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Select and Implement a Loyalty Program Platform Solution

Choose a system that aligns with the business’ strategic digital goals and opportunities.

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Although the gaming and hospitality industry has good intentions to drive guest loyalty (94% consider driving guest loyalty as a top priority), it falls short in acknowledging that updating and integrating the martech stack is the key to smooth operations (only 21% include modernization of tech stack as an area of focus for digital initiatives).

Our Advice

Critical Insight

Unlocking the digital value of a loyalty program is restricted by the technology stack in place. Without establishing the right loyalty management solution, the organization will be unable to break through the digital loyalty transformation barrier, missing the mark on differentiation and sustainment.

Impact and Result

A well-prepared loyalty management platform selection will mitigate digital initiative risks. Implement a strategic loyalty management selection process by:

  • Distinguishing between core, advanced, and strategic loyalty functionalities and assessing each functionality’s support of your loyalty program value chains.
  • Examining and determining the deployment architecture that aligns with the organization and loyalty program objectives.
  • Analyzing the vendor landscape, focusing in on those vendors that support your designed deployment architecture and satisfy current functionality and gaps.

Select and Implement a Loyalty Program Platform Solution Research & Tools

1. Select and Implement a Loyalty Program Platform Solution – A step-by-step deck that walks you through a strategic loyalty management selection process

This approach to loyalty management system selection will drive digital loyalty transformation which can, in turn, enable sustainment and empower differentiation.

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Select and Implement a Loyalty Program Platform Solution

Choose a system that aligns with the business’ strategic digital goals and opportunities.

Analyst Perspective

Breaking through the digital loyalty transformation barrier.

In the previous report, Info-Tech’s Optimize Your Loyalty Program Through A Digital Strategy, we leveraged Info-Tech’s Digital Business Strategy to develop a digital loyalty strategy that identifies what aspects of the program to transform, technologies to embrace, processes to automate, and new growth strategies to create.

With digital loyalty initiatives in place, a loyalty program platform analysis must be the next step toward a digital loyalty program because establishing a proper loyalty management solution selection is the critical enabler that will veritably drive digital loyalty transformation.

In this report, we offer a strategic loyalty management selection process that will allow the organization to determine how loyalty functions support the value chains, what deployment approach to select, and what vendors are in the market.

Photo of Monica Pagtalunan, Research Specialist, Gaming & Hospitality, Info-Tech Research Group. Monica Pagtalunan
Research Specialist, Gaming & Hospitality
Info-Tech Research Group

Where does a Loyalty Platform System sit in the Marketing Tech Stack?

Casino Management System
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Property Management System
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Point-of-Sale System
Customer Relationship Management

Loyalty Management Platform

Player Host Tool Customer Data Platform
Operational industry systems that hold and feed guest data to the rest of the marketing tech stack. Software that consists of applications designed to automate and manage the customer lifecycle. Software that lets you create, launch, manage, and track your loyalty program. Software that is designed to manage the customer lifecycle on the casino floor. Software that enables a unified customer profile for marketing purposes.

The tech stack must be ready for digital guest loyalty

The CX programs of the future will be holistic, predictive, precise and clearly tied to business outcomes. Evidence suggests that the advantages will be substantial for companies that start building the capabilities, talent, and organizational structure needed for this transition.” McKinsey, 24 February 2021.
  • Disconnect between acknowledgement and intention to change - Although the gaming and hospitality industry has good intentions, with 94% of surveyed organizations wanting to drive guest loyalty, they fall short in acknowledging that updating and integrating the marketing tech stack is the key to smooth operations. (Hospitality Technology, 2021).
  • Agility is critical for digitization - To digitize the customer experience, the organization must digitize the operation through agile approaches to processes and the implementation of customer-centric platforms.
  • Your loyalty platform must enable digital loyalty transformation - The loyalty management solution has a role to play in the entire customer journey and lifecycle of the organization’s members.
  • Stay ahead of the curve to be competitive - Organizations that have modernized their tech stack in preparation for the implementation of digital initiatives will be ahead of the curve (21%), while the rest (79%) will struggle to develop a guest-centric, unified, and agile loyalty program. (Adobe, 2021)
  • Assess the capabilities and limitations of your loyalty system - An agile pivot from traditional toward a digital loyalty program will require the assessment of the current core loyalty management solution to see if the platform can handle digital transformation. To power today’s most sought-after use cases, organizations must investigate the capabilities and limitations of their loyalty management platform.

The industry acknowledges the need to change...

94%

IT departments that consider driving guest loyalty as a top priority (Hospitality Technology , 2021)

...but has little intention to change.

21%

Include modernization of tech stack integration as an area of focus for organization’s digital initiatives. (Adobe, 2021)

Your loyalty management solution will critically enable digital transformation

Unlocking the digital value of a loyalty program is restricted by the technology stack in place. Without establishing the right loyalty management solution, the organization will be unable to break through the digital loyalty transformation barrier, missing the mark on differentiation, and even sustainment.

A successful solution will result in the following:

  • Expansion and optimization of guest data.
  • Increased reach of communication by addressing the demand for digital interaction.
  • Prioritization of the user journey which increases the opportunity for personalized and relevant content and conversion rates.
  • Minimized manual processes; maximized process automation.
  • Increased marketing autonomy and flexibility.

Visit Info-Tech’s Build a Business-Aligned IT Strategy Blueprint

Visit Info-Tech’s Define Your Digital Business Strategy Blueprint

Pyramid of loyalty management solutions. The bottom section is 'Build the Digital Loyalty Program Vision', then 'Establish Foundational Enablers' with a note that this is where you are currently. The line above says 'Break through the digital transformation barrier'. The 3rd section from the bottom is 'Enable Sustainment', and the top is 'Empower Differentiation'.

Unlocking the digital value of a loyalty program is restricted by the technology stack in place. Establishing a proper loyalty management solution selection is the critical enabler that will veritably drive digital loyalty transformation.

Understand the different components necessary to develop a guest-centric, unified, and agile enterprise loyalty program architecture

Loyalty Program Architecture.

IT’s Role in Enhancing the Organization’s Loyalty Program

1 – Digital Loyalty Program Opportunities
Careful analysis of pain points, gaps, and opportunities within the loyalty program is the core estimation of effectiveness and a way to determine digital initiatives to enhance your program.

Focus of Report
2 – Loyalty Platform Solution Vendor
Select a system that aligns with marketing’s strategic goals and opportunities.

3 – Data and Integration Strategy
With digital loyalty program opportunities in mind, optimize your data & integration strategy.

https://architect.salesforce.com/design/architectu...
https://architect.salesforce.com/design/architectu...

A loyalty program’s objective should be focused on making the guest’s experience as seamless as possible, while enabling the organization to keep record of services consumed

Determine whether your current loyalty management solution can support your digital goals and initiatives

Sample Data: Integrated Resort X elicited a goals cascade to identify the organizational goals, initiatives, and capabilities, mapped back to IT goals, initiatives, capabilities.

Example organization goals cascade. The first column on the left side is 'Business Goals' listing four business goals, some of which are color-coded similarly. The second column on left side is 'Business Initiatives' with three initiatives, each color-coded to match the business goal(s) they help to achieve. The third column on the left side is 'Business Capabilities' with capabilities grouped by a category such as 'Loyalty Program Mgmt.', each of which are color-coded to business goals and the business initiatives that create or improve them. On the right side there is similarly 'IT Goals' with five goals listed, they each are achieved through many 'IT Initiatives', some of which are color-coded to goals, which are created or improved by 'IT Capabilities'. The capabilities of either side support each other.

A Well-Prepared Loyalty Management Platform Selection Will Mitigate Digital Initiative Risks

To mitigate risks, a loyalty program management solution must support its digital initiatives through the enablement of two overarching systems:
  1. Digital Ecosystem
    • Definition - Refers to an environment of interconnected IT systems and processes.
    • Lay the foundation for upcoming high-value implementations and build for expansion - Your loyalty management environment must allow for the connectivity of systems (technology and people) and processes (channels and strategy), so that your organization is in a better position to take advantage of projects in the coming years.
  2. Experience Platform
    • Definition - Refers to a system that sits on data to manage both operational and customer experiences.
    • Lay the foundation for guest engagement and build for an optimal experience - Your loyalty management environment must drive engagement for customers and enable the ability for the business to make the right decisions in improving marketing and service.

A poor platform selection may result in risks:

  • Misalignment between IT and the business, and the organization and selected vendor.
  • Insufficient focus on user stories.
  • Lack the monitoring of all integration points.
  • Inability to scale the solution with the growth of the program.

Info-Tech’s Methodology for a Strategic Loyalty Management Selection Process

Phase Steps 1. Determine Loyalty Functional Support for Loyalty Value Chains 2. Adopt the Right Deployment Approach 3. Evaluate the Loyalty System Vendor Landscape
Phase Outcomes Determine whether stakeholders are experiencing challenges with functionality, the impact on the business, and the tasks that can be accomplished to establish current state gaps. Examine and determine the deployment approach that aligns with the organization and loyalty program objectives. Analyze the vendor landscape, focusing in on those vendors that support your designed deployment approach and satisfy current functionality and gaps.

Determine what value your loyalty program creates

Value streams and value chains connect business goals to the organization’s value realization activities. They enable an organization to create and capture value in the marketplace by engaging in a set of interconnected activities. Loyalty programs create value by attracting, entertaining/servicing, and retaining guests (Value Stream) through the following loyalty program management and operation processes and activities (Value Chains):

Different types of value your organization creates
Value Stream for loyalty programs with activities 'Attract Guest', 'Entertain/Service Guest', and 'Retain Guest'.
The way that your organization creates value
Value chain for Loyalty Program Management.
Value chain for Loyalty Program Operations.

Value Streams
A value stream refers to the specific set of activities an industry player undertakes to create and capture value for and from the end consumer.

Value Chains
A value chain is a ”string” of processes within a company that interrelate and work together to meet market demand. Examining the value chain of a company will reveal how it achieves competitive advantage.

Each value chain has a stakeholder associated with it. This is the primary stakeholder that seeks to gain value from that value chain

Visit ITRG's Integrated Casino Reference Architecture Guide

Analyzing Loyalty Program Value Chain Components

Collection of data on guests (such as needs, wants, and habits) to segment and build profiles, and to activate the customer experience. The creation of loyalty schemes for the guest's lifetime journey based on guest data and profiles. Examples of schemes include perks, gamified loyalty, earn and burn promotions, etc. The creation and coordination of exclusive events and experiences for high-value loyalty program members. Development of loyalty program rules and ensuring the transparency and clarification required by members. This also involves the administrative tasks involved for promotions and incentives. Management of partnership relations and contracts, specifically loyalty terms, point blocks, billing, accrual templates, and distributed ledger management.
Value chain for Loyalty Program Management.
Value chain for Loyalty Program Operations.
Involves enrollment and registration to expand membership. This process focuses on creating awareness while making the registration and onboarding steps as easy as possible. Executes loyalty schemes in the guest lifetime journey through promotion recommendations, personalized rewards, etc. This process focuses on what promotions and incentives the guest sees and how they see them. Refers to the concept of front-line employees knowing your members and being able to provide personalized service. Allows for the accrual and visibility of points after enrolling or taking advantage of promotions and incentives, as well as the redemption of intangible and tangible rewards. The function assesses and keeps track of points based on tier classes, and point and voucher expirations, etc. Track and analyze member behaviors based on their transactional and non-transactional activities such as bet tracking, rollover tracking, and non-gaming purchases.

Measure the value of your loyalty management solution based on the individual processes it supports

Processes

Arrow pointing right.

Objective

Arrow pointing right.

KPI Metrics

Loyalty Program Management

Guest Profile Management

Loyalty Scheme Management

Loyalty Event Management

Partner Management

Loyalty Administration

Accessibility and ability to successfully use data to segment out and identify accurate guest profiles (Profile/Segmentation Quality).

Based on guest profiles, flexibility and agility to design and develop loyalty schemes that engage the right customers.

The ease of developing, designing and coordinating loyalty events for high value members.

Ability to successfully management partnerships through collaboration as well as the number of partners engaged with and their contribution rate.

Ability to maintain a flexible rules engine that allows for a complex network of rules and tiers with the goal of providing transparency to guests.

Loyalty Program Management

Customer Acquisition Cost, Usage, Time Spent

Customer Lifetime Value, Active Engagement Ratio, Reward Redemption Rate, Customer Churn Rate, Reward Liability Rate

Conversion Rate, Transaction Accuracy, Average Basket Size

Engagement Ratio, Revenue Increase, Number of partners, number of partner-related schemes, sales volume, gross margins via partners

Customer Satisfaction Score – Survey Feedback (Education of Limitations), Customer Retention Rate, First Time Resolution Rate

Loyalty Program Operations

Enrollment

Promotions and Incentives

Member Service Integration

Transaction Processing

Behavior Tracking and Analysis

Guest attraction to loyalty program and from there, usability and user-friendliness for guests to enroll in a loyalty program.

Right guest, right time, right message, right channel.

Ability for front-line staff to successfully support and service members

Ability to distribute Points, Rewards and Perks to the appropriate guests with speed.

Ability to track and analyze loyalty program member behavior.

Loyalty Program Operations

Enrollment Rate, Customer Acquisition Rate, Click-Through Rate, Conversion Rate, Customer Attention, Frequency

Customer Lifetime Value, Active Engagement Ratio, Reward Redemption Rate, Customer Churn Rate, Reward Liability Rate

Customer Lifetime Value, Customer Churn Rate, Customer Satisfaction

Transaction Accuracy, Conversion Rate, Usability, Point Scoring

Customer Acquisition Cost, Customer Lifetime Value, Sentimental Analysis

Calculating KPI metrics

KPI Metric Definition Calculation
Customer Acquisition Cost Cost of winning a customer to purchase a product or service (Cost of Sales + Cost of Marketing) / New Customers Acquired
Customer Lifetime Value Total worth to a business of a customer over the whole period of their relationship Average Value of Sale X Number of Transactions x Retention Time Period
Active Engagement Rate Percentage of customers who are “active” in the program. For example, referring friends, redeeming rewards, etc. Number of active members / Number of total program members
Reward Redemption Rate Measure of how many points are being redeemed by members to see whether the program is engaging enough Number of points spent on rewards / number of points issued
Customer Churn Rate Rate at which customers leave the loyalty program (Members at beginning of period - members at end of period) / Users at beginning of period
Reward Liability Rate Cost to your company of the redemption of all outstanding loyalty points Outstanding Points x Cost Per Point x Redemption Rate
Conversion Rate Percentage of customers that convert to loyalty program members Number of visitors that converted / total number of visitors
Average Basket Size Average amount spent by your loyalty members in one transaction Total value of transactions / number of transactions or sales
Enrollment Rate Percentage of customers that enroll in your loyalty program Number of program members / total number of customers
Click-Through Rate Percentage of people who click your loyalty program advertisements Number of clicks that your ad receives / number of times your ad is shown
Select and Implement a Loyalty Program Platform Solution preview picture

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Author

Monica Pagtalunan

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