Why to Outsource Your Loyalty Program to a Third Party Provider?

You have found that you need a loyalty program because you want to focus more on increasing customer retention in your e-commerce store. Great! It’s an exciting field to navigate to.

But how you will meet this goal?

Well, you have three options.

You may build your program in-house, outsource it to an agency, or use a third party loyalty program provider. Now, this last part is what we do at Antavo, and this blog post we would like to share with you what is the difference in between building your loyalty program in-house or with the help of a third party provider.

So let’s dig in!

Calculate time and money

The number one reason why e-commerce marketers choose a third party loyalty program provider is to save money. By going with a third party, companies can save money on researching current loyalty program trends, technical aspects, and the man-hours it takes to build the loyalty program mechanism from scratch, then connecting the loyalty program to the existing e-commerce platform.

In addition, some companies have quite a small development team, or if they’re lucky to have a big dev team, their hands are probably already full with other development projects for the store, which prevents them from dedicating enough resources into building the company’s own loyalty program quickly.

So time and money are a definite PRO for using a third party loyalty program provider instead of handling everything in-house.

But there’s another consideration you should make at this point.

How complex is the loyalty solution you’re shooting for?

Would you like to wire it with all of the marketing tools you use in your e-commerce ecosystem? Do you want it to work on mobile? What about your mobile app? How wide is the range of customer actions (e.g. besides rewarding purchases) would you like to reward through your loyalty program? And which channels (from social to email) would you like to include as a part of your loyalty program mechanism?

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Now, if you want a simple program that only rewards purchase and provides a couple of rewards, but doesn’t touch your social accounts or email communication, you can pull it off in-house at a reasonable cost, but it will still require a larger timeframe. But is that kind of program really going to keep customers interested?

These questions are important because they influence how much development time it takes for you to get a loyalty program up and running. If you want to build a modest loyalty program for a small store and keep all of the project private and in-house, of course, you can go with your team. But! I remember how this process looked at Antavo. We started brainstorming on what seemed to be the simplest concept at first, and it turned out to be something totally complex in the end, which took us exactly 2 years (at a cost of $2 million) to build.

Now, the benefit of using a loyalty software provider like us, is that we have passed the brainstorming phase and have the practical knowledge in place. We have already researched, built and tested everything, so our clients only need to think about their own specific needs – or just simply launch our ready-to-use toolkit, which reduces the implementation period to only a few weeks. That’s quite a bit less than 2 years, right?

Leverage expertise

When you start a new project for the very first time in your life, you need to research everything. And I really mean everything. If you go choose an in-house loyalty program building, you should research the best loyalty strategy that works in your industry. You need to know what your competitors do. And you should understand the latest trends in loyalty marketing and customer retention.

But your research doesn’t end here.

You may come up with the best strategy on you own, but you should make sure that is technically possible to make happen.

When it comes to loyalty program providers, you can be sure that they are experts in their field and are passionate about what they do. They spend all their time with loyalty programs, therefore have the experience and knowledge about how to use webhooks and APIs to meet custom requirements or even how to calculate how much discounts your loyalty points should worth.

And they’re on top of trends, because if they don’t know what customers demand from loyalty programs, they face losing out to the competition.

There is a con, though. You know your customers better than any agency or third party will. You know what will motivate them the most. That’s why you should look for a third party provider that is willing to shape-shift a bit, one that’s ready to customize their platform to make it effective for your users.

Stay focused

Building and running your own loyalty program not only takes time and money, but any issues that pop up unexpectedly can distract you from your core competencies as well. If you hire a company to help you out with a loyalty software, you can keep concentrating on everyday marketing and sales tasks.

You have to admit that, without putting your expertise into having a well-functioning web store, loyalty programs as extensions can’t drive the results you seek. So, don’t forget, the success of a loyalty program is based on a well-functioning online store.

Asking the right questions from a loyalty provider

Sound good so far? Maybe you’re wondering how you can make sure a loyalty program provider won’t let you down…

We’ve got a list of things to look for when choosing your provider and their software:

• Analytics
  Make sure you’re getting the right data. For example, how many points are your members earning and spending? Or how much revenue is being generated through loyalty program incentives? This information is a must, as it’s what helps you see if the loyalty program is really paying off. You’ll still need to combine that data with google analytics and social media stats, but make sure you’re getting a great basis from your loyalty provider and it will save you time on reporting.

• Customization & white-labeling
  Of course, when you develop something in-house, you can develop the most unique loyalty program on the market and there’s no question that it will be 100% your branding, and your voice. But here I am referring to the design and ensuring it will appear as a seamless part of your store. That’s why you should find a software that is fully white label and can help you achieve the very same thing. So be sure to ask: how will this look on our site? Typically a quality provider will offer a program that is uniquely your style. At Antavo, each of our customers have a program that fits their brand. With custom CSS and HTML your front-end developer and designer can re-create the look and feeling of your store throughout the loyalty program. There’s a bit of coding involved, but it’s far less than that of coding a loyalty program from scratch.
• Data Security
  Rewarding customer activities requires customer data, such as personal details, payment info and in-store activity tracking data. All of this information must be handled carefully and securely. A major pro for building the whole loyalty program in-house is that you don’t need to hand over these data to a third party provider. Of course, a loyalty program providers’ first priority should be securing all of your customers’ information. For example, we have multiple security layers, and we’re constantly monitoring our service to detect misuse, fraud and hacking.
• Project management and support
  Implementing a loyalty program in your store involves management and technical tasks as well. If you go the in-house route, you’re going to need a small, dedicated team to focus on these to-dos. I don’t have to tell you, that costs money. That’s one place where a loyalty program provider should step in. Make sure you’re getting a dedicated account manager to help you with best practices and keeping up with industry trends – from building the point logic of your programs, to planning promotional campaigns. An account manager’s other not-so-secret obsession is monitoring your loyalty program’s performance and reaching out to you with any ideas for updates, and improvements, which should save you time on creative planning. Your marketing team won’t lose its creative input and brand voice, but you’ll definitely win when it comes to measurable performance improvements.

Here is an example for a customized and white-labeled loyalty program from one of our client, Joyalife.com.

Consider your decision

Even if you have an amazing marketing and dev team that has the potential to build and maintain a high-performing loyalty program, you need to look after your costs and savings as well. In addition to in-house developments and third-party loyalty program providers, you can also enlist an agency’s help.

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Why to Outsource Your Loyalty Program to a Third Party Provider?