10 Benefits Outsourcing Loyalty Programs

10 Benefits of Outsourcing Customer Loyalty Retail Programs

WWW.INVENSIS.NET | contact@invensis.net
Outsourcing as a Solution for Managing Loyalty Programs
As business and marketing managers think through the above questions, they might
find that the answers to some of them could be outsourcing the management of the
loyalty program to a specialist company that has the required expertise to make it a
success. Various facets of the program that can be outsourced are:
• Database Creation and Management
• Analytics
• Promotion of the Program
• Information About Rewards
The popularity of customer loyalty programs has spread to such an extent that they
seem almost ubiquitous now in many business verticals and across the world. The
hotel, airline, BFSI and retail industries, particularly, have recognized the immense
value of having a repeat purchaser of their products or services.

While the first customer loyalty program cannot be clearly identified, it is believed
that one of the early formats was the trading stamp concept that began in the
1890s in the US. A few decades later, in the 1930s, the S&H Green Stamps
program got customers to collect small stamps based on their purchases and
paste them on the pages of a booklet. When the number of stamps reached a
sizeable quantity, they were redeemed for products. Joseph C Nunes, professor of
marketing at the University of Southern California’s Marshall School of Business,
considered these trading stamps to be the first ‘alternative currency’ to promote
repeat purchases.
The loyalty program has evolved greatly since that era, taking on different shapes
and magnitudes. The complexity of the framework and the need for dedicated staff
and resources is leading several companies to consider outsourcing this
requirement to specialist companies as the most viable option for its success.

The Mechanics of Loyalty Programs
A loyalty program is any initiative by a company to increase and retain its base of
existing customers. While its origins go back more than a century, American
Airlines’ Advantage frequent flyers program, launched in 1981, is credited with
giving a big impetus to the popularity of customer loyalty programs in the airline
industry, as well as outside it. Since the 1990s, the customer loyalty program has
come to be seen as an important vehicle for marketing activities. According to a
recent survey, the membership in loyalty programs in the US stood at 2.647 billion
in 2013.
Traditionally, loyalty programs rewarded customers for their purchases, either
through discounts, cash back or points. According to Forbes, with the high rate of
mobile and social network adoption, consumers are now also being rewarded for
other actions, such as online interactions, in what is being seen as a convergence
of loyalty programs, gamification and engagement.

• Customer retention
• Enhancing the satisfaction level of customers
• Garnering insights through their repeat purchase behavior
• Increased revenue and profitability
The Advantages of Customer Loyalty Programs are:

10 Benefits of Outsourcing Customer Loyalty Programs
1) Cost-Effectiveness: The cost of setting up and managing a customer
loyalty program can be considerable. Training costs of existing employees
or for new intakes for customer care and database management will also
push up the budget for the program. An outsourcing company, which
already has the technology and employees for customer care in place, can
look after the loyalty program with ease.
2) Focus on Core Competency: Outsourcing the loyalty program
implies that no existing personnel or technology will have to be
reallocated within the business. This allows employees to focus on
their core competency and build other key pillars of the business.

3) Leverage Expertise: As in any business vertical, experience builds
expertise. An outsourcing company that has handled customer care for a
number of years will be in the know of best practices in the domain,
challenges that could come up and how to circumvent them.
4) Save Time: Customer loyalty programs can generate immense
physical copies of data, that hold valuable information about
consumer behavior and other details. Through document process
automation tools, a technology-savvy solutions provider can help
bring about increased accuracy of data entry within reduced time.

5) Customization: Experienced outsourcing companies have the capability
to customize the loyalty program as per the requirement of the client. For
instance, if a special incentive program is initiated for a new target group,
it will be challenging for a business to retrain or realign its in-house
employees for that requirement quickly. By outsourcing the requirement
to an expert, the approach can be tailored for the desired objectives as
and when required.
6) Create Convenience: : A loyalty program has to be mutually
beneficial for the business and the customer. The convenience of
the entire process plays a big role in how the customer feels about
the brand in the long-term, and in share of wallet. Outsourcing
could help to ensure a smooth experience for the customer.

7) Secure Data: In his book ‘Customer Loyalty Programmes and Clubs’,
Stephan A Butscher states that a well-maintained, up-to-date database is
one of the most powerful marketing tools a company can have and it can
be used as a strategic weapon. Clearly, expertise is required to build and
maintain this database, as well as to ensure that the information remains
confidential. An outsourcing company that gives importance to data
security should be preferred as a partner.
8) 360-Degree Customer Service: Building customer loyalty is one
part of the gamut of activities that make for good customer care.
A specialist outsourcing company that is proficient in managing
customer care in its entirety for clients across multiple channels,
will help to enhance customer satisfaction on all fronts.

9) Analytics: An outsourcing partner with the right skill-set can deliver
analytics for the customer loyalty program, which will help keep the
program on track to success.
10) Increased Customer Lifetime Value: An outsourcing company
that is accomplished in data management and analytics can mine
insights from the customer database. Marketing managers can then
identify the most profitable customers and develop them over a long
period through personalized offers.

While consumer fatigue and market saturation could have
an effect on the success of a loyalty program, ultimately,
its impact will come down to the value it generates and
the ease of the experience. With the help of outsourcing,
businesses can make the program simple for their
valuable customers and reap the benefits of earning their
loyalty.

10 Benefits Outsourcing Loyalty Programs

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (20)

Similar to 10 Benefits Outsourcing Loyalty Programs

Similar to 10 Benefits Outsourcing Loyalty Programs (20)

More from Invensis

More from Invensis (10)

Recently uploaded

Recently uploaded (20)

10 Benefits Outsourcing Loyalty Programs