Loyalty Program Past and Present. How to Manage a Loyalty Program in Light of Customer and Technological Challenges in 2024

Loyalty programs have come a long way, evolving with advances in technology and consumer preferences. The first mass solutions of this kind worked on the basis of cards, stamp collection and material rewards. The organizers’ main task was to refresh the prize catalog, make timely shipments, secure inventory and process complaints efficiently. Things have become more dynamic in recent years, and the loyalty landscape itself has become much more complicated. We have moved away from a focus on administration and logistics to a focus on analytics and constant work with communications to provide personalized experiences. Today, a loyalty program is almost an IT project based on continuous learning of consumer needs and an offer-communication response to those needs. What competencies and tools do you need to secure to nimbly manage a loyalty program in 2024?

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Challenges – Past and Present

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Over the years, the approach to measuring the effectiveness of a loyalty program has changed, in particular. In the past, the loyalty program was analyzed using simple and generic groupings. Attractiveness was evaluated based on the popularity of rewards and the lowest possible number of complaints. In the era of customer centricity, we look at the loyalty program in much more detail, analyzing and trying to understand and predict the behavior of each individual customer. Today, it is metrics such as LTV or NPS that are used to measure club member engagement on a daily basis. The values of these parameters can change even from day to day, depending on what both we and our competitors are offering. The marketer must understand where these changes and trends are coming from.

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We remember well the days when brands simply wanted an overall increase in sales. Customers were simply expected to buy more and more often. Companies did not do detailed analysis of what drove a particular customer to make such a purchase decision and not another. Nowadays, both the quantity and value of transactions continue to matter, but companies are trying to understand customer behavior.

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Those who buy only on weekends – encourage them to visit stores during the week. Those who buy only stationary – they invite them to visit the online store. Similar examples could be multiplied. In this way, brands are trying to target more precisely and influence customers’ purchasing decisions by mapping additional purchase paths. Not only have the challenges of running a loyalty program changed over the years, but there are many more. Brands need expanded loyalty teams with new competencies and tools to improve the daily battle for customer attention and wallet.

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Competencies in Loyalty Teams

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Nowadays, it is increasingly difficult to imagine a loyalty program that would be the responsibility of a few people handling only the logistics of shipping rewards and handling complaints. Running a loyalty project is becoming a large, ever-changing IT project. An effective loyalty program is a collaboration of multiple departments, using a variety of tools to achieve common goals. The complexity of today’s systems for handling loyalty programs and their numerous connections with other tools used in the company, such as the cash register system, call center, e-commerce, among others, make it necessary for loyalty teams to aggregate a wide range of skills.

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It is increasingly necessary to react in real time to the market situation and the actions of competitors. It is essential to have people on the team with analytical skills who understand technology, campaign management specialists to handle communications or managers to manage CRM processes. Competencies that a good loyalty team is distinguished by include the ability to work with data at a much more advanced level than in the past. Analysts must be able not only to create reports, but also to interpret them, draw conclusions and share any recommendations based on them that will improve the effectiveness of the loyalty program. It is essential to combine statistical analysis skills with a deep understanding of the business in one person, which allows for comprehensive data management and the generation of accurate recommendations.

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In the case of projects such as loyalty programs, where administrators, managers and consultants have to work together on a daily basis to create, and introduce new offers, and campaigns, the use of modern, and interrelated tools is crucial. If a program participant receives an email with a special offer, it must be visible in the mobile app and redeemable in the checkout system no matter where the club member makes his or her purchases. The traditional manual handling of loyalty programs by the hands of developers and technical changes in the code of the loyalty program application are giving way to faster and more agile solutions.

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UP TO DATE Tools

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In the loyalty program market, we already have a sizable array of tools in the no-code model, which are designed so that project managers can create the necessary processes such as defining mechanics, creating promotions or configuring special actions without having programming skills or having to code.

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The project manager goes from being the person who prepares the brief for the developer to being the operator of the tool, and needs to know how to most effectively achieve the goals set with the capabilities of the system. His role is already rubbing up against the analyst, who, knowing what capabilities we have available, conditions, but also barriers, tries to combine business needs with functionalities.

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What is needed is an excellent understanding of how the tools work and, more importantly, their limitations. In the past, campaign implementation required time and updates in distributed tools. Somewhere else the base for communication was exposed, somewhere else the offer was prepared. And all of this had to be plugged into distributed checkout systems so that the promotion could charge while the club member was shopping. On top of that, the online store was a separate system. Today, this has to be done quickly, using as few systems as possible.

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This modern direction in technology facilitates the effective management of loyalty programs, eliminating the barrier of limited developer team capacity and the erroneousness that results from the need for several teams to perform a single task in several different systems.

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Cohesive Ecosystem

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Connecting a loyalty program application to all the business systems in use is not just a matter of technological compatibility. It’s about creating a cohesive ecosystem where data, processes and customer interactions are seamlessly connected. The degree of integration between marketing automation tools and loyalty program tools is tightening. In the past, syncing email addresses and withdrawn marketing consents was enough. Now, wanting to work agilely with micro-segments, a two-way flow of all operations taking place is necessary.

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When marketing automation feeds information to the database about the click-through rate of emails or time spent on the site, the loyalty program can build subsequent better-tailored action paths with greater accuracy. In turn, information from the loyalty program, marketing automation can use to plan subsequent mailings. The number of possibilities for targeting offers and communications seems endless with this. Increasingly, the ongoing work with offers and communications is supported by artificial intelligence algorithms. An example of such a solution is Ariadne AI, Loyalty Point’s proprietary solution. Ariadne AI analyzes issues of matching offers while estimating the customer’s level of openness to communication. The manager receives recommendations on how to target the offer to maximize engagement with a specific customer. This enables more strategic allocation of time and resources and maximizes the chances of closing more deals.

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Summary

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The dynamic nature of the market, evolving customer expectations and developing technologies mean that loyalty programs require increasingly sophisticated knowledge and skills in many areas. What is needed are “renaissance people” who have both an entrepreneurial and business analyst’s sense, competence in statistics and programming, and at the same time excel in communication and creativity. For good measure, a loyalty program can be implemented by any company. The real challenge becomes managing it.

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Efficiency can be ensured by the support of an experienced partner. Loyalty Point distinguishes itself by operating under the One Stop Shop model. What does this mean? We combine strategy and consulting with our own loyalty tools under one roof, offering a unique mix of competencies. We cover all the key areas necessary to implement and maintain loyalty solutions, while helping to develop competencies within the client’s organization.

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