Last updated on November 22, 2023

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Nikhil Naidu
Product Marketing Manager @ Yotpo
March 2nd, 2020

You’re already doubling down on retention for 2020, but choosing the right loyalty provider can be harder than it looks. This buyer’s guide is designed to get you thinking about what your brand actually needs from a loyalty program.

Table Of Contents

It’s no secret that customer acquisition costs are on the up and up. Shuffling ad spend from channel to channel can help mitigate the expense, but savvier brands are instead looking to offset the unpredictable costs by focusing on retention to drive LTV.

While there are several solutions brands can use to increase retention — from email to SMS marketing to retargeting ads — a loyalty program, when done right, is one of the most effective, driving both incremental purchases and long-term allegiance to your brand. Installing a comprehensive loyalty solution, however, is very different from adding a basic plug-in to your site. In order to get the most out of your loyalty program, you need to make sure you choose not only the right solution, but also the right tech partner to help you implement it most effectively.

We created this guide to help you evaluate loyalty programs and ensure the investment you make sets your brand up for success. Obviously, we’re not entirely free of bias here — but we work super hard to make sure that Yotpo’s loyalty solution answers to all the needs of mid-market and enterprise brands and then some. Regardless, every brand needs to choose the solution that’s right for them.

Defining your goals

Before you begin looking into specific solutions, it’s essential to make sure you know exactly what you want to get out of your loyalty program.

Improving retention is an obvious goal, but it’s also quite broad. Make sure you consider what other metrics you want to impact through your program. Do you want to use it to increase AOV? Add followers to your Instagram account? Incentivize shoppers to try new product lines? Improve engagement among your brand community?

Contrary to popular belief, loyalty programs aren’t just about aren’t just about earning points as you spend more money; they can be used to achieve a wide range of goals, if the solution you’ve chosen is flexible enough and set up correctly.

Once you’ve settled on what goals you hope to achieve through a loyalty program, you’re ready to start asking the right questions.

1) Is this solution flexible enough for my needs?

The most basic, out-of-the-box loyalty solutions allow brands to create simple, punch-card type experiences. But with 28.7% of shoppers looking for more interesting rewards, and 38% saying their biggest loyalty program pain point is that making a purchase is the only way to earn points — collecting points and claiming discounts doesn’t always cut it anymore.

If you want to achieve some of the goals listed above, you’ll need the flexibility to perform actions like:

  • Scheduling promotions to reward customers with 3X the points when they purchase new products on the day of release.
  • Automatically upgrading your best brand advocates to your top VIP tier when they’ve referred 10 friends to your brand.
  • Allowing top customers to purchase exclusive VIP-only products directly using the points they’ve accumulated through the program.

Make sure to choose a program that allows you to customize incentives so that you can go beyond retention to impact community-building, cross-selling, etc. You’ll also want to ensure that the look-and-feel is as customizable as the reward options, so that your program is always on-brand and seamlessly incorporated into your website.

2) Does it integrate with my tech stack?

Creating unique, on-brand loyalty experiences requires more than just flexibility within your program: it also means that your solution has to integrate with the technology that helps deliver those experiences. For example, if you want to send out an email or text message to your highest loyalty tier members to let them know about new, fun swag they can get, your program needs to work hand-in-hand with your email service and SMS marketing providers. Or if you want to seamlessly reward a shopper for submitting a review, you need to integrate with a reviews provider as well.

The strength of your program and the likelihood that members will redeem their points depends on your ability to send out smartly segmented emails, texts, and ads, as well as to create unique experiences for earning points. If you don’t choose a multi-product solution (i.e. one that has both loyalty and reviews or loyalty and email) , make sure to go for one with many deep integrations, so you’ll be able to provide personalized customer experiences easily across channels.

3) How will I measure success?

There are multiple factors to consider when choosing and building a loyalty program, from customizable discounts to integrations with your tech stack, and more. The most important (and the most often overlooked) factor, however, is loyalty performance measurement. Measuring the impact of your brand’s loyalty program really means measuring incremental changes in customer behavior — and, without the right tools, reporting on that kind of human data is difficult.

In the past, brands looking to measure loyalty program value focus on metrics like number of points earned, average amount spent, number of referrals made, etc. This data is important in measuring engagement, but it doesn’t provide brands with the information that really matters when it comes to evaluating the ROI of a loyalty program. Instead, brands should be asking: Does this loyalty program work? And how is it changing customer behavior?

Be sure to select a program with robust performance dashboards that dig into factors beyond engagement to give you a true read on ROI.

4) How can I sell my team on this?

No matter how much you believe in a loyalty solution, the decision often comes down to the team’s budget and buy-in. Since flexible loyalty programs impact metrics across the board — from social engagement to purchases to traffic on your latest blog post — your best bet is to show your colleagues how they will be able to use the program to drive their own varied KPIs.

If a tool meant for customer marketing suddenly becomes a robust solution that also serves the eCommerce director, social media manager, and email marketing manager, it’s several times more valuable and the budget is easier to justify. Start by sharing your solution with the team and then present a united front to the key decision-maker.

Conclusion

Investing in a loyalty program solution will have widespread impact across your business metrics. Still, your best chance for success requires a lot of research and thoughtful consideration around what you hope to achieve, which solutions can provide you with the necessary infrastructure to meet those goals, and how you’ll measure results. To kick off your journey into answering the questions in this guide, check out Yotpo’s Loyalty & Referrals offering here.