Building and Developing a Loyalty Program. In-house or Outsourcing – Which Model to Choose?

Building and Developing a Loyalty Program. In-house or Outsourcing – Which Model to Choose?

Loyalty programs are one of the most effective methods of sales support, and their popularity continues to grow. Companies that have a loyalty program are constantly developing their solution, while those that do not have one are wondering how to offer consumers an attractive loyalty program in the fastest and most effective way. In the minds of managers who are just planning to launch a loyalty program, two approaches very often clash. The first assumes the need to focus on creating a team and developing the program internally. Proponents of this model emphasize full control, flexibility or close contact with consumers as its key advantages. The second relies on outsourcing and cooperation with a specialized agency. However, making a final decision is often not an easy dilemma.

Loyalty program: in-house

A loyalty program is a powerful center of knowledge about customers, their preferences, purchase history and all their experiences with a brand. Some companies choose to create the program and its technical background from A to Z with their own hands. Building the solution in-house means, first of all, that the system can be completely managed and modified at any time. Then the company-organizer has full control over processes such as customer registration, data collection, activity monitoring and reward payment. This allows the company to better know and understand the behavior of its consumers.

Companies that decide to implement in-house must take care to develop internal resources, both in terms of personnel and technology. Unfortunately, this can prove to be not only costly, but also time-consuming. It also carries a higher risk of failure or childhood mistakes. Lack of outside perspective and experience in building a loyalty program can result in limited innovation and difficulty succeeding in a market that is constantly evolving. Additionally, starting a new project for the first time from scratch can be complicated. Even if a company spends a tremendous amount of time on the necessary research, competitive analysis, or market trends, there is a high probability of making costly mistakes. So these arguments certainly speak in favor of outsourcing. Perhaps it will therefore prove more cost-effective and safer to entrust the program entirely to a subcontractor.

Loyalty program – outsourcing

Cooperation with external specialists is a guarantee of high-quality services and optimization of solutions. As a rule, a specialized agency under one roof aggregates knowledge and experience from many programs and industries, which can be creatively used when creating the next loyalty program in the agency’s portfolio.  What benefits and support, in which areas, can be gained with the help of specialists in creating a loyalty program?

One of the key elements responsible for the success of a loyalty program is its strategy. Many companies think that they know their customers well and are able to design a profitable concept. However, it happens that – often even unconsciously – they overestimate the possibilities and propose a solution that is not profitable from the consumer’s point of view, for example, in terms of the need to accumulate a certain number of points in order to gain access to a reward. At this stage, it is important to verify that the pre-designed mechanics cover all groups, so that the program is, as much as possible, tailored to the company’s expectations, but also to the consumers’ capabilities. The agency’s expertise can help assess the viability of the strategy adopted, as well as enrich the concept with new insights and creative ideas.

Cooperation with an agency also means a faster start of the program. As a rule, a company that specializes in handling loyalty programs because of its experience works more efficiently and effectively. The tool that the agency offers is well tested in the market, so that the client only customizes it for his needs and at the same time avoids the childhood mistakes that could occur when creating the solution on your own.

Why is it worth working with an agency?

When developing a program on its own, the recruitment process, which is usually time-consuming and expensive, proves to be a barrier. By choosing to work with an agency, the company eliminates the need to build Customer Service, BI, or IT departments from scratch. By working with an agency, the company has access to a pool of experienced specialists and can, for example, share an analytical environment, which, especially at the beginning, makes it easier to analyze data and understand customer needs. What’s more, if the company wants to develop competencies internally, it can enlist the agency’s support in creating its own CRM team and attracting people with the right qualifications and experience.

Nowadays, loyalty programs are no longer a stamp card with 10 free coffees, but increasingly a data center on which major business decisions are made. A loyalty program is access to insights and knowledge about customers, with which the company creates personalized offers. Specialized agencies have advanced tools and technologies to manage loyalty programs, with dedicated software, analytical systems or platforms for performance tracking and reporting. The use of these tools improves the monitoring and optimization of loyalty programs.

Agency support is also invaluable when it comes to data protection. Loyalty programs usually require the processing of personal data. And these must be stored and processed securely and in accordance with applicable regulations. A company that does not take care of data security risks a negative reputation, loss of customer trust and even potential legal sanctions. Agencies conduct regular data security audits to ensure that their systems and procedures comply with international security standards. Having certifications such as ISO 27001 confirms that the agency you are working with has adequate data protection procedures in place. By using a certified partner, a company can be assured that its loyalty program complies with security standards.

Recommended model for developing a loyalty program

A loyalty program is an essential tool for any company that wants to get closer to customers and ultimately increase sales. Regardless of how it is implemented, any program should provide convenience to customers at a reasonable cost on the part of the organizer. Without this, there is no chance of success for any project. The ideal cooperation model should first and foremost involve proper empowerment on the management side, so that the venture is considered in the category of investment, not cost. In this way, the company maximizes the value of the project and builds a loyal network of customers.

At Loyalty Point, we offer a flexible approach to cooperation. We strive to fully understand the client’s needs in order to support them in the most demanding areas. We work with clients in different models, depending on their needs. From providing comprehensive loyalty solutions, to being a project coordinator, to playing only a consulting and advisory role in selected aspects.  Regardless of the preferred model, from the very beginning of cooperation we take an individual approach to each client, additionally proposing the implementation of solutions, communication platforms, or loyalty-related activations that are designed to build a consistent customer experience, even before the launch of the official program.

LOYALTY POINT is implementing a project with Contribution from European Funds. Learn more