THE CLARUS Blog

Thinking of Hiring a Loyalty Management Company? Ask Yourself These 10 Questions First

Do you want to launch a new loyalty program or revamp your current one?

We’ve spoken to several companies who have taken on this task internally and struggled.

This process is more complex than you’d expect.

The truth is every company has a unique goal for its program and a unique internal skill set that makes broad advice here difficult.

If you think about the next steps for your loyalty program, one of the most important considerations is whether you need a loyalty management company to help you.

As you ponder this question, start by understanding your needs first.

Do you need services only? Or only a technology platform? Or a company like Clarus Commerce that does it all.

Here are 10 questions that will help determine if this is the right time for you to partner with a loyalty management company.

 

1. How are my best customers performing over time?

It’s tempting to look at all your customers but focus on your best customers when you start this process.

Understanding their behavioral patterns and pain points can help you create a program that will enhance their loyalty.

What are their current habits? Are they driven by promotions? Do they shop online and offline?

When Restoration Hardware launched its successful RH Members Program, CEO Gary Friedman announced the company was eliminating all promotions. This is a similar approach Bed Bath & Beyond used in its Beyond+ program.

If you understand your best customers, this knowledge should form the cornerstone of your loyalty strategy.

If you aren’t sure how your best customers are engaging with your brand, it’s a good sign that a loyalty management company can help with your loyalty program.

 

2. Have I revamped my loyalty program in the past 12 months?

Customer expectations are constantly changing.

Unfortunately, too many loyalty programs aren’t being updated to meet these new expectations.

In the past few years, we’ve seen major brands relaunch their loyalty programs. A few examples of this include Target, Starbucks, and Chipotle.

These brands understand creating a loyalty program alone is not enough. You need to keep adding to it and innovating over time.

What are your customers doing differently now than they were in the past? Are the benefits of your program in line with current customer expectations for more instant benefits?

You don’t need to completely relaunch your program every year, but you should be testing new things. Test new member benefits, try new member events and create new member experiences.

Launching a program by itself is a big lift on your company, but continually adding to that program can become overwhelming. If you haven’t made any updates in the past year, it’s a good sign a loyalty management company can help.

 

3. Do you have a budget for your loyalty program?

Many times companies create their own loyalty programs due to budget concerns.

It makes sense.

You would think creating your own program would be cheaper than working with a loyalty management partner.

But once you add in the development, upkeep, and personnel costs, it makes sense to work with a partner that has an established technology solution and expertise.

Not only are we talking about cost here, but also the time it takes to create something from nothing.

When you work with a full-service loyalty management company, you gain access to its valuable experience that will get your program up and running successfully. You also get access to a loyalty technology platform that is a much smaller IT lift.

Be realistic with yourself on your budget.

If you are trying to do this internally, look for the hidden costs and upkeep costs and compare that to what it would cost to work with a vendor. In both cases, you want to understand how long it will take you to get to an ROI on these costs.

If the budget is one of your concerns, at Clarus Commerce we can help create loyalty programs that don’t require any budget from your team.

 

4. When do you want your new loyalty program to launch?

With more companies relaunching their loyalty programs, we’re beginning to see more differentiated offerings in the market. Basic points programs are not enough to create differentiation anymore.

With that, getting a modern loyalty program in the market before your competitors can become an advantage for you. What is a realistic timeline for you to launch your loyalty program?

Do you have two years to work on the perfect program or are you trying to launch something for this year’s holiday season?

Answering this question will not only help you find out if you should work with a loyalty management company but can also help you determine which one you should work with.

Some companies will take well over a year to get anything live, where others, like Clarus Commerce, can help enterprise customers launch a new loyalty program in as little as three months.

If you have a tight timeline, working with Clarus Commerce will help get the project done fast and efficiently.

 

5. How does my loyalty program compare to my competitors?

Is your program unique?

Start by reviewing your competitors’ loyalty programs.

Chances are, they will mostly look the same. Some points for shopping, a birthday gift, and maybe a higher tier for people who shop a lot.

How does your program compare to theirs? Are your program benefits unique?

Having a similar program to your competitors does little to generate customer loyalty.

Customers have unlimited choices now and a unique loyalty program can help you stand out.

When designing a new loyalty program, you want something that enhances your brand promise and offers something unique to your customers.

Nike and Lululemon are both good examples of companies in a similar space that have designed unique programs for their audiences.

Nike has a free loyalty program and offers early access to new merchandise (like limited edition shoes), access to expert guidance on products and fit, and online running and training programs.

Lululemon, on the other hand, charges customers $128 to join its loyalty program but offers enhanced member benefits including a free pair of pants, in-store workout classes, and free expedited shipping.

Every industry has its opportunities to create a unique program.

If you are struggling to find unique benefits for your customers, this is where a loyalty management company can help.

 

6. Does my ambition align with my capabilities?

What kind of loyalty program do you want? Something that drives email signups or something that drives attributable revenue to your company?

If you’re looking to just dip your toes in the loyalty pond, it can make sense to take that on yourself. After all, many of these types of programs are most focused on getting customers to sign up and then collecting data on them.

This is a good strategy for data collection, but unfortunately, it is not ideal for driving loyalty.

If you are looking at a larger relaunch, there are a few different things to consider.

Do you have the people to handle the workload? And do those people possess the experience and expertise to get the job done?

Many companies can launch a small program on their own but doing something at scale to make a large impact is difficult.

If you have big plans and limited internal experience, you may want to consider a loyalty management company.

 

7. Are your customers advocating for you?

Do your customers refer you to their friends?

This is arguably one of the most important markers of loyalty and can be harder to understand than transactional loyalty.

When you create a loyalty program that enhances your brand promise, your loyalty program should improve your customers’ experience enough that makes them more likely to advocate for you.

This can include referral programs, but it doesn’t need to. Referral programs can be strong growth levers, but incentive programs are seen as that by the person who received them. True organic recommendations are the Holy Grail for brand growth.

If you’re not getting this type of emotional loyalty from your best customers, you may want to think about getting help with your program

 

8. Are my team members trained to present the program correctly?

While the program construct will determine your desired long-term result, success can often come down to how your in-store associates and website present your program.

The best loyalty program in the world will do nothing for you if your customers never hear about it. Or if they don’t understand the benefits to them.

How often do you test how you position your current loyalty program on your website?

Are your in-store associates being trained on how to offer your program to customers?

This is especially challenging with premium loyalty programs where customers pay a fee to join. A company that specializes in premium loyalty can help with best practices on employee training as well as how to present your offer online.

Continuing to understand how you best present the program to your customers will play a major role in its long-term success.

Are you happy with how you’re currently presenting your program in-store and online? Are you regularly testing new ways to present the program to your customers?

 

9. How responsive do I need my partner to be?

We’ve spoken a lot about how customer expectations are constantly changing.

Responding quickly to your customer changes is paramount.

If you need quick changes and rapid responses, a partner may or may not be right for you.

Many companies find they can react faster than outsourcing these projects.

If speed is important to you, all is not lost.

When you talk to different loyalty management companies, make sure to ask about their expected turnaround time. Also, look for a loyalty management company that includes all their services in their pricing. If speed is important, you don’t want to be negotiating change orders every week.

Reaction speed in a loyalty partner is one of the most important factors for creating a successful program.

 

10. Do I have a single source of truth for my data?

A loyalty program plays in to your data strategy. Understanding where you currently are with your company data is an important question to ask during this process.

In fact, a loyalty program is one of the best ways to collect customer data.

Customers are becoming more private when it comes to giving out their data, but they will if there is a benefit for them. This is where a loyalty program can help, assuming you’ve created the right benefit mix.

Regardless of the answer to this question, a loyalty management company can help you with your data strategy.

This question is important, though, to better understand what kind of data services you are looking for from your partner. Do you need a loyalty partner to be the single source of truth for your data or will it be a part of your larger data strategy?

 

Use these questions to determine your next steps

A loyalty program is a complex undertaking for any company.

The questions above can help you understand if it’s the right time to look for a loyalty management company, or if you are equipped to manage and change your program yourself.

Regardless of how you answered those questions, there are a few universal truths about working with a loyalty management company that you should consider.

When you work with a partner you receive:

  • A lighter lift on internal resources across the company. This includes marketing, marketing operations, data, and IT. You can view our services page to better understand the full extent of services a loyalty management company can offer you.
  • Less of an IT focus on upkeeping your internal system. Staffing and creating a loyalty program is hard enough. Upkeeping a program over time takes constant work. Therefore, many companies don’t test enough new things with their programs. Their entire focus is to keep the current program moving.
  • Continuous innovation – When you work with a partner, they will update their systems and processes over time with the learnings they receive across multiple companies. When you work with a partner here, you will have access to these updates.

Hopefully, these questions helped you better understand your loyalty needs.

If you are interested in learning more about how Clarus Commerce can help you with your loyalty program, please don’t hesitate to reach out.

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