8 Key Considerations For Choosing a Loyalty Program Provider

Almost every business in every industry is constantly looking for ways to stand out: ways to acquire more customers, attract indecisive buyers, and keep existing ones. Loyalty programs have become an essential strategy for brands looking to stand out and increase sales long-term. For companies who decide its time to launch a loyalty program however, the first question they inevitably run in to is always how to go about creating the loyalty program. 

Typically companies have two options: build the loyalty program themselves or partner with a loyalty program provider or vendor. The factors that go into deciding one way or another will change depending on the business itself. Both options have pros and cons, both have upsides and downsides. Companies looking for guidance and help in creating a truly strategic loyalty program usually elect to use a loyalty program provider.

However, choosing the right loyalty program provider means new decisions that must be made; primarily which provider to select. With multiple options for loyalty program vendors ranging from big to small, how do you determine which is the right fit for you?

To help, we've put together 8 key factors to consider when you're evaluating loyalty program providers. Using this checklist can help you understand what you're looking for from a potential partner and find a vendor who can provide you with a customer loyalty platform that exceeds all your expectations.

1. Loyalty Program Goals & Requirements

Before you even begin selecting a loyalty program vendor, it's crucial to first define your loyalty program's goals and objectives. Doing so allows you to determine what your loyalty program (and what loyalty platform you use to build the program) needs to have or do to meet your goals and objectives. For example, if you want to better understand what, where, and when your customers are buying, your loyalty program should include image or receipt validation capabilities.  This allows customers to submit their receipts to earn points or rewards, which provides you with valuable purchase insights.

If you're in the early stages of planning and not 100% sure yet what features your loyalty program should include, that's fine! Identifying even the basic loyalty program capabilities, tools, or modules you want can give you a good starting point for evaluating loyalty program providers. Consider questions like: 

• What are your primary goals for the loyalty program? Like our receipt validation example above, think about what your primary goals are for launching a loyalty program. Are you looking to lower customer churn and increase customer retention? Do you want to encourage customers to purchase through a particular channel? Are you looking for ways to build a brand community and drive brand advocacy?
• What type of loyalty program design or structure fits your business? There are a variety of loyalty program types, such as points-based programs, tiered programs, rebate programs, paid subscriptions, and so on. Smaller loyalty programs may use just one format, while larger enterprise-level loyalty programs typically combine multiple design elements. 
• Does your business have industry-specific regulations or requirements? Loyalty programs might follow similar formats, but they are certainly not one-size-fits-all solutions. Businesses in different industries like CPG or Manufacturing will have different requirements when it comes to loyalty program design or offerings. Companies in regulated industries like alcohol or tobacco especially will have very specific legal requirements and regulations that will impact how a loyalty program operates. 

Determining factors such as program goals, objectives, and industry requirements first will give you a good foundation to start from when identifying loyalty program vendors that can meet your specific needs and requirements.

2. Technology & Platform Capabilities

Customer loyalty program technology has come a long way since punch-card program days. Loyalty platforms now include several different features and capabilities. Some of which you’ll need, some of which you won’t. The goals and objectives we mentioned before can help identify certain capabilities your program needs at launch. But what you also need to consider is the long-term potential and plans for your program. If you have long-term objectives and plans to grow, but launch with a platform with basic capabilities, you might find yourself a year or two after launch needing to find a new provider - again.

The backbone of any successful loyalty program is a customer loyalty platform with robust features and scalable technology that can adapt to your business. Here’s what to ask potential loyalty program providers about their loyalty program technology:

• Customization & Scalability – Does the platform allow for customization such as unique points earning rules, customer offers or promotions, and program design and branding? Does the platform use a flexible build that can grow and scale with your business?
• Omnichannel Access – Can customers access and use the loyalty program across multiple channels, such as desktop, mobile, social media, apps, and point-of-sale?
• Data Capture & Reporting – What kind of data points can the platform capture? What analytics tools or reporting capabilities does the platform offer? This is especially important if you already know your brand has specific data points or reports the program needs to be able to handle. 
• Integration Capabilities – Can the platform integrate with your existing software and support systems, such as your CRM, POS, e-commerce, and marketing automation tools? Not being able to integrate and send/receive data across your business can hurt your program's effectiveness and impact.   

3. Rewards & Incentives Management Tools

Rewards and incentives are a core element of any loyalty program. Offering the right rewards to the right customer at the right time helps to nurture them into becoming a loyalty brand advocate. You want to look for a loyalty platform that can provide you with the right reward structure and catalog options that you want for your future loyalty program and that your customers will enjoy. When evaluating loyalty program providers, consider:

• Rewards & Incentives Options – Does the vendor provide diverse rewards, such as digital & physical items, coupons, cashback, or experiential rewards? Does it have customization options such as the ability to select specific rewards or categories to include in your the rewards catalog, or allow you to offer branded merchandise or products? 
• Redemption Process – How are customer rewards redeemed and fulfilled? Keep in mind that typically the simpler and easier it is, the better. 
• Gamification & Engagement Features – One of the biggest ways to increase loyalty program participation is to give customers more options to earn points than just purchases. Does the loyalty program provider allow you to include gamification elements in your program, such as challenges, missions, and milestone achievements, to drive customer engagement? Can you increase customer interactions by offering brand content, quizzes/surveys, or educational materials? 

If you’re still not completely sure what your rewards structure will be for your loyalty program, your biggest priority should be looking for vendors with a flexible reward management system. Flexible rewards management will allow you to offer the right relevant rewards and incentives that your customers will love.

4. Data Compliance, Security, & Fraud Prevention

The number of data breaches and sophisticated scams has skyrocketed in recent years.  making customers more wary and vigilant than ever when it comes to their personal information. Customers are more likely to abandon a brand that suffers a data breach, and rebuilding customer trust after a breach can be difficult. This is why data security and fraud prevention are now major priorities for businesses, especially for loyalty programs. 

Loyalty programs can sometimes process sensitive customer data and financial transactions, making compliance and data security a must. To minimize the risk of your future loyalty program suffering a breach, your potential providers should include strict data security and compliance measures. 

• Data Privacy & Security Processes or Certifications – Your future provider should at the minimum comply with regulations like GDPR, CCPA. It’s also good to look for providers who have more advanced accreditations such as PCI-DSS or SOCI or II. 
• Fraud Prevention – What fraud detection or security tools does the loyalty platform have to help minimize potential abuse of rewards or offers?
• Receipt Validation – If your program involves receipt scanning, check the accuracy and reliability of the validation technology, as well as the security of any data integrations used to transfer information between systems.

The best way to protect your business and your loyalty program is to look for loyalty program vendors with established and comprehensive security and compliance processes. 

5. Customer Experience & Engagement Features

An engaging and enjoyable customer experience can make or break a loyalty program. Creating those customer experiences will partially depend upon your brand and customers; for example, a sports/fitness brand will likely have different customer wants and needs than a food & beverage brand. The sports brand might want to allow customers to earn points for specific fitness classes, while a food & beverage brand might want to reward customers with bonus points for trying new product releases. 

You want your loyalty program to be intuitive and engaging to drive customer participation. Key loyalty platform elements to look for from a loyalty program include: 

• Personalization Tools – Does the loyalty platform allow you to personalized the loyalty experiences for customers, such as exclusive offers, personalized content, or 1-1 experiences  demographics?
• Program UX – Is the program's front-end and back-end experience easy to use and navigate for both customers and program administrators? A difficult or clunky user experience can hurt a loyalty program's performance. 
• Member Communication Tools – Can you send personalized member communications for your loyalty program? Does the platform offer automation tools for emails, SMS, push notifications, or in-app messages?

Customers want loyalty programs that make them feel valued, rewarded, and that they’re of a community. Personalized offers, content, and messaging goes a long way in creating that “belonging” experience that increases customer satisfaction and boost loyalty program useage rates.

6. Account Support & Customer Service

When evaluating a potential loyalty program vendor, remember to consider your own business needs as a client before, during, and after your loyalty program's launch. If your program is smaller and more self-managed you might not need much dedicated support; however, if your program is an enterprise-level build you likely need greater levels of account management and customer support services. To find a vendor with the right support and service levels for you, consider: 

• Industry Experience – Does the loyalty program provider have previous experience or successes working with brands in your industry or sector?
• Customer Support & Account Management – What kind of customer support options does the vendor offer? Do they have one base level or do they have multiple options or tiers to you can choose from depending on your needs? Do they provide you with a dedicated account team or 24/7 technical support?
• Ongoing Strategic Guidance – Does the provider offer ongoing optimization strategies and program performance insights, such as strategic planning meetings, QBRs, or year-end reviews?

Again, you might not need a vendor with in-depth service options if you’re just looking for a self-managed loyalty platform. However if your goal is to launch a well-rounded, strategically-built program then a knowledgeable and responsive loyalty program partner will be essential to your loyalty program’s long-term success.

7. Program Costs & ROI 

Loyalty program pricing can fluctuate on a number of factors. You likely already know at least the scope of your budget at the beginning of the evaluation process. While pricing shouldn’t be the sole factor in your decision, it’s important to understand the different cost structures you might see from potential vendors:

• Pricing Models – The size and scope of your future program will likely play a part in the pricing model depending on the requirements. Some vendors charge a one-time build fee, while others utilized a SaaS subscription-based model.
• Special or Ongoing Costs – Some vendors include program features such as integrations, advanced reporting, or customer support are in the build fee, while other vendors might cosider them add-ons that cost additional fees. Be sure to know which group your required program features belong to when evaluating.  
• ROI Measurement – To prove your program is both performing well and financially stable to upper management, you need the right tracking and reporting tools. How does the provider help you track program performance and optimize ROI?

Understanding different financial factors such as costs for initial program build and ongoing costs can help you narrow down your list of options to ones that offer you the best value and service for your program budgets. 

8. Case Studies & Client References

The list of considerations we’ve discussed so far is long but by no means exhaustive. Even after eliminating several vendor options, you might find yourself with a handful of potential loyalty program vendors left. To help finalize your top picks for evaluation, it is always good to understand a potential vendor’s track record for brands or clients similar to your business to help give you the best idea of success. 

• Case Studies – Real-world success stories and case studies can be extremely helpful for evaluating a loyalty program vendor.
• Client Testimonials: Ask potential vendors for testimonials from their existing clients. Similar to case studies, testimonials or endorsements from existing clients can give you a better understanding of what it's like to work with a particular vendor.
• Program Results: While some vendors may not disclose specific performance numbers in case studies or testimonials due to client confidentiality agreements, it's always good to look for any results data attributable to past programs, such as increased sales volume, customer engagement rates, or year-over-year revenue growth. 

Finding a program provider with a strong track record of success can make you feel more confident in their ability to deliver results for your business.

Conclusion

Selecting the right loyalty program provider is a critical decision that impacts customer retention, engagement, and overall brand success. By carefully evaluating your business needs, platform capabilities, security measures, and vendor expertise, you can choose a provider that aligns with your goals and delivers long-term value.

Are you exploring loyalty program providers? Contact us today to learn how we can help you build a high-impact loyalty solution tailored to your brand’s needs.