Acquiring customer data and sustaining customer loyalty for long periods is a never-ending challenge that every business faces. While most consumers are members of more than 12 customer loyalty programmes, they are active in less than 50% of those programmes. What makes some programmes more successful than others and how do you make your customer loyalty programme one of those that people use, share and talk about?
At Collinson we work tirelessly with customers to unlock the magic within their business, to design build and deliver the best loyalty programmes that set them apart from their competition and drive desired change – more mindshare, wallet share, advocacy, and Loyalty.
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To learn what we’ve done for businesses like yours and how we can leverage Salesforce loyalty management technology across Customer 360 to help you achieve your customer vision and bring your loyalty strategy to life, please get in touch.
However, you can design a solution which is optimal for creating loyalty by taking a holistic view of your company’s opportunities to create value for customers, harnessing these within a compelling loyalty proposition and executing consistently to give customers the seamless experience they expect.
The totality of a loyalty programme is the sum of many complex moving parts and - from a technical delivery perspective - this means looking at end to end customer journeys and mapping all the elements that need to be delivered across the Brand Promise, Customer Value Proposition and Customer Experience.
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Loyalty technology painting the big picture
For complete loyalty ecosystem architecture design, it’s useful to think and plan in layers. ‘N-tier’ architecture divides an application into logical layers and physical tiers. This includes the Infrastructure, Data, Rules and Interface layers that will comprise the requirements and the various systems that need to be integrated into the overall tech stack, delivering different services and solutions.
Loyalty ecosystem architecture requires a considered and balanced approach given the need for control over risk and programme costs versus the need for customer centricity and adaptability to market conditions. There are some key decisions which affect outcomes.
Loyalty technology planning and provision has to recognise that loyalty is a strategy not a tactic. As the sum of many moving parts, loyalty as an outcome needs to be planned and executed enterprise-wide, building on solid data foundations before developing towards more engaging experiences and the tech plug ins required to support . This needs careful and expert planning. Managing the project and the business case will be a balance between showing short term quick wins and longer term incremental achievements.
Play the long game
Short term or long term planning?
Loyalty programme value measurement is often difficult, via indirect measures like Net Promoter Score (NPS) impact and direct incremental revenue from promotions and campaigns. However the true value of increased loyalty is a marginal incremental shift in a customer’s overall brand preference which influences their overall purchasing decision. We can attempt to measure this via a Customer Lifetime Value (CLTV) metric comprised of a number of different variables.
What is clear is that loyalty efforts typically pay back in the long term. This is important in loyalty technology planning as business case models based on 1-2, more usually 3 years or even 5 year timelines may not be long enough to offset the initial investments against future returns with sufficient ROI.
Short term or long term planning?
Standalone system specification versus composite (microservices) approach
When deciding how to architect, typically with loyalty there is the challenge of not only connecting different areas of your own business but also incorporating third party partners into your loyalty platform in order to create an extended customer proposition. So there is a decision to take on how much data variation to accept in the partner connections and manage via Extract, Transform and Load (ETL) tools versus enforcing a standardised data template with no exceptions.
Similarly, rather than just use a standalone system for loyalty, there may be a need to connect to an ecosystem or to marketplace app partners in order to expand the technical capability needed to deliver the customer programme. Here there is a real need not just for APIs, but for a full managed service layer, flowing data as needed across partners to achieve a comprehensive technology service, with adaptability and flexibility. This approach allows for future-proofing the tech stack by connecting to cutting edge solutions, once they have been proven in the market.
Standalone system specification
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Composite approach
Evolution versus Revolution, it is time to update or start from scratch?
Looking at this diagram comparing loyalty concept and capabilities, it should be possible to establish where your programme and technology ecosystem are today. The question is therefore where do you need to be on this curve in order to be competitive both today and tomorrow? That’s the minimum target end state for your current decision making.
The good news is that, depending which technology stack you are currently deploying, it is potentially extensible all the way along this curve. Building on a solid foundation of enterprise data management capability, with analytics and marketing cloud abilities for personalisation is typically within scope of most enterprise systems.
Evolution
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Revolution
Build versus Buy
Specialist loyalty solutions prevail on the market for a reason - someone has already done the job of thinking through standard loyalty programme requirements to architect and build a solution that best fits loyalty ‘out of the box’. It is their business to be market aware and competitive in capabilities and - in the case of tried and tested solutions - they will also have found and solved for the potential pitfalls and traps in loyalty solution architecture.
That said, as loyalty is a cross-enterprise commitment, much of the required functionality across a loyalty ecosystem will be provided by other solutions. Here the internal team will know and understand the organisation’s current technical capabilities, what it already holds licences for and the overall enterprise technology strategy. An internal build team can arguably design and deliver a component solution to operate loyalty more efficiently than buying an off the shelf solution which will have capabilities that are immediately redundant when deployed.
Build vs Buy
Static systems design
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Dynamic delivery
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Here are five areas in which sound judgement will set you up for success
Static systems design versus dynamic delivery
As loyalty is complex and has requirements across many aspects, designing a total solution upfront as required for waterfall based delivery is time consuming, needs a highly detailed, documented programme design and locks the solution to what is known at the outset.
Conversely, an Agile approach creates freedom and flexibility to adapt and discover new possibilities during the development process. However, when an end to end solution is not planned and architected, entangled solutions and coding loops can result.
The balance therefore perhaps is to design the deep tech infrastructure and data layers upfront, whilst keeping the business rules and interfaces layers adaptable to market needs and technical innovation, providing build adaptability but on a solid foundation.
Technology
Build versus Buy
So where’s the sweet spot between these two approaches? We advocate buying an existing core loyalty rules engine (because no one wants to write a new set of loyalty use case rules for new system design) while ensuring there is a strong internal technical team to support and direct the integration of the solution into the overall enterprise architecture. This may be achieved via APIs or even a microservices layer but it still requires an internal architect to define and approve the data exchange over those interfaces to meet company strategy and compliance rules.
Evolution versus Revolution, it is time to update or start from scratch?
However if you are working on a proprietary and standalone loyalty system then you may struggle to adapt to new needs in the future. If the data architecture is not robust, complex processes have been coded organically as needed and interfaces hard wired between systems, then unpicking this in order to move forward is an enormously complicated task. This is a typical scenario when companies have been merged and a single solution in one business has been adapted to fit all.
Just as loyalty is an enterprise wide strategy and needs a cohesive approach from many departments, so the loyalty tech stack needs to be comprehensive, organised and integrated before you start building out new customer solutions. If that can’t be achieved from your current capabilities then it may be time to start thinking about revolution rather than evolution of existing systems.
Short term or long term planning?
So in order to balance the business case there are other metrics that can be brought into play that measure shorter term gains, like CPA acquisition cost reductions from member get member activities, direct incremental revenue from loyalty campaigns and a host of other shorter term wins that can sustain the model in favour of loyalty rather than wait for the longer term gains.
If loyalty is built in a lifetime but destroyed in an instant, from a customer perspective it makes sense to balance long term increase in value with shorter term goals and metrics that can help support the business case for the initial investment in both capex and opex, as well as the cash flow impact if issuing points as rewards
Awny Elafghany
Head of Sales - Middle East & Africa
Contact me
Awny Elafghany
Head of Sales - Middle East & Africa
Contact me
Awny Elafghany
Head of Sales - Middle East & Africa
Contact me