Why a Loyalty Program Should be Part of Your Customer Engagement Solution

A loyalty-enabled customer engagement solution allows your clients to target customers with relevant communications that keep them coming back.

Customer Retention

Merchants can’t be successful without loyal customers. Return customers spend more, and it’s more cost-effective to retain a customer than to find a new one. Those are the primary reasons you’ve provided loyalty program software to your clients. But is a loyalty program alone enough to build loyalty and keep a business competitive?

“Going to market with just a loyalty program or an email-type club is comparable to showing up to a gunfight with a knife,” says Robert Perez, Business Development Director at Como. “You may have decided to compete, but you’re not truly in the competition.”

However, a loyalty program does have value, he points out. “Merchants looking to implement a loyalty program are on the right track. Getting the guest to join the loyalty program is the first step. I compare joining the program to saying yes to the first date. Perez says that customer engagement is giving your brand and the guest a path to marriage,” Perez says. “There is a lot of work that needs to be done to get there.”

What Customer Engagement Solutions Have the Loyalty Applications Don’t

Perez explains that customer engagement is a group of integrated services – one of which is a loyalty solution – that provides a holistic approach to enabling merchants to understand their customers based on data, behaviors, and preferences.

“Based on this understanding of the guest, the business can then interact with them via multiple channels with messaging and offerings that are not strictly part of that base loyalty solution,” he says. “This can include anything from time-controlled promotions, one-time offers, direct gifts, surveys, reviews, and all kinds of marketing activities to keep customers excited and engaged with the brand. Customer engagement solutions can be measured on total sale and frequency increase.”

According to Perez, the most important features of a customer engagement solution are personalization and omnichannel communication. “Personalization is based on the specific behaviors and actions of a guest. Capturing this allows the merchant to set automation based on predefined rules to know which messages to send, when to send them, and through which channel to deliver them,” Perez says.

An omnichannel approach allows merchants to engage customers in the ways they prefer – not just through email or in-app communications. “This also opens up a program to 100 percent of your potential client base,” Perez says. “My father likes offers and rewards and signs up for loyalty programs relevant to him, but you’ll never see him download an app. He just doesn’t know how. As a merchant, would it be a wise business decision to exclude a valuable customer that would otherwise want to engage?”

Make Marketing Easier

Another feature of a customer engagement solution is setting marketing automation rules. “They allow merchants to send targeted campaigns based on predefined rules,” Perez says. Some examples of rules that would trigger communication with a customer include:

  • 30 days without purchase
  • Promotions during slow days/times
  • Offers for underselling items
  • Promoting a menu item based on previous purchase history

“The flexibility and opportunity for creativity here is endless – and not only endless but also measurable,” says Perez. “A merchant’s engagement program should be able to give clear insights into the campaign and offer effectiveness. For example, how many days did it take to redeem? What was the total revenue associated with that offer redemption? What days of the week were the most popular for that redemption? These are all crucial statistics and insights to understand effectiveness. This will allow the merchant to pivot to something different or amplify what is working.”

High-Value Customer Engagement Solution Data

Perez says the data from the customer engagement solution is essential. “These insights will give the merchant a clear direction when deciding on their next marketing campaigns.” He says Como’s system is based on deep integration with the merchant’s point of sale (POS) system, which provides insights into purchase frequency, specific item-level detail, and dollar spend data for every customer. He adds that the solution you provide should also offer these insights to your clients quickly and easily so they don’t have to invest time in pulling reports and formatting CSV files to uncover them.

“One other piece of information that should be considered when deciding on a customer engagement solution is the question of who owns all of that valuable data,” says Perez. “It may be on your dashboard today, but with some solutions, a merchant may be surprised to find that the data was never theirs. So read agreements carefully and ask these crucial, forward-thinking questions upfront to avoid difficult and unfortunate situations later.”

Mike Monocello

The former owner of a software development company and having more than a decade of experience writing for B2B IT solution providers, Mike is co-founder of Managed Services Journal (formerly XaaS Journal) and DevPro Journal.