How Loyalty Program Software Works

Building a Successful Customer Loyalty Program

Customer-centric processes for earning and redeeming rewards points

Loyalty program software gives retailers the ability to reward loyal customers, showing appreciation for their business, grow traffic, and use loyalty program data to build an effective customer retention strategy.

Shoppers enroll in the retailer’s loyalty rewards program by providing basic contact information, and they may also agree to provide demographic information that can help make their shopping experiences and the communications they receive from the retailer more relevant. Customers who enroll receive a unique loyalty program ID, which can be entered or scanned at the point of sale (POS) when they make purchases. The loyalty system tracks each loyalty program member’s purchases, awards points, and displays information for sales associates when the customer has earned rewards.

iVend Loyalty on a mobile phone device.
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Customer purchase made through loyalty program.

The Importance of Loyalty Program Software

Most retailers find that about 80% of their revenues come from about 20% of their customer base, so keeping this elite group engaged with your brand it crucial to continued success. Loyal customers are also more likely to convert when they return to your store when compared with first-time or occasional shoppers, and they’re also likely to become brand ambassadors, recommending that friends and family visit your store and enjoy the great shopping experiences it offers.

It’s also more cost-effective to keep an existing customer than to acquire a new one — by some estimates the investment to acquire customers can be up to five times as much as investment in retention strategies. Loyalty program software ROI includes the ability to effectively implement a rewards program that keeps current customers engaged, incentivizes them to shop at your stores, and to make purchases.

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Make Your Store the Preferred Destination

A well-planned loyalty program can be a significant asset to your overall customer engagement strategy. Loyalty program software gives you a direct line of communication with your most loyal customers, making sure they are first to know about new promotions, notifying them when the season’s most sought-after merchandise is available, and letting them know they’ll receive rewards for making purchases.

Rewards can play a significant role is a successful retailer’s strategy. Our Global Path to Purchase Survey revealed that more than 65% of shoppers around the world join loyalty programs for free items and discounts. But customer loyalty doesn’t depend on discounts and promotions alone. Our research shows that shoppers also participate in loyalty programs to stay informed about what the retailer has to offer, for a sense of community — and sometimes just to have fun. A successful loyalty program provides customers with more than just discounts —it provides value. By using your loyalty program to enhance shopping experiences with added value, your stores can become go-to destinations.

Purchase made through a Loyalty Program.
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Loyalty Program integrated with retail management system

How Integrated Loyalty Program Software Improves Customer Experiences

When your loyalty program software is integrated with your retail management system, you can make loyalty program participation convenient for your customers and seamless across all channels and store locations. Integrated systems allow data to flow freely from one application to another. With integrated loyalty, sales associates will have the ability to see the loyalty rewards points a customer has accumulated and easily apply them to a purchase or notify the customer after the purchase of their new points balance.

An integrated digital retail platform also allows loyalty program software to share data with your eCommerce platform, mobile POS, reporting, and other retail systems, so however your customers choose to engage with your brand, they have visibility into their rewards points, they can take advantage of loyalty program offers, and accrue and redeem points.

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Understand Your Customers on a Deeper Level

In addition to enhancing customer experiences, integrated loyalty program software also provides data than can help retailers make smarter business decisions. With loyalty program information analyzed with data from the point of sale and other business applications, you gain new insights that allow you to know your customers better and tailor operations to their preferences and behaviors.

For example, data from your loyalty program can help you segment your marketing database so customers receive promotions and messaging that are relevant to them. Sales associates can also use that data when assisting individual customers to personalize service and to upsell or cross-sell more effectively.

In addition, you can use insights from loyalty program software to optimize your loyalty program itself, determining which promotions get the best results, which rewards resonate with your customers, and how to best use the program to entice customers back to shop and convert. The data will show you what’s working — and what’s not — so you can make a smart investment of time and resources, resulting in the greatest return.

integrated loyalty program can help retailers make smarter decisions.
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A loyalty program can provide a wealth of information about your customers and products.

Continuous Improvement

Few retailers will argue that what worked 10 years ago to run a competitive, profitable business isn’t work today. It’s necessary to continuously monitor trends and behaviors to deliver the types of shopping experiences that your customers want and to manage your operations effectively.

The right loyalty program software can be a goldmine of information. It provides you with insights into what your most valuable customers are buying, which promotions bring them into the store, and which offers drive online sales. It also helps you develop a clearer picture of the demographics of your typical loyal customers, which will allow you to tailor your marketing messages to appeal to that buyer persona.

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Drive Sales with Your Own Loyalty Program

Moreover, loyalty program software data doesn’t just benefit your marketing department. You can use insights from loyalty program data to update customer-facing processes, to refine merchandising to showcase in-demand items, to forecast more intelligently, and even to train your staff to provide the types of experiences that your customers prefer.

The Right Way to Earn Customer Loyalty

In a digital world, customer loyalty depends on exceptional shopping experiences however consumers engage with your brand — and it depends on how well you know your customers. Our eBook highlights the right way to earn customer loyalty in an omnichannel world.

Loyalty programs improve the experiences of customers.

Digital Passes: Taking Loyalty Program Convenience to a Whole New Level

Research for our Great Omnichannel Expectations report revealed that shoppers often forgot paper coupons at home, which could result in them missing out on using discounts or rewards points before their expiration dates. You can make sure your loyal customers never miss a chance to use their rewards by sending digital passes directly to their smartphones. Integrating digital passes with loyalty program software, your customers always have their rewards point coupons with them, conveniently stored on their smartphones and ready for scanning by a sales associate. Your customers won’t be disappointed because they’ve missed a deal — and you won’t miss the sale.

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