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Headless Loyalty Software Benefits and Drawbacks

Kate Banasik
Kate Banasik
March 26, 2021
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Headless Loyalty Software Benefits and Drawbacks

Table of contents:

  • What is headless e-commerce architecture?
  • Why headless?
  • The benefits of headless commerce
  • What is headless loyalty software?
  • What are the benefits of headless loyalty software?
  • What are the drawbacks of headless loyalty software?
  • Headless loyalty software vs. monolithic loyalty system
  • How to choose a headless loyalty software?
  • Voucherify – Headless Loyalty Software

What is headless commerce?

"Headless commerce" or "decoupled commerce" is a software architecture where the frontend and the backend are separated. This approach can be used almost in any area of ecommerce, for most software applications.

Headless commerce requires an app-based connecting layer between the frontend and backend where the communication occurs via API calls, which results in more streamlined architecture and produces less network traffic due to smaller payloads.

Headless Commerce is the current best-of-breed solution. Developers don’t build commodity software, like email systems, payment systems, booking engines anymore. They simply connect via API to best-in-class platforms that specialize in providing individual functions, or to the microservices necessary to deliver their chosen functionalities to the users.

Read our interview with Greg Lord where he explains the benefits of so-called "Composable Commerce" that is, at the core, microservices-based commerce.

Why headless?

As we have written in our blog post about Headless Commerce, going headless is a major technological trend adapted by major software companies and consultancies:

  • Magento says the future is headless.
  • Isobar educates their customers how to use the headless approach to create long-term customer relationships that can deliver sustainable business growth.
  • Demandware (Salesforce) places its bet on the democratization of retail through API-first approach. 

Headless commerce became a trend not without a reason. There are plenty of benefits of decoupling frontend from backend, as we have written in our blog post.

What is headless loyalty software?

Headless loyalty software is API-first loyalty platform that enables any software application to integrate loyalty functionality via API. Headless loyalty platforms are backend, designed to process any type of loyalty transaction in a manner that is decoupled from the frontend, customer-facing environment. This means, in simple words, that the logic, validation, redemption and tracking of the loyalty program will be managed by the API of the headless rewards software but the data to feed the loyalty program like, for example, product data, customer data will be pulled from your back-end (your CRM system or PIM system, for example). The loyalty program and its data, for example, number of points or available rewards, will be displayed on your front-end applications (mobile app, website, chatbot, you name it).

This is a graphic prepared by MACH Alliance that explains quite well where a headless rewards software is within a headless commerce architecture:

Technology || Enterprise MACHified.

If you are wondering what a headless retention software should offer when it comes to features, read our post about the design of a loyalty software architecture where we cover a comprehensive overview of loyalty program features that matter.

In short, some of the features a headless loyalty software should cover are:

  • Personalized incentives.
  • Rewards stacking.
  • Validation rules.
  • Start and expiry dates.
  • Loyalty program tiers.
  • Budget limits.
  • Multi-channel distribution.
  • Automatic Reminders.
  • Out-of-the-box integrations with various software solutions.
  • Features that support scaling and maintenance.
  • Customer touchpoints interface (digital wallets, customer cockpits, landing pages and more).
  • Programmable (automated) loyalty campaigns.
  • Webhooks.
  • Customization possibilities with custom rules, events, metadata.
  • Authentication & monitoring.
  • Meeting the legal requirements (like GDPR, PCSS etc.).
  • Offering Customer Support.

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What are the benefits of headless loyalty software?

Omni-channel compatibility

The ability to decouple the frontend from the backend gives much more flexibility when it comes to frontend platform choice, allowing for truly omni-channel distribution. It also allows for more flexibility in creating the frontend, as compared to rigid frontend solutions when using monolithic software. Having an out-of-the-box solution for the backend logic in place shortens the time-to-market greatly and saves a significant amount of money and time that otherwise would have to be spent on introducing a back-end logic. On the other hand, if you compare a headless retention software to an out-of-the-box monolithic (single-vendor) solution, it gives you much more options and flexibility when it comes to both features and frontend choice.

Affordability

Reaching an infinite degree of flexibility that API platforms offer, if you plan to build it yourself, requires a great deal of investment which is simply not worth it if this is not your core business. Even if the initial investment cost might be comparable to the cost of paying a subscription over a couple of months, the real costs come with maintaining and upgrading the system. While you might think you will be fine with just 10 features at the beginning. With time, your needs will expand and as will your budget spent on building and maintaining such solutions yourself. Not even mentioning the hosting costs!

Instead of building features that can be readily available from a headless loyalty platform, your developers can focus on designing a scalable and responsive technical architecture, that will allow you to respond to market changes, new opportunities or risks, customer expectations, new distribution channels, sales channels or devices. 

Agility

Thanks to having a headless retention platform in place, you gain a lot of agility. For example, if you need to change the program rules or available rewards quickly, you do not need to code a new set of rules and solve the edge cases yourself. You can do it with a couple of clicks on a dashboard or a couple of lines of request to the API and the API will change the back-end logic for you. You do not need to wait for the change to happen after another release round, you will see the changes immediately on the back- and front-end where the API is connected. The change will be effective on all platforms, mobile, desktop, social media – everywhere, where you use the API. No need to change the rules separately for each device or version. Such agility can be your competitive advantage on the market. In the future, this will be the baseline.

Faster time-to-market

Thanks to out-of-the-box features of a headless retention platform, enterprises can ship their loyalty programs in minutes, once the initial integration is completed. This can help you respond faster to market opportunities and expand your operations by entering new markets or targeting new customer segments.

Easier loyalty management

If your headless loyalty platform provider offers a dashboard to change the settings of your loyalty program, the loyalty program management can be handed over to non-technical teams, like Marketing or Sales. It makes much more sense as they are the ones designing the loyalty programs rules and related communication. It will also take the burden of managing loyalty programs off your developers' shoulders and let them focus on building the features related to your core business.

Optimized backend with less payload

Headless loyalty solution uses open APIs with specific endpoints that are optimized for each specific use-case or business objective. An endpoint in an API is simply the end of a communications channel provided by the API, that allows a specific function to be completed. Hera are some use cases:

  • List all customers who are loyalty program participants.
  • List all rewards available to a given customer.
  • List the number of points collected by a given customer.
  • Assign points for making a purchase to a customer.
  • Convert points to cash when paying for an order.
  • Convert points to a gift card.
  • Convert points to a material reward.
  • Add a customer to the loyal customers segment.
  • Update the customer data and add them to the next loyalty program level.
  • Add different earning rules to specific tiers of the program.

Decoupling the frontend from the backend, via an open API, greatly enhances extensibility to work with any other software apps in the technical architecture. Smaller data transmission payloads improve performance. The packets of information shared via API tend to be quite small, so congestion in the network is minimized as compared to monolithic solutions.

A list of benefits of headless commerce and headless loyalty platforms

There are various benefits of implementing headless commerce. We’ll categorize the benefits and challenges according to the marketer, management, developer, and CTO perspectives.

Benefits for Marketers:

  • Personalized customer experience.
  • Fully customizable look and feel for the whole shopping journey.
  • Quick launch of new brands and customer touchpoints by reusing the same building blocks.
  • Convenience-driven path-to-purchase with untapped marketing channels.
  • Faster customer touchpoints integration.
  • The API-first approach reduces integrating e-commerce and CRM platforms effort by order of magnitude.
  • Headless opens your front-end development to new UI frameworks and other developer tools making delivering new customer-facing features faster.
  • Platform upgrades, performance fixes, and adding new functionalities take less time and resources.
  • Better retention optimization.
  • Building UI variants for A/B experiments is easier.
  • Turning features on/off for specific customer segments is more controllable.

Benefits for Management:

  • Lower development costs and faster time to market.
  • Headless loyalty systems give robust building blocks out of the box; they would take your in-house months of development.
  • API-first platforms pricing is often usage-based, you can start small without worrying about the scale later.
  • Headless vendors have already made mistakes you would face coming up with your custom software.

Benefits for CTOs:

  • Lower maintenance costs.
  • Providers ensure a solution and support engineers along with thorough documentation .
  • API-first solutions are easier to be cached which leads to lower load on servers.
  • Lower risk of critical failures when isolating e-commerce functions is done right.
  • Future-proofed solution.
  • Reduced dependencies on individual technologies; you can use a mix of the best tools in their category.
  • Easier integration with tools like Zapier or Mulesoft.

Benefits for Developers:

  • Better documentation for the system being implemented.
  • Faster back-end and front-end testing due to the isolation.
  • Freedom to choose any front-end framework.

What are the drawbacks of headless loyalty software?

Drawbacks for Marketers:

  • Headless approach means no default UI, no WYSIWYG editor; you need to build UI for the customer and often for administrators from scratch.
  • Live previews can be difficult if there’s no support from the vendor or an internal tool developed by your development team.
  • Many headless vendors offer “scale as you grow” pricing – it’s hard to estimate the budget for the software purchase when you start out. Although it is even harder to estimate the cost of building such a solution.

Drawbacks for Management:

  • Dependency on a third-party system. This is more of an issue for critical e-commerce functions, loyalty software in most cases is not a core business and risks are low.

Drawbacks for CTOs:

  • More traffic means more API requests which in turn increases costs. That is why transparent pricing and pricing scalability are very important when you choose your software vendor.

Drawbacks for Developers:

  • Slower full-stack changes; contract-driven approach needs more communication between back-end and front-end.
  • Longer time to troubleshoot when it comes to cross-cutting functionality, because of more difficult debugging.

Headless loyalty software vs. monolithic loyalty system

Monolithic loyalty applications are:

Rigid

They have a set of out-of-the-box features that have limited customization options. If you need something else, it might take weeks or months of your own developers to develop something on top of that platform, if possible at all.

Not ready for omni-channel

It is expensive to adapt monolithic loyalty software for new sales channels. If the system provider does not do it, you will need to custom code it yourself. It will take time, it will cost money, and you may be far behind the competition once you reach that channel.

Overpriced

They often include much more features than you need, for example an in-built CRM system or campaign management for different platforms. You probably already have a CRM and campaign management platform in your stack and you do not necessarily want to migrate to another vendor. If you pay for a headless loyalty system, you should pay JUST for the loyalty functionalities and you can easily integrate and use the platforms you already have in place as data layers or distribution channels.

Not optimized for loyalty features

Monolithic solutions are often providing much more than just promotion management. As they do not specialize in loyalty programs, they might miss some use cases or relevant features. They may also upgrade their loyalty features less often than loyalty- and promotion-focused software.

Difficult to integrate

Lack of integration capabilities with customer touchpoints, CRM and ecommerce software ecosystem leads to a simplistic approach to multi-channel customer journey, suboptimal rewarding schemes, and ineffective offer management in the enterprise context. 

Slow to launch 

Monolithic loyalty software's shipping speed is slowed down by the following factors:

  • The design is constrained by legacy frameworks.
  • Limited feature set.
  • Small front-end changes may require changes in database and back-end code, increasing testing time, and the overall cost of the task.
  • If things go wrong, changes to back-end code can cause unexpected errors in the front-end.

Not personalizable

Legacy frameworks rarely have personalization built-in in their set of features. You may need a separate Customer Experience Platform or a Personalization Software to personalize your loyalty program and the integration of the database and features might be a colossal task.

Headless loyalty platforms can use any data you possess delivered via API to personalize your loyalty program. They can also fill in the loyalty data to your personalized messages crafted in your Customer Experience Platform.

Traction between the Marketing and Development teams

If you have monolithic software in place or you have built your own loyalty solution, it can cause confusion and mutual misunderstanding with the tech team because small software changes take ages to complete. Marketing-required updates or changes are not implemented because they have a low priority level.  This traction and frustration may cause inefficiencies in marketing-development collaboration.

How to choose a headless loyalty software?

What to watch out for when choosing a headless loyalty software provider:

  • API uptime – look for a status page and go through the historical records to see how the vendor handles outages.
  • Pricing and API limits – transparent pricing that allows you to calculate your current and future bills. The vendor might have safety thresholds for the API usage that might blow out your monthly invoice.
  • Documentation – headless approach is all about speed. But without developer documentation and educational user guides, the integration and training might as well prolong as in the case of low-priority internal projects everybody wants to avoid.

For more information on the features you should consider when choosing your provider, go to our guide on must-have features of a loyalty software.

Remember that you need to think not only what your needs are right now but how you might need to quickly adapt and expand that system in the future.

Voucherify – Headless Loyalty Software

Voucherify is an API-first, Headless Loyalty Software. Voucherify is a certified MACH (Microservices-first, API-based, Cloud-native, and Headless) Alliance member.

With extensive documentation (we even made our client's developers smile thanks to the detailed and clear documentation!), 10 SDKs in major programming languages and 50+ Webhooks, Voucherify is easy to integrate.

Voucherify offers plenty of out-of-the-box features for customer loyalty programs management but thanks to the flexible API and possibility to add metadata, Voucherify allows for plenty of customization and personalization options. API-first build allows you to distribute your loyalty campaign omnichannel, to any current or future channels.

Voucherify is not only a customer loyalty software. It is a holistic, API-first, and Headless Promotion Engine. Promotion Management System helps you launch, manage and track all of the following sales promotions:

Having just one software that powers all your sales promotions makes offer management easier, cheaper, and quicker. Thanks to having just one platform in place, you can cut the time spent on integration, learning the tool, and training your team.

With Voucherify, campaign launching and management do not require involving developers. We have a marketer-friendly dashboard from which your marketing or sales team can easily launch, update and track every promotional campaign.

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