Loyalty Program Providers: How to Choose Between Them?

Well-run customer loyalty programs are as valuable to brands as their members. Whether you want to acquire and retain customers, strengthen brand advocacy, or increase the average customer lifetime value, a loyalty program can help.

The market is awash with loyalty program providers, and choosing between them takes time and effort. Here are our top tips for choosing the right one for your brand.

What is a Customer Loyalty Program Provider?

A customer loyalty program provider combines market expertise and technology to help brands develop compelling, engaging, and personalized loyalty programs. Some provide an end-to-end service that covers everything from program creation and management to delivery and optimization. Others focus solely on the underlying technology.

There are two main types of customer loyalty program providers:

1. Loyalty platform providers
2. Loyalty program managed service providers

Loyalty Platform Providers

These providers specialize in offering dedicated customer loyalty platforms that give you the tools to build and develop your program. Choose a loyalty platform provider if you have the internal resources and expertise to manage your program in-house.

Loyalty Program Managed Service Providers

Managed service providers offer a mix of technology and strategic guidance to help you build, manage, and optimize your loyalty program over time. They may partner with a technology provider, build a platform for you, or have their own platform to host your program on. If you're looking for dedicated support, a managed service provider is your best bet.

Nine in ten people are members of at least one customer loyalty program that offers rewards, discounts, or other incentives.

5 Tips for Finding the Right Loyalty Program Provider

1. Define Your Goals

Setting goals – and the metrics you’ll use to track your progress towards them – helps you decide what type of loyalty program provider best fits your brand. Do you want to attract new customers? Retain existing ones? Encourage brand advocacy? These might seem like obvious questions, but they can help you narrow your search.

Not sure where to start? Use the SMART framework. This ensures your goals are achievable, measurable, and relevant to your brand or industry. 

The Nike Membership program is a prime example of a successful customer loyalty program with a clear vision. Launched in 2005, the program delivers personalized experiences to drive brand engagement and loyalty among its members. This includes bespoke training regimens, early access to new products, and invitations to exclusive events. The results speak for themselves. Since launch, the program has grown to 300 million members, who spend 3x more than casual customers.

2. Consider Your Technical Requirements

Your loyalty platform is the foundation of your program, so choosing a provider with the right technology for your needs is essential. We recommend focussing on these core areas:

Implementation

How much time, money, and resources does it cost to implement the underlying technology? Whether you’re choosing a customer loyalty platform for the first time or switching solutions, consider how this impacts day-to-day operations.

Capabilities

What sort of capabilities does the platform offer? If you're running a sophisticated loyalty promotion or program, choose a provider that offers a comprehensive technology suit. At the bare minimum, your provider should offer:

• Member portal
• Purchase and non-purchase validation
• Benefit management
• Segmentation and personalization
• Omnichannel support
• Contests and promotions
• Rewards and fulfillment
• Data collection and analytics

Integrations

How easy is it to integrate with internal and third-party systems? The more flexible your platform, the easier it is to manage and add new features and functionality. This, in turn, enables you to provide smooth, consistent customer experiences.

Typical systems you’ll need to integrate with include your:

• E-commerce platform
• Customer relationship management system
• Point-of-sale system
• Enterprise resource planning system
• Customer data platform
• Customer care platform

Omnichannel Activation

Do they offer omnichannel support? The best providers use fully integrated loyalty platforms that enable you to activate your program on multiple channels, facilitating seamless and rewarding experiences across:

• Web
• Mobile
• E-commerce
• Social media
• Partners and reseller marketplaces
• Regions

Data Collection and Analysis

Can you collect, store, and analyze customer data at scale? Loyalty programs are a rich source of customer insights – from demographic information to individual consumer preferences and detailed basket analysis via receipt uploads. Platforms that allow you to track points, tiers, and reward status and give you a single customer view help you spot macro-level trends. This gives you a better understanding of each shopper, so you can deliver more personalized offers.

Security and Compliance

How secure is their platform? Does it comply with cybersecurity and data protection regulations? As a repository for sensitive customer data, your platform must have robust security features to prevent cyber-attacks, such as multi-factor authentication or data encryption. Equally, choose a platform that has built-in fraud detection to prevent fraudulent activity, like “double-dipping.”

3. Think About the Member Experience

It doesn’t matter how much someone likes your products or how good your rewards are; customers will only engage with your program if it provides a positive experience.

A lot goes into designing an seamless and engaging user experience. Everything from how members earn points and redeem awards to how they track their progress toward higher membership tiers can influence their engagement. The rule of thumb is the easier the better.

Beyond traditional pay-to-earn mechanics, look for a provider that supports a range of program types. This includes non-purchase programs that allow members to participate through a wide range of activities – such as sharing posts on social media, writing reviews, or referring friends – and tiered programs. Equally, your provider should have the tools and industry knowledge to create member-specific promotions, offers, content, and engagement strategies.

What is a tiered loyalty program?

Tiered loyalty programs separate rewards into distinct levels or tiers. Most tiered programs are points-based, meaning customers earn points with every qualifying purchase or brand engagement. As they earn points, they gain access to higher tiers and more exclusive rewards. 

Equally, consider the type of rewards they offer. Look for a provider with an extensive customer rewards platform. Discounts and gifts are great, but today’s customers want variety. Think:

• Exclusive or early access to new products/services
• Experiential rewards (VIP event tickets, once-in-a-lifetime holidays etc.)
• Charitable donations

4. Calculate Costs and ROI

Working with a customer loyalty program provider is an investment in your brand. And, like any investment, it’s important to weigh costs against potential returns.

There are numerous factors to consider when calculating a customer loyalty program's return on investment (ROI). At the very least, we recommend:

• Implementation costs
• Maintenance costs
• Reward costs
• Marketing costs

Compare this with the financial benefits, or returns, of running a loyalty program. This includes increases in:

• Purchase frequency
• Basket size
• Wallet share
• Product trials
• Overall sales life

These calculations can help you determine the type of partner you need. A loyalty platform provider might be the best option, as long as you have the internal resources to develop your strategy, implement the solution, and manage your program long-term. If you need dedicated support and have budget, a full-service provider could be right for you.

5. Do Your Research

Investing in a customer loyalty program provider is a serious commitment. So, you need to know the company is financially stable and has a proven record of success.

Use comparison sites like Capterra and G2 to get a feel for the type and quality of their solutions. Want to understand the typical brand experience? Read some of their testimonials, case studies, and reviews.

If possible, sign up for a trial or book a demo. Seeing the solution in action will help you determine if it's compatible with your systems and has the necessary capabilities to achieve your goals.

The average US consumer belongs to 16 customer loyalty programs, but actively participates in seven.

Make An Informed Choice

Your choice of customer loyalty program provider can make or break your program. A loyalty platform solution is perfect for brands with the resources to manage their program in-house, but others might need the guidance and support of a fully managed service.

Before making a decision, consider your objectives, technical requirements, and the level of investment you’ll need to create your ideal customer loyalty platform. This will help you narrow down your options and find the right provider.

At Snipp, we give you the best of both worlds: a flexible, modular loyalty platform combined with the expertise of a managed service provider.  Get in touch to discover what sets our customer loyalty platform apart.