External partner can enhance effectiveness of loyalty programs

By: Imran Firoz
Senior Research Analyst, Marketing Services

27 Oct 2016

Abstract/Business Case

1    Introduction

In this whitepaper, we discuss the procedures for sourcing loyalty programs. Marketers in loyalty program management have the option to select between a proprietary program or coalition loyalty such as Plenti in the U.S., Nectar in the UK and Flybuys in Australia. When marketers form their judgement for a proprietary program, they have the predicament to either build the plan internally, buy a subscription under SaaS loyalty platform or to partner with end-to-end loyalty service provider. Marketers can make the right decision by analyzing certain pros and cons of each of the options; the ideal procedure depends on the business objective and the internal resources that the buyer has to achieve these objectives. This white paper highlights how the best option can be implemented by looking at the advantages and disadvantages of each procedure and matching it with the business objective.

2    Objective

The main objective of this paper is to infer the best option for sourcing/producing a proprietary loyalty program solution among building a program in-house, buying SaaS-based subscription or partnering with an end-to-end loyalty program service provider.

3    Recommendation

Engaging end-to-end loyalty program service providers is the best and most preferred option for sourcing or developing proprietary loyalty. This is due to their ability to provide flexible and scalable solution along with in-house analytics. Marketers are striving to differentiate their programs by in-house analytics which help in offering relevant, personalized rewards matching the local preferences.

Problem Statement

It has been observed that the loyalty program often proves to be ineffective. Some of the major reasons for its failure can be summarized as follows.

Lack of defined goals: The success of the loyalty program is determined by comparing its results against the set goals and this can be done if there is a well defined goal and measurable statistics to compare the program performance against the set goals.

 A dearth of adequate time given to the program: Loyalty program requires time for research into the target market as this is a long term organizational strategy which requires proper planning and implementation. When marketers do not devote proper time and a dedicated team to oversee and manage the program in the right direction, the program fades away without much results.

Gaps in customer service: Despite the program being exceptionally engaging and alluring, gaps in the customer service may shake the very foundation of customer loyalty.

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