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What to Consider When Creating a Loyalty Program

By understanding customer behavior, companies can create loyalty programs that offer personalized and exclusive attention to their users. While each program is unique, we review core functions that remain consistent for any loyalty program.

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Retail & Commerce Marketers Business Leaders

Published 7 Jul, 2021 6 minutes of reading

In recent years, at Modyo we've helped many of our clients build and implement loyalty programs that aim to generate changes in the behavior of their customers interacting with brands.

The objective of these loyalty programs is established according to the needs of the business, and within that structure, we can see variations in particular aspects depending on the loyalty program itself. However, there are certain core functions that remain consistent for any program an organization is looking to implement.

Considering this, the first task in creating a loyalty program is to determine our objective. What is it that we want our users to do? This could be to visit a store more frequently, buy brand by-products, or eventually launch benefits from the partnerships we have established with other brands.

Why do organizations implement loyalty programs in the first place?

The purpose of these loyalty programs is to understand customer behavior. Understanding behavior helps organizations segment their customer audiences by calculating their  RFM score : recency, frequency and monetary value. Armed with behavioral data, they are now capable of offering customers increasingly personalized and exclusive attention.

We’re interested in when a customer’s last purchase was (recency), how often they’ve made purchases in the past (frequency), and how much they’ve spent (monetary value). Knowing this means that we can invite them to make additional purchases, offer them products from stores associated with our brand, and increase their purchase frequency and/or the total expenditure they make on each visit.

This opens the door to creating different strategies in the future, either to benefit the most loyal users, personalize promotions and benefits depending on purchasing behavior, or retain customers in case their purchasing frequency has declined.

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You want a familiar and easy-to-understand program

In any loyalty program there must be two worlds

  • A public site, where the program is explicit and explained, and…
  • A private site, where the user reviews their transactions, redeems points and can see exclusive promotions. 

What to consider in a loyalty program public site

A loyalty program public site should have attractive, dynamic and interactive public pages. It should have a homepage that allows us to attract users and explain, relatively easily, what the program is about, its benefits, and how to access them. 

In addition to this homepage, we should include foundational information about our product, in case the user has any questions or concerns. Consider an FAQ section where the user can hopefully resolve any questions they may have. The public site should also have a tutorials section, with step-by-step instructions in case the redemption system is complex. It’s also important to provide a Terms and Conditions section, with detailed legal information.

None of these aspects of your public site should neglect the key elements of any publicly available digital channel, and should be well positioned with SEO strategy accessibility, best practices and good technical performance, so that it can be easily found and well positioned in search engines. 

What to consider in a loyalty program private site

A loyalty program private site, similar to a bank, should show a customer's movements and actions, so that both the user and the company can see the customer’s history and engagement with the company. 

A private site should also show transactions based on the loyalty program’s currency (points, premium dollars, etc.), indicating how they’ve earned and what they’ve spent. This provides transparency so that customers can evaluate how beneficial the loyalty program is to them.  

A key element within the design of a loyalty program is the program’s gamification, the usage of typical elements of game playing (point scoring, competition) to other areas of activity in order to increase engagement. Taking into account the objectives of the program, an entertaining way to attract users back to products or services, or incentivizing them to buy sub-brands is to generate time limits or challenges that must be completed within a set time, so that these actions generate even more benefits. 

In order to implement a successful loyalty program that’s beneficial to both you and your users, it’s crucial to have a platform that can support the functionalities you’d like to offer. In the following section, we dive deeper into the key aspects of a platform that will provide you with everything you and your customers need in a loyalty program. 

5 aspects of a DXP for a successful loyalty program

Integration Capability 

Just as different loyalty programs can achieve a variety of different objectives, they also differ in the way they are developed. In many cases, they have several platforms that deliver relevant customer information. 

Loyalty programs can also generate useful data to be part of and feed into solution ecosystems such as CRMs (Customer Management Software), lead generators and push messaging. Your platform supporting a loyalty program must have the ability to integrate with any of these systems and many vendors simultaneously, allowing for seamless and interconnected experiences. 

For example, if we have our users' purchases, accumulated points, and their available promotions in three different systems, we can create a more unified and interlinked experience  by integrating these separate systems within a platform. 

Public and Private sites that are easy to manage

As mentioned above, it’s important to have a public site that provides general information and answers common questions. Anyone can access this site, which is where SEO, page speed and accessibility comes into play. Meanwhile, your private site should show users their histories and personalized offers and content. 

Because you are dealing with a lot of information on both the public and private sites, you want a platform that administrators can manage from one place and with ease, with an easy way to build spaces and channels where teams can develop and scale a product quickly.

Omnichannel strategy

When accessing a private site, the user must enter through a login or registration. It is key at this point to consider the importance of unified access in all platforms, where the user interacts with the brand. If it’s a website or application, we suggest having a SSO (Single Sign On) registration process, so that the user has only one single account for all devices. 

You also want the platform to stay as similar as possible between devices, creating a seamless experience that isn’t interrupted by changing platforms to perform a specific action. 

Headless content

A headless platform allows administrators to create content that can be served on any device. Have you ever logged into a website on your computer and later gone to the mobile version and it looks completely different? We want to avoid that by being able to manage and distribute content in a single place, allowing users to consume it from any device. Not only is the content accessible and digestible for the user, but it also generates lower administration costs.

A personalized experience

Once our user logs in, we are able to gather their relevant information and store it, allowing us to provide a personalized experience. This can be done in both the private and public site, since we can also adjust the public site and provide targeted information once users have initially given their information. For example, if we invite the user to log in, we can configure the homepage to deliver a more personalized welcome with their username, accumulated points, and current offers. 

In addition to offering a totally exclusive experience, the goal is to also have a future where all the information is integrated in one place and where the behavior with the loyalty program itself will nurture user profiles so we can know their RFM and generate marketing and retention strategies relevant to each segment. 

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Increase engagement with a loyalty program

At Modyo , we want to help you give your customers the best, most seamless experience. Modyo’s next-gen DXP has the ability to integrate with many different types of systems and with providers simultaneously, allowing for a seamless and interconnected experience that keeps users happy. By integrating your site with Modyo’s next-gen DXP, you can obtain and keep user information updated through the Modyo Customers tool, making it easy to provide customers with relevant and personalized information on both the public and private sites. Modyo’s headless platform allows administrators to distribute content in a simple and uniform way, allowing them to be as efficient as possible. 

Whether you’re looking to implement a new loyalty program in your company, or have one that you’d like to improve, we’d be happy to talk about it. Feel free to reach out and talk to us and we would be happy to discuss that journey with you.

Photo by Erik Mclean on Unsplash

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