51 major loyalty platforms: flaws & benefits
Following a new benchmarking study of 51 global customer loyalty platforms including the leading solution providers and programme operators in the coalition, single-operator and B2B markets, the key weaknesses were still found in bonussing capabilities, rewards and fulfilment, programme management tools and performance measurement, according to Mike Atkin of MJA Associates.
Apart from evaluating the platform capabilities based on a detailed benchmarking checklist - covering a wide range of market sectors including grocery, fashion, fuel retailers, telecoms, airlines and financial services - the study also reviewed and scored other features such as front-end and back-end links, loyalty programme management tools, quality assurance processes, and any relevant accreditations that may be required for the vertical market in which the provider operates.
The main areas of the Benchmarking Process included:
- Service Models and Experience;
- Technology: support systems;
- Basic end-to-end solution;
- Rewards & fulfilment processes;
- Bonus rules engine;
- Data analytics platform & tools;
- Member communications;
- Financial transaction processing;
- Member set-up & maintenance;
- Admin capabilities (programme management tools);
- Currency management;
- Reporting & dashboards;
- Documentation and quality assurance (QA);
- Customer care screens & processes;
- Security & audit;
- Integration and implementation;
- Surrounding platforms & links.
"Sadly, many programmes are still mainly reward schemes that do not have the functionality and, sometimes the internal support to develop real customer loyalty," said Atkin. "However, I have reviewed several platforms that actually can deliver greater functionality than the programme offers. When taking a more holistic view of a customer loyalty programme, I often see that the most successful and effective schemes are where loyalty or customer management is part of the business culture. The loyalty solution should be used as a marketing tool and be at the hub of the business rather than just a promotional tool."
Bonussing capabilities Atkin believes that the success of a loyalty programme depends on the platform's ability to create, deliver and manage relevant offers to members that will influence behaviour and create loyalty. Many systems can use data analytics tools to segment members/customers but few platforms enable targeted bonussing to use the data effectively. Many solutions can create double point offers, product group and spend value bonuses but the better platforms enable bonuses to be created based on SKU's, date/time, payment type, member group or segment, location, terminal and some enable cyclical and other more sophisticated offers.
The trend toward supplier funding of points/miles has meant that software needs to manage and report on these campaigns and leading retailers are using this functionality to add value and reduce costs for programmes. Atkin also found platforms that enable programme managers to easily set up and manage bonus offers using customer care screens, with supporting ROI and liability management tools.
Rewards and fulfilment Today's consumer understands the 'points mean prizes' concept, and also the value of rewards. Programmes that offer cashback and vouchers are making the CVP (customer value proposition) very weak and transparent. A typical 1% funding rate needs to be improved by creating attractive low-cost, high perceived value rewards, and loyalty platforms need to enable this.
Many retailers are now realising the benefit of working with redemption partners to increase the value of rewards by enabling members to redeem currency in-store and online. This not only improves the customer value proposition but actually increases loyalty while ensuring that a loyalty programme is not just seen as a discount on purchases.
Apart from enabling the set up and management of these type of offers, a loyalty platform must record and report on member and partner activity to measure performance. The member redemption journey should be simple and enable flexibility to 'pool' points (i.e. householding), add cash to points, track reward deliveries, print vouchers, link to partner sites and communicate reward offers via web sites, email, SMS and so on.
Programme management tools Programme management tools varied significantly within the various platforms benchmarked, although almost all the software vendors and solution providers include them as part of their basic offering. These tools usually enable programme managers to set up offers, access performance data, monitor promotions, identify training needs and trends, although many of the screens presented were not very user friendly.
Good programme managers are hard to find, and few practitioners recognise the importance of their role within the business. Another weakness in many platforms is therefore a lack of documentation on how the programme works and how to use the various tools provided.
Performance measurement Considering the enormous expense involved in creating, delivering and managing loyalty programmes, there are often very few controls built into a platform to enable real-time performance measurement.
While most loyalty platforms offer improved functionality and data collection facilities to enable practitioners to cost-effectively create and target member offers, there are still many that do not measure if or how a particular tactic or offer is performing.
Successful programmes are monitored, evaluated and adapted on a regular basis, and corporate financial managers are increasingly demanding this.
Recent platform developments The global trend toward coalition programmes has created a demand for more sophisticated platforms that enable currency and partner management and this has, in effect, moved the goalposts for many vendors and practitioners. While many of the solutions are adequate for operating single brand programmes, only a few have the necessary functionalities to operate and manage multi-partner schemes.
This has meant that many practitioners are looking to enhance existing software and/or source new technology with the latter option often proving to be the most cost-effective. Many solution vendors now offer SaaS (Software as a Service) and/or licence agreements, and platforms are quick to deliver and provide many management tools and applications to enable programmes to be operate more efficiently.
The three main developments in platform functionalities over the past few years have been:
- Currency and partner management The leading platforms are capable of managing highly sophisticated currency arrangements within loyalty programmes, enabling earn and burn partners to purchase or redeem points and miles with different rates and terms. This capability will mean that operators can improve programme performance and profitability by enhancing the CVP with supplier-funded offers (e.g. double points on wine in the supermarket) and, at the same time, reducing programme costs.
This functionality can also allow the programme operator to increase the perceived value of its currency by enabling redemption partners to redeem points and miles at higher values (e.g. making currency worth 3 times the face value). The improved functionality that several vendors offer can automatically report on partner issuance and redemption performance, and thus more effectively manage financial liability.
- Data collection and customer care While most platforms will collect member transactional data, very few actually collect and analyse lifestyle data. Members' lifestyles evolve and are constantly changing; they get married, change jobs, move house and so on, and it is important that programme operators collect and use this data along with other personal attributes (e.g. preferences) and use it when making offers to influence behaviour.
Many of the larger programme operators now offer enhanced capabilities to collect this data via customer care agents and online surveys, meaning that programme members can be offered more relevant and attainable offers to earn and burn points and therefore increase loyalty. Customer care screens offer greater functionality for agents, and member pages on web sites enable and increase online activity that further reduces operating costs and improves the CVP.
- Social networking links Many programmes, particularly coalitions, are now targeting the family rather than the individual and this tends to mean the over-30s. Global trends in access to mobile technology has meant that the better programmes and platforms now provide sophisticated back-end links for messaging and communication with smart phones. This not only attracts the younger consumer but also reduces communication costs, and there are now many iPhone and Android mobile apps with clever tools to help influence member behaviour.
Tips for success Among MJA's tips for a more successful loyalty programme:
- Benchmark your platform against your competition; you may find it is far more capable that you realise.
- Recruit and/or train a loyalty programme manager.
- Collect and use lifestyle data as well as transactional data.
- Future-proof your RFP to avoid unexpected additional costs in the long term.
- Use your technology creatively and target your best and best potential customers.
- Put your loyalty programme at the heart of your business.
The benchmarking process now includes a commercial checklist to evaluate platform performance and vendor experience as well as the functionality spreadsheet that identifies the capabilities that the software can deliver. This service enables programme operators to create detailed RFP's to create or enhance a scheme and for platform vendors to see how their solution compares with global competitors. The study includes questionnaires covering commercial systems and capabilities, a full report and Gap Analysis, and weighted spreadsheets providing scores in comparison to best practices.
For further details of the benchmarking study, please contact Mike Atkin at firstname.lastname@example.org.