Running Loyalty Programs with a Customer Data Platform

July 12, 2018

AdobeStock_142866829-min-225421-editedLoyalty programs can be an integral part of your marketing strategy, improving everything from churn rate and lifetime value to customer experience. 

Whether or not your brand already has a loyalty program in place that you are looking to optimize, or you want to implement a loyalty program for the first time, AgilOne’s Customer Data Platform (CDP) can greatly improve the process. While a CDP is not a loyalty solution itself, it can enhance what your loyalty solution is able to provide.

The Two Types of Loyalty Programs

1. Point Based

This is what most of us think of when we think loyalty - you earn points for activities or purchases, and those points can be redeemed for future purchases. While this sounds simple in theory, this type of program is actually far and above the most difficult to implement.

First, you have to choose a loyalty vendor that runs these types of programs, and integrate the vendor into your entire marketing stack. Loyalty solutions can cost hundreds of thousands of dollars, and the integration into your systems can be difficult and time consuming. Not only does the program need to be integrated into your POS and website, but your entire staff needs to be trained on the new program (e.g., educating them on how customers can earn and redeem points). Additionally, marketing verbiage around these types of programs can get very opaque and difficult for consumers to understand. Think airline miles; most consumers know what they are, and they want to earn them, but they would be hard pressed to tell you the exact ratio and how their points are earned. This can lead to decreased customer satisfaction.

However, these difficulties aside, for enterprise brands that have the budget and bandwidth to implement a point based loyalty program, this approach can be extremely effective if you have a large number of product types that sell at a low-to-medium price point. In this case, points are an easy way to increase customer purchase frequency, minimize churn rate, and cross-sell customers into new product types.

2. CRM Based

For a CRM based approach, you don’t need to integrate into your POS, or even bring in a third-party vendor. Instead, you simply need a CRM that tracks customer behavior. With this type of loyalty programs, marketing teams can internally determine what attributes or behaviors they want to reward, and set “tiers” that customers can reach based on these behaviors. For each tier, you determine the reward. These tiers can be customer-facing or internal, it is up to the brand on the approach they would like to take. Brands that have a high price point and a lower purchase frequency tend to see the most success with this style of loyalty programs.

For example, one AgilOne client wanted to kick off a loyalty program to reward and improve experience for their highest-value customers. After strategizing with the AgilOne team, this client determined the internal-facing CRM based approach was the right fit. We helped the client determine which attributes would trigger the loyalty program, as well as the tiers that customers could achieve with these attributes. Now, this customer is able to run promotions for their high-value customers, rewarding them based on their attributes and the tier they achieve. Not only is this program increasing their purchase frequency and overall order value, it is also creating brand evangelists by improving customer experience for their key segments.

Three Steps to Setting up a Loyalty Program with AgilOne

When it is time to evaluate a new loyalty program for your brand, the first thing you need to ask is, “What is the goal of this loyalty program?”  Look at the opportunities a loyalty program can help achieve (retention, frequency, etc.). Once your team has come together and agreed on the overall strategy and goal of a program, this will guide the decision making process on which style of loyalty program is right for your brand -- point based or CRM.

The next step is implementation. Whether you are moving over a legacy loyalty program, or looking to start from scratch, the AgilOne Customer Success team will be there to help every step of the way. From transferring data and attributes into the Customer Data Platform, to creating easy-to-access, custom reports help your marketing team gauge the success of the loyalty initiative. For example, another AgilOne client migrated over a loyalty program, and the AgilOne team was able to set up the integration with this loyalty vendor as well as set up reports in the AgilOne UI so the marketing team could look at churn, repeat purchases, etc.

Finally, the third step is strategy and consultation. Many brands we work with find that they need guidance when implementing and/or moving over to a new loyalty solution, and the AgilOne Strategic Services team has extensive experience helping enterprise brands optimize and perfect their loyalty vision. This includes determining communication cadences, direct mail, or just overall consultation for a marketing team that is new to loyalty programs. This typically involves an on-site workshop (or two or three) to make sure the team is fully trained and onboard with their loyalty program, as well as ongoing services after the program launch.

If you are interested in a Customer Data Platform that can easily integrate and support your brand’s loyalty programs, let us know! We would love to set up a short consultation about AgilOne’s functions and capabilities.