Building and Developing a Loyalty Program. In-house or Outsourcing – Which Model to Choose?

Loyalty programs are among the most effective tools for supporting sales and building long-term customer relationships. Their popularity continues to grow – companies that already have a loyalty program constantly work on improving it, while those that don’t are looking for the fastest and most efficient way to introduce one.

When managers begin planning such an initiative, two opposing approaches often emerge.
The first focuses on developing the program internally – building a dedicated team, owning the technology, and maintaining direct control.
The second relies on outsourcing – entrusting the project to a specialized agency with experience and ready-made solutions.

Making the right choice, however, is rarely easy.

Before Choosing a Model: Key Preparations

Before deciding whether to build a loyalty program in-house or outsource it, a company should begin with a comprehensive readiness and ROI analysis. Start with a solid business case that outlines the program’s objectives and estimates all implementation costs – including technology, staffing, and time – against the expected benefits such as increased customer lifetime value, higher retention, and incremental revenue. Next, assess internal capabilities: does your organization have the necessary IT infrastructure, reliable data sources, and skilled personnel to manage a loyalty program effectively? Beyond technical readiness, cultural alignment and leadership commitment play a crucial role – without them, even the best-designed system may fall short of expectations. It is equally important to analyze the market landscape and customer needs to ensure that your initiative stands out and delivers meaningful value. Finally, conduct a thorough risk assessment to identify potential bottlenecks such as integration challenges, compliance issues, or resource shortages.

At this stage, many companies choose to seek expert support. At Loyalty Point, we help organizations prepare for the implementation of a loyalty strategy through step-by-step consulting services – from readiness assessments, market benchmarking and program concept design to setting key performance indicators and business case development. This structured, data-driven approach allows businesses to make an informed choice between in-house development and outsourcing, reducing risk and ensuring that the foundation of their loyalty program is solid, scalable, and strategically aligned. Get to know more reading about Loyalty Program Consulting Services.

Loyalty Program: In-house

A loyalty program is a powerful source of knowledge about customers – their preferences, purchase history, and interactions with the brand.
Some companies choose to build the entire program internally, developing both the strategy and technical background from scratch.

The main advantage of this model is full control. An in-house system allows the company to manage and modify processes at any time — from customer registration and data collection to activity monitoring and reward management. This direct control helps businesses better understand and respond to consumer behavior.

However, developing a loyalty program internally requires significant investment in people and technology. It can be costly, time-consuming, and prone to errors, especially for teams with limited experience. Lack of external perspective may also lead to limited innovation and slower adaptation to market trends.

Even with careful research and benchmarking, companies risk making “first-timer” mistakes, which can be expensive to fix. That’s why, in many cases, partial or full outsourcing may prove more efficient and safer.

Why It Is Worth to Launch Loyalty Program On One's Own

Although developing a loyalty program in-house requires more effort and investment, it brings strategic advantages that can significantly strengthen the organization from within.

Working on the program internally gives the company full autonomy in defining objectives, rules, and reward mechanisms – and just as when cooperating with an agency, the organization ultimately makes the key decisions. However, the unique value of in-house development lies in the fact that the solution is created from the “heart” of the organization, naturally aligning with its culture, strategy, and values. Every element – from data collection and customer segmentation to program mechanics and communication – can be precisely tailored and quickly adjusted without relying on external providers.

Moreover, internal development enables seamless integration with existing CRM, ERP, and e-commerce systems, ensuring smooth data flow across marketing, sales, and customer service, and supporting more accurate reporting and decision-making.

Building the program in-house also helps develop internal expertise in areas such as CRM, analytics, and customer engagement. These capabilities become long-term assets for the organization, supporting not only the loyalty initiative but also broader marketing and customer experience efforts. And if the company is planning major CX transformations or already has mature development and change-management capabilities, in-house development allows it to work across multiple fronts simultaneously and make efficient use of existing resources.

Loyalty Program – Outsourcing

Cooperation with external specialists is a guarantee of high-quality services and optimization of solutions. As a rule, a specialized agency under one roof aggregates knowledge and experience from many programs and industries, which can be creatively used when creating the next loyalty program in the agency’s portfolio.  What benefits and support, in which areas, can be gained with the help of specialists in creating a loyalty program?

One of the key elements responsible for the success of a loyalty program is its strategy. Many companies think that they know their customers well and are able to design a profitable concept. However, it happens that – often even unconsciously – they overestimate the possibilities and propose a solution that is not profitable from the consumer’s point of view, for example, in terms of the need to accumulate a certain number of points in order to gain access to a reward. At this stage, it is important to verify that the pre-designed mechanics cover all groups, so that the program is, as much as possible, tailored to the company’s expectations, but also to the consumers’ capabilities. The agency’s expertise can help assess the viability of the strategy adopted, as well as enrich the concept with new insights and creative ideas.

‍Outsourcing has become even more attractive due to the rise of omnichannel loyalty platforms, gamification modules, and advanced analytics tools. Agencies now offer ready-to-deploy solutions that integrate with e-commerce, mobile apps, and social media, enabling a consistent customer experience across all touchpoints.

Cooperation with an agency also means a faster start of the program. As a rule, a company that specializes in handling loyalty programs, because of its experience, works more efficiently and effectively. The tool that the agency offers is well tested in the market, so that the client only customizes it for his needs and at the same time avoids the childhood mistakes that could occur when creating the solution on your own‍.

Why Is It Worth Working With an Agency?

When developing a program on its own, the recruitment process, which is usually time-consuming and expensive, proves to be a barrier. By choosing to work with an agency, the company eliminates the need to build Customer Service, BI, or IT departments from scratch. By working with an agency, the company has access to a pool of experienced specialists and can, for example, share an analytical environment, which, especially at the beginning, makes it easier to analyze data and understand customer needs. What’s more, if the company wants to develop competencies internally, it can enlist the agency’s support in creating its own CRM team and attracting people with the right qualifications and experience.

Nowadays, loyalty programs are no longer a stamp card with 10th free coffee, but increasingly a data center on which major business decisions are made. A loyalty program is access to insights and knowledge about customers, with which the company creates personalized offers. Specialized agencies have advanced tools and technologies to manage loyalty programs, with dedicated software, analytical systems or platforms for performance tracking and reporting. The use of these tools improves the monitoring and optimization of loyalty programs.

Agency support is also invaluable when it comes to data protection. Loyalty programs usually require the processing of personal data. And these must be stored and processed securely and in accordance with applicable regulations. A company that does not take care of data security risks a negative reputation, loss of customer trust and even potential legal sanctions. Agencies conduct regular data security audits to ensure that their systems and procedures comply with international security standards. Having certifications such as ISO 27001 confirms that the agency you are working with has adequate data protection procedures in place. By using a certified partner, a company can be assured that its loyalty program complies with security standards.

Balancing In-house Development and Agency Collaboration

For organizations that still prefer the in-house route, collaboration with an agency can provide valuable support in specific areas, such as:

• Loyalty team augmentation with experienced practitioners – helping recruit and train internal staff dedicated to loyalty operations.

• Competitive benchmarking – analyzing market standards and competitor programs to identify gaps and opportunities.

• ROI forecast and business case development – preparing financial models to justify investment and predict profitability.

• Organization readiness assessment – evaluating internal processes, IT infrastructure, and cultural readiness for implementing a loyalty program.
  These services allow companies to maintain control while reducing risk and accelerating implementation.

Such cooperation allows companies to maintain full control while minimizing risks and accelerating the program’s launch.

Although working with an agency seems like an easier step, it also requires commitment on the part of the company. When outsourcing the entire program, companies should verify the agency’s ability to integrate and collaborate with existing partners and systems. This includes:

• Technical compatibility with CRM, ERP, e-commerce platforms, and marketing automation tools.

• Partner ecosystem alignment – ensuring the agency can work seamlessly with logistics providers, payment processors, and IT vendors already engaged by the company.

• Compliance and security standards – confirming certifications (e.g., ISO 27001) and GDPR/ePrivacy adherence.

• Scalability and flexibility – assessing whether the agency can adapt the program as the business grows or enters new markets.
  These checks prevent operational bottlenecks and ensure smooth cooperation across all stakeholders.

Recommended Model for Developing a Loyalty Program

A loyalty program is an essential tool for any company that wants to get closer to customers and ultimately increase sales. Regardless of how it is implemented, any program should provide convenience to customers at a reasonable cost on the part of the organizer. Without this, there is no chance of success for any project. The ideal cooperation model should first and foremost involve proper empowerment on the management side, so that the venture is considered in the category of investment, not cost. In this way, the company maximizes the value of the project and builds a loyal network of customers.

Hybrid models are gaining popularity as companies combine internal strategic oversight and control over their key business vision with the domain expertise of specialized consultants and outsourced technical execution. This approach provides flexibility, cost efficiency, and access to specialized expertise. Crucially, it allows firms to maintain tight control over their brand and strategic direction. Some modern agencies successfully merge these two roles, offering both strategic consulting and technical execution as a unified solution.

“For many organizations, the most effective hybrid setup is one in which the company deliberately retains ownership of the loyalty strategy, customer data, and analytical environment, while leveraging external platform providers and specialist consultants for technology, implementation, and selected operational processes. In this model, internal teams remain the “owners” of the business logic and insights, and partners provide scalable tools, proven methodologies, and specialist know-how that would be difficult or costly to build alone.” – comments Wiktor Goliszek, Global Strategy Director at Loyalty Point.

Is it possible to go one step further? Wiktor adds that as an end-to-end loyalty partner, Loyalty Point combines strategic design, technical implementation, and day-to-day program management under one roof and assume accountability for clearly defined loyalty business outcomes. "Instead of separating the roles of consultant, system integrator, and operations provider, we integrate them into a single responsibility center: from designing the value proposition and customer journeys, through configuring the platform and integrating data sources, to running campaigns, optimizing mechanics, and continuously improving the program based on measured results.” – summarizes.

Loyalty Program In-house or with an Agency – Conclusions

The final decision regarding the development and management model for a loyalty program –  whether fully in-house, outsourced, or hybrid – should always be driven by the goal of maximizing value for both the customer and the organization.

Regardless of who executes it, a loyalty program must be treated as a strategic investment, not an operational cost. Hybrid models offer an attractive combination of retaining internal control over strategy while leveraging the specialized knowledge and scalable tools provided by external partners.

The choice of partner should be based on their ability to integrate strategic thinking, effective technical execution, and accountability for measurable business outcomes. This is the key to building a loyal customer base and achieving sustained market success.

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