A Practical Guide to Loyalty Software

Learn about loyalty software: what is it, how it works, how businesses use it, & see examples of customer loyalty software.

What is customer loyalty software?

Customer loyalty software is a marketing tool that helps build and manage loyalty programs. Yes, it is that simple. 

Loyalty solutions enable brands to collect and track customer data and reward meaningful interactions, driving repeat business and cutting on crazy acquisition costs. With advanced features such as data analytics, targeted marketing, and integrations with other systems, customer loyalty software is a must-have for any business looking to boost customer loyalty and drive growth. Hopefully, I am talking about you. 

Example of customer loyalty profile

Since we all like lists, let’s see what elements are usually included in loyalty software:

  • Customer tracking – allows businesses to collect and store first- and zero-party data about customer behavior and purchases, which can then be used to segment members and personalize rewards and offers.
  • Personalization – enables businesses to customize loyalty programs to meet the specific needs and preferences of their user base.
  • Rewards and points management – lets loyalty professionals assign and track rewards and loyalty points.
  • Reporting and analytics – provide businesses with insights into customer behavior and program performance, allowing them to make data-driven decisions.
  • Integrations – many loyalty software solutions can integrate with other business systems such as CRM, e-commerce, and POS systems. Voucherify integrates seamlessly with Braze, commercetools and other providers. 
  • Communication tools – allow businesses to communicate with customers through automated email, SMS, and push notifications, to keep them informed about rewards, points, and promotions.
  • Security features – the software should have measures in place to protect customer data and prevent loyalty fraud.

Learn why loyalty plugins won’t cut it and why you need a (really) good loyalty platform to succeed

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Benefits of loyalty software

When it comes to building strong customer-brand relationships, loyalty is key. A well-crafted loyalty program will keep your customers coming back for more. It's no wonder that an overwhelming majority of brands – over 90%(!) – have implemented some form of customer engagement or loyalty program. But to succeed in loyalty marketing, you need bespoke loyalty software to help you build and manage your dream campaign. Here are some benefits of using a dedicated loyalty solution: 

  • Convenience and better CX – no more fumbling through wallets or purses for that loyalty card. With program information stored on your customers' phones or available right in the POS, they can easily collect points and earn rewards without missing a beat.
  • Tailored to your business – advanced loyalty software lets you create a rewards program that is unique to your business. Whether you want multiple rewards or specific conditions to earn them, the flexibility is yours.
  • Track progress and adapt – forget about excel sheets. Get detailed insights into your customers' purchasing habits and adjust your program accordingly to keep them coming back for more.
  • Effortless reward distribution – Automate the process of distributing rewards, so you can focus on running your business and not on routine tasks.

Explore the pros and cons of running a loyalty program for your brand

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Evolution of loyalty software

The evolution of loyalty software has been nothing short of revolutionary. Gone are the days of clunky physical loyalty cards and tedious points collection. Today, the world of loyalty is digital, dynamic, and endlessly customizable. Let's take a look at some of the ways loyalty software has transformed over the years:

  • Mobile integrations – with the widespread use of smartphones, loyalty software now allows customers to access and manage their loyalty accounts through mobile apps. 
  • Omnichannel integration – it is now simple for businesses to integrate their loyalty program across multiple channels, such as online and in-store so that members can earn and redeem rewards across different touchpoints.
  • Gamification – loyalty software now allows businesses to gamify their loyalty programs, making them more engaging and fun for customers.
Animated loyalty statistics

Loyalty software landscape in 2023

The loyalty management software market is experiencing explosive growth and is on track to reach a staggering 23.5% CAGR and $24.44 billion by 2029. It's no surprise that more and more companies are turning to loyalty programs as THE key strategy for driving revenue and growth.

But with such a fragmented market, companies have plenty of options to choose from. From plugins to ecommerce platforms to custom apps developed by digital agencies, all-in-one marketing platforms with loyalty modules, and end-to-end loyalty solution providers, the choices are endless.

I am sure you are tired of hearing this, but the best solution will always depend on the specific needs and goals of your company. Hopefully, you will find this guide helpful in finding the right loyalty software solution for your brand. 

Animated loyalty software market statistics

What’s wrong with legacy loyalty systems?

Before moving on, it's essential for you to understand the limitations of traditional, monolithic loyalty platforms. While they may offer a wide range of features, they also come with a significant drawback: a lack of flexibility. Legacy solutions often require businesses to adjust their loyalty marketing strategy to fit the platform, not the other way around. To make matters worse, introducing changes often requires updating both the front and backend, prolonging the process and annoying the marketing and development team alike. In today's fast-paced and competitive market, businesses need to be able to act quickly and sadly, legacy software won’t cut it. But not all is lost – enter headless loyalty technology.

What is headless loyalty software?

Headless technology is revolutionizing the way businesses approach loyalty programs. 

The term ‘headless’ derives from the external layer that customers interact with (frontend) being separated from the backend infrastructure, making it easy for businesses to make changes and modifications to the customer-facing apps without disrupting underlying mechanics and data. Plus, with the use of APIs, businesses can seamlessly integrate loyalty programs across all touchpoints for a truly personalized experience. 

Headless loyalty software

Discover the key pros and cons of headless loyalty systems

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Build or buy loyalty software?

I am sure you have already asked yourself this question – should I build or should I buy customer loyalty software? It's a classic cruncher faced by marketers and tech teams alike. But the truth is, the choice between building or buying a loyalty solution is a false one. In today's fast-paced business landscape, the best approach is often a combination of both.

Thanks to advancements in technology and the API economy, businesses now have the ability to combine the best of both worlds and cherry-pick the building blocks that make up their loyalty solutions, choosing from a wide range of API-first and headless loyalty engines. This new generation of loyalty solutions offers ready-to-use loyalty and gamification features that can be easily integrated into existing systems.

Think of it like a chef blending ingredients to create the perfect dish. You may have the recipe and the know-how to cook up a tasty dish, but by sourcing the highest-quality ingredients from external vendors, you can elevate the dish to new heights. 

See what it takes to build loyalty software from scratch and how this decision can shape your business for the years to come

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Must-have features of loyalty software

Once you decide that you need a dedicated loyalty solution, it’s high time to analyze what the loyalty market has to offer. To ease this process, we’ve assembled a list of critical features you have to consider while going through your options.

Loyalty software overview

Here is what a loyalty platform should offer out-of-the-box:

  • Easy implementation within your current framework (preferably API-based loyalty solution) and quick integration with other systems and third-party apps.
  • Efficient testing and program management.
  • Advanced customer tracking and program analytics. 
  • Scalable and secure infrastructure.
  • Possibility to personalize rewards, eligibility criteria, and timing of your loyalty incentives.
  • Gamification features – time limits, custom reward actions, tiers.
  • Compliance with legal norms and personal data policies.
  • White-labeling possibilities.
  • Affordability with predictable monthly costs.
  • Team management features to make daily operations easier. 
  • Possibility of integrating with mobile-first technologies.

Besides functional requirements, you need to analyze the UX of your loyalty program. Download Voucherify UX Kit for Loyalty Programs from Figma.

When selecting a customer loyalty vendor, it's essential to don a general hat and approach it from a strategic standpoint. Consider both your current and future needs and determine the level of flexibility required for your business. It's also important to consider the ownership and long-term maintenance of the loyalty solution within your organization. Furthermore, be sure to fully analyze the total cost of ownership, including not only the initial license fee but also ongoing costs such as hosting, maintenance, updates, and potential future expansion. By taking a thorough, strategic approach to choosing a loyalty solution, you can ensure that it aligns with your business goals and drives real results.

Here is a cheat sheet of questions you need to answer before choosing a loyalty provider:

  • What unique features and capabilities do you want to include, such as earning and spending options?
  • What is the likelihood of adding new features and mechanics over time?
  • What key scenarios must the program be able to handle?
  • What technical and security considerations must be taken into account for the loyalty program software?
  • Do you need an on-premise or cloud-based solution?
  • How much development time, resources and talent do you need to integrate the new software?
Features of loyalty management software

Get a detailed blueprint for selecting a loyalty vendor

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Comparison of top loyalty vendors

Going through hundreds of similar loyalty platforms will definitely take a bigger chunk of your workday. To save you some time, we’ve prepared separate comparison guides, listing and describing the best loyalty vendors:

Comparison of loyalty software

Creating a loyalty program with Voucherify is a breeze. With our user-friendly platform and robust API, you can quickly design complex loyalty programs with multiple tiers, real-time rewards, location-based promotions and more, saving you precious time and resources compared to building a program from scratch.

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