What Your CTO Needs to Know About Modular Loyalty Technology

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By: Wise Marketer Staff |

Posted on May 12, 2023

How to architect the loyalty platform of the future

The Loyalty Steering Committee

Imagine that you are the brand’s CTO and that you’ve been invited to join a newly formed Loyalty Steering Committee. You’ve heard the group is being formed to promote a cross-functional approach to managing the company’s loyalty program, but don’t know much more. Walking into the first meeting there’s an agenda full of projects being proposed, and cumulatively they represent a heavy IT impact.

The marketing and businesspeople are making the case that to address customer feedback and to respond to a recently launched campaign by a key competitor, the company should add capabilities to serve customers more conveniently and save them time. The meeting chair goes further to urge that in order to continue to lead and separate from competition, these changes must be made sooner than later, all in the name of innovation.

“We need to be able to offer promotions at the point of sale for our instore shoppers and also need a complete revamp of our mobile app or we are at risk” says the Chief Customer Officer (CCO), continuing “Moreover, we need to add a gamification layer to our loyalty program, as it’s the only way to stimulate continual engagement with the customer base.”

Quickly realizing the meeting is losing focus, you gather everyone’s attention and say, “look folks, we need a reality check.” “These may be good ideas, but we have a backlog of IT projects a mile long that will keep our team fully tasked for at least 18 months. The tech debt we are dealing with is enormous.”

“Don’t worry sir, I think I’ve found a solution” says the CCO. “We’ve talked with one of our partners who is proposing something they call Modular loyalty… it’s supposed to address exactly those concerns you are expressing.”

The Reality Check

This is anything but a fictional tale of corporate collaboration. There are more and more organizations adopting an enterprise approach to building customer loyalty and we’ve sat in on many of these conversations to witness the way good intentions can be derailed by the practical realities of corporate budgets and resources.

The story does mirror actual conversations taking place at many big brands today, EXCEPT for the mention of Modular Loyalty at the end. A handful of loyalty providers have adopted a modular approach to loyalty technology architecture, one that provides flexibility to brands in onboarding incremental or improved capabilities. Forrester cited Modular Loyalty as a key consideration in evaluating loyalty providers.

The concept is one that is meant for today’s business climate and there are market examples that serve as evidence that “bolting on” technology can be a more sensible and cost-effective way to respond to market needs than engaging in a lengthy and costly “rip and replace” approach that has been practiced for years by brands who support loyalty programs.

Exchange Solutions is one of the providers in the Forrester report mentioned as bringing the Modular Loyalty approach to market effectively.

Modular Loyalty

The concept has a name, but what is it exactly and what is driving the demand for this trend?

Retailers are challenged to keep up with changing consumer buying patterns and they are often perplexed about how to onboard and activate the technology needed to serve their customers without creating time consuming and expensive projects in their organization. Management is focused on budgets and wants to drive greater results at a lower cost.

Even today, there’s an “urban myth” in loyalty technology that for retailers to advance their solution capabilities and keep pace with customer demands, their first, maybe only, option is to “rip and replace” their entire loyalty platform in order to accomplish their goals. This way of thinking is no longer necessary and could be altogether foolish, as a broader set of options are available to extend capabilities and meet consumer expectations.

If you consider that customers are changing rapidly, let’s say evolving in eighteen-month cycles, then how can IT projects that take that much time or longer be responsive to business needs? As mentioned, more retailers are taking an enterprise approach to their customer marketing efforts, therefore IT, Operations and HR business leads need to participate in planning alongside their colleagues from Marketing, Finance, and the executive suite. Offering a modular solution that meets enterprise needs satisfies the greatest number of these constituents in the business.

Customer expectations are focused on technology that works. A brand can have great strategy and technology, but it must work consistently, or customers will be disappointed.

A select group of providers are building on cloud-based solutions to deliver modular solutions. They lead with technology but have designed that technology to be installed and activated in short time frames at reasonable cost in order to test the desired capability through customer and market response. Being able to deliver added capabilities with quick “up time” and at reasonable cost will drive better results and lead to better client retention.

Modular technology could be the defining element in the future of loyalty technology architecture. This is a moment in time when brands can and should evaluate their ability to respond to strategic needs in an efficient way. Next week’s webinar hosted by The Wise Marketer features a conversation with executives from Exchange Solutions to expand on this topic and give you what you need to engage in the conversation with your team. Join us for this revealing dialogue on Wednesday May 17 at 1pm ET. Register here.