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Customer loyalty software describes any computer or web-based tool used for tracking and strengthening customer value after the point of purchase, and the category may include customer engagement software, advocate marketing software, loyalty programs, and gamification.
The customer loyalty market is changing, both in form and in function. When you consider customer loyalty, you probably think of a loyalty card. Further, you think of a points-based system in which customers accrue credit for each purchase. In these systems, customers receive credit in a brick and mortar store or through online purchases. This credit acts as a secondary type of currency the customer redeems for rewards, usually after they reach a predefined number of points.
While retailers find success with both the physical loyalty card and point-system, a different type of loyalty market is emerging. This market responds to the new type of interaction happening between brands and consumers. Since customers engage with retailers in many online spaces, the majority of interactions consumers have with an organization will not result in a purchase.
That means the best customer loyalty programs now have to extend past sales.
For instance, a visitor who frequents a website to read a blog post may not be far enough down the sales funnel to make a purchase, so incentivizing a purchase would be a waste of resources. However, rewarding consistent readership with an offer to download exclusive content or with recognition via social media are both methods for keeping these customers engaged. This type of interaction turns the concept of purchase-based loyalty on its head, and changes the way businesses think about their customer relationships.
Today’s buying process is complex, and raising retention rates post purchase often requires more than sending coupons to past customers. Loyalty happens across a range of actions—often centered on the consumption of content.
This type of interaction is a response to consumer expectations, but it typically requires integrating a software platform dedicated to rewarding customers. This guide details the features of customer loyalty software, examines how businesses can measure ROI, and discusses the continued use of purchase-based loyalty programs.
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Compare Customer Loyalty Software, by Category
|Retail||Enterprise||Social / Content Engagement||Advocate Marketing|
|Perkville||Belly||Captain Up||Annex Cloud|
|Loyalty Box||Microsoft Dynamics 365 - Gamification||GaggleAmp||Customer Advocacy|
To properly reward non-purchase behavior, businesses will need to structure rewards that create user loyalty. These rewards can vary from access to unique or limited-time content to gamification elements such as special statuses or badge icons. Robust loyalty program software also allows businesses to customize their rewards based on the context of the interaction as well as the type of loyalty behavior the business wants to promote. The best customer loyalty programs should make distributing rewards intuitive for business users, making oversight of the rewards program straightforward.
Loyalty game elements drive users to engage in specific behavior, so we often see gamification in loyalty programs. By structuring loyalty campaigns into levels or tiers and rewarding users for engagement, organizations can create experiences that play on a user’s sense of progress and increase their motivation to participate.
Companies can also take advantage of loyalty rewards with time-limited campaigns like contests, especially when software provides intuitive customization of limited-time loyalty events.
While online interactions drive many of the new innovations in customer loyalty software, some leading programs offer businesses omnichannel capabilities. This means customers access loyalty rewards and features through three main channels: desktop, mobile, and in-store.
Even though customer expectations have increased for online interactions, they have not lessened their in-store expectations, so companies must track customers across all available channels to get a full picture of the customer’s actions. Providing consistent interactions across digital and in-person interactions is also known as a seamless experience.
For example, if one of your customers receives coupons in his email, an omnichannel or seamless experience would allow this customer to open the email on their smartphone and scan the coupon in-store.
Of course, mobile access may not be relevant for programs that feature a physical card, though it’s becoming more common for card-based programs like Pirq to take the form of a digital app that customers also scan through their phone.
Organizations that implement loyalty functionality on their site must consider how their new loyalty program software will integrate with legacy systems. To function properly, the loyalty program software will need to connect via an API to content management systems like WordPress. Otherwise, your installation will require heavy support from the software vendor, which could delay the launch date and make future software changes difficult.
Also consider social media integration, which makes it easier for customers to log in with their social profiles and for your company to distribute rewards for targeted behavior through social channels. You can also use integrated email programs to distribute coupons and other rewards to your customers.
Similarly, look for loyalty solutions that integrate with your customer relationship management system (CRM). With a customer loyalty and CRM system integration, businesses organize their customer information and track the behavior of each customer wherever it happens.
Brick and mortar businesses can’t ignore digital customer loyalty and should look for point of sale systems that integrate with their loyalty solutions. Card-based products like Belly feature unique hardware for customers to scan their loyalty card, while others will allow scanning straight into the POS system. Advantages exist to both: the latter may be more user friendly for your employees and customers while the former collects more detailed information about buying habits.
Common to both card-based and web-based customer loyalty software, analytics features enable businesses to gain greater insight into the buying behavior of customers. You can then cross reference this information with demographic data to develop customer profiles that better target your customers. The type of data you gather will vary depending on the type of platform you deploy.
For example, web-based loyalty management software captures data on how customers act when they visit your site, when they mention your brand on social media, and when they make a purchase. Card-based systems gather a narrower set of data—mostly buying behavior and demographics—though loyalty software vendors like Perkville can sometimes gather more robust data.
How to Measure Your Return on Investment
Measuring the effectiveness of loyalty has historically been limited to an incremental model: customers receive rewards or incentives, and an organization waits to see who responds over a certain period of time. Analytics tools make it easier for you to measure the return from your loyalty program software. Using an uplift model, you can track the effectiveness of your efforts.
An uplift model creates a control group against which to test the returns of your loyalty incentives. The control group consists of customers who were not exposed to your customer loyalty program, which allows you to measure the impact of the independent variable—your incentives and rewards—for comparison against the control. Some top tier vendors include this in their software platform, you can also build an uplift model yourself.
Once you’ve let your model run for a couple of months, you can examine the data to analyze which rewards and incentives are most effective at spurring engagement and which tactics translate into the most significant return for your business.
- Which Customer Loyalty software is right for your business?
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