interactions between you and your customers can amend your reward algorithms rapidly. A particular business aspect you want to promote should correspond to some current behavior of your customers. Both variables are modifiable with numerous customization means inherent in rewards program software.
- Provide omnichannel accessibility. Your customers expect a seamless experience in interactions with your business. Your coupons sent by email can hardly represent the threshold of communicative opportunities in today’s world of digital channels. Make your loyalty program easily accessible through the means of communication most commonly used by your audience. Mobile apps, messengers, social media platforms, and even in-game environments all work well. But custom-made loyalty software can combine them all in one.
As we see, a software solution is not just a digital supplement for your rewards program. This is a universal toolkit capable of enhancing the very capacity of loyalty management. If we can accept it as a clear thesis, the only remaining thing is to select the must-have features worth having in customer loyalty software. Successful use cases from famous brands can give us a hint.
Essential features of loyalty management software
The following list of features is not exhaustive as such. We indicate only those whose positive effect is confirmed by successful brands in practice. Why not include them all into specifications for your custom-developed loyalty software?
Customer data collection
- What the feature is about: this is not about sensitive personal information, the collection of which makes your customers vulnerable to the violation of their privacy. Only two sorts of data should be collected. One of them implies some general info your customers would like to reveal by themselves when completing the sign-up procedure of your loyalty program: name (even nicknames can fit), age, gender, and job status at best. Another one belongs to your customers’ preferences that can be collected automatically via statistics on their purchase history within your business.
- How it works: the data helps make your clients emotionally attached to your business. Everybody loves surprises, right? PetSmart delivers small birthday gifts to the clients’ pets, for instance. An unexpected little something impresses much better than any discount known in advance does. Surprise your regulars all the time. This is how true brand advocates are brought up. The data-processing feature of your loyalty software is an invaluable aid in doing so.
Online community communication
- What the feature is about: some virtual environment within your customer loyalty platform should encourage your regulars to share their positive experience regarding your business. A strong community of your brand devotees can appear in a messenger-like chat room of your loyalty software. You can use AI-powered chatbots to catalyze continuous communication amongst your loyalty program participants.
- How it works: The closed club of like-minded customers from the world-famous cosmetics vendor Sephora shows the way how to turn a loyalty program into a perfect tool of community building. Besides, valuable consumer content such as customer expectations and product reviews can be collected by a brand almost effortlessly. The community communication feature creates an army of devoted followers whose shared experience helps a brand develop new products.
Subscription model option
- What the feature is about: this is what can merge any kind of business with digital in a broad sense. Subscription stimulates customers to switch from random purchases to regular consumption. Moreover, this fanciest business model makes any product evolve to meet the Product-as-Service paradigm. Your loyalty program software can offer your customers the easiest method of subscription that results in increased income for your business.
- How it works: Some global brands can supplement their subscription model with various sweet nothings to encourage their customers to participate in loyalty programs. Amazon Prime can afford to add free music, free books, free games, and free movies to the free delivery service accessible via subscription. But the only purpose of all those free by-products is the subscription business model able to overcompensate all the expenses. The subscription option available in a loyalty software solution can help any business follow the zeitgeist and boost sales.
Integration with partners
- What the feature is about: it implies involving your business partners into the orbit of your loyalty management. Collective efforts always bring better results. Your partners can barely refuse to earn more together with you. Consider how to interconnect the loyalty programs of your partners and your own one. API integration is here to help your customer loyalty software facilitate fruitful partnerships with related businesses.
- How it works: The Marriott Bonvoy loyalty program encourages customers to earn and spend points with numerous partnering airlines, restaurants, cruise ships, car rental services, payment card providers, etc. This multifaceted loyalty structure enables Marriott hotels to reach the global audience of travelers via friendly businesses. Such collaborative loyalty management leaves no potential customer untouched.
- What the feature is about: turning some aspects of your loyalty program into a game can catch new customers in quite an unanticipated way. This is about not just game-like elements inbuilt into your loyalty software. Some gamified scenarios implying certain offline contests can attract new audiences with amazement. Nothing prevents you from combining gamified features of your loyalty software solution with lifestyle-related accomplishments that resonate with your customers’ habits.
- How it works: you can reward your customers for something they do beyond buying products from your business. The VIPeak loyalty program from The North Face proposes that customers spend their time according to the active nature-friendly lifestyle propagated by the brand. They can earn points by checking in at national parks with a mobile application, bringing their own reusable bags while shopping in stores, and using the brand’s product for in-field testing. Similarly, your loyalty software can incentivize your customers to accomplish some gamified tasks that meet your brand philosophy.
How DICEUS can help you build great loyalty software
We have sufficient competencies to create fully-fledged customer loyalty platforms since both software development expertise and a deep understanding of loyalty management belong to our specs. We can create a custom loyalty software solution with the following critical features:
- Customer data aggregation: data collection and processing algorithms providing you with real-time stats on both newcomers and regulars based on their shopping behavior
- Integration and automation: tools that seamlessly integrate your CRM (or CRM-like) system with your loyalty management program to automate your reward distribution in a 24/7 mode
- Multichannel connections: all available means of communication with your customers, beginning from email and social media and up to tailor-made messenger-like chat rooms with AI-powered chatbots
- Gamification: various features to cover your regulars with amazing tasks online and offline, including contests, leaderboards, voting stars, etc.
- Brand-native UI/UX: your loyalty software solution will be designed to look and feel strictly in accordance with your brand style
- Mobile apps: a multi-platform application with a responsive design for whatever screen size is properly integrated with your website
Besides, our project managers and engineers can assist you in preparing terms of reference for your loyalty management program. They can prompt fresh ideas and approaches on how to achieve the following results in your customer engagement:
- Creating a hierarchical system of levels and statuses that allows your loyal customers to feel like VIP persons
- Adding instant bonuses to a multi-level reward algorithm with points, gifts, and discounts
- Providing your customers with opportunities to earn points while they do what they like to do
- Including your company values into your loyalty program to make your regulars possess a strong emotional attachment to your brand
- Integrating your partners into your loyalty management to achieve a cumulative effect from the business partnership
- Establishing an online community of your brand devotees, making them communicate as much as possible to share their positive experiences
Contact us right now to start your journey across the exciting development process of your tailor-made loyalty management software.
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