, , ,

A Practical Look at Executing Modular Loyalty

WM Circle Logo

By: Wise Marketer Staff |

Posted on June 6, 2023

Best Practices illustrated through two case studies

Modular Loyalty represents the future of loyalty technology architecture. The concept can be defined as a medium to make low-risk enhancements to your loyalty program. Modular Loyalty affords the ability to pace the development of your program in a gated model in order to deliver the capability that your customers are asking for, within their desired time frames.

Referring to any technology as “plug & play” invites skepticism, but Modular Loyalty is a concept worthy of the name. As we are seeing through adoption by multiple retailers, Modular Loyalty dispels one of the most damaging urban myths of customer loyalty, that retailers can’t advance their loyalty program delivery without replacing entire platforms. In the vernacular of IT planning rooms, retailers should not have to “rip and replace” a platform to find new benefits, serve customers better, and unlock new return on customer investment.

In a recent Wise Marketer webinar with Exchange Solutions executives Scott MacDonald, VP Product and Marketing, and Jen Hickling, VP Loyalty Solutions Engineering, we hosted a discussion that explained how to properly define and describe Modular Loyalty and how to apply it in today’s fast moving business environment.

Much of the conversation in that webinar was dedicated to understanding the concept of Modular Loyalty, and we thought it’s important to share clear illustrations of how Modular Loyalty can be executed in practical terms. We turned to Scott and Jen once again, asking them to share real life examples of how Modular Loyalty works. Here are two case studies that illustrate the power of Modular Loyalty.

Case Study – Luxury Men’s Fashion Retailer

There is nothing quite as personal as fashion. Everyone has their own style as well as occasion to wear specific types of clothing. Skin tones and other attributes are unique to individuals and choosing the right color palette for clothing can make or break an outfit. For those reasons and more, this leading fashion retailer wanted to improve its ability to deliver targeted and more relevant offers to its loyalty program members.

The challenge was made greater as the retailer wanted to deliver these offers in near real time at the point of purchase in its stores. Unfortunately, the point-of-sale system did not offer the flexibility to deliver on the need and the retailer had limited internal resources to task for the solution in a reasonable period of time.

There were a few limitations to defining a potential solution. The retailer did not have the budget or time to go through an RFP process, select a new provider and start the lengthy process to “rip and replace” its current system. Competitive dynamics demanded speed to market, and this was not a project that could simply be given to an outside consulting team to create a contracted solution. Finally, the solution had to be straightforward, minimizing complexity and bringing with it the ability to test and adapt to new circumstances.

Using a Modular approach created and delivered by Exchange Solutions, the retailer was able to be in market with the new capability it desired in less than 3 months. Within the first 90 days, the retailer was able to gather data and measure results. The results were impressive, showing that the applied use of more targeted promotions and offers at the point of sale resulted in:

  • More than a 10X increase in promotional efficiency (cost to deliver versus results)
  • 50 percent increase in average transaction size for participating members
  • 40 percent increase in captured sales, meaning much higher engagement with the campaigns

The Key take-away from this scenario showed the value of progress over perfection for retailers working in a fast-moving environment. While the retailer believed it was making a “tough” decision to prioritize progress to meet a need over carefully configuring a “perfect” solution, they found success by being able to move at the speed of retail and keep up with changing customer demands.

Case Study – National Pharmacy Retailer

Pharmacies market thousands of individual products to customers on a daily basis. The epitome of daily-spend retail, this Pharmacy needed to do a better job matching product to purchaser. The pharmacy knew they could benefit from delivering truly personalized offers but had an insufficient path to execution at scale. In effect, they were trapped by the limitations of their existing loyalty technology and point-of-sale system.

A critical by-product of this situation was that the Pharmacy was missing out on being able to optimize significant levels of vendor funding. There was tremendous pressure being placed on unlocking the value of the vast stores of customer data collected and vendor funding was being placed at risk as data usage continued at a sub-par level.

As moving the queue in the stores is highly correlated to customer satisfaction, the desired solution could not impact system performance negatively. The Pharmacy demanded a seamless (or close to it) integration of any new technology with its existing loyalty platform.

After a trial period of less than six months, the Pharmacy’s Modular solution resulted in:

  • 2X increase in offer engagement, meaning twice the number of loyalty members activated available offers
  • 35 percent reduction in offer costs
  • 50 percent overall increase in operational efficiency

Key Take-Aways:

  • The Pharmacy retailer was not only able to make better use of its data and optimize vendor funding, it also responded to pressing customer demands in a short time frame
  • Tangible financial objectives were evaluated and achieved
  • New learnings were adopted internally as the retailer was able to adopt a progressive path to execution. The “crawl, walk, run” symbolism is anything but trite here. This retailer was able to realize continuous improvement to get its desired results.

These two case studies tell the story of two retailers who fought their way “out of the box” through a modular approach to capability improvement and technology enhancement. They also illustrate that Modular Loyalty is not just a concept to be considered for the future, it is a new approach to architecting loyalty technology solutions that can be implemented today.