loyalty program framework for e-commerce

Loyalty program solutions for E-commerce stores

With the growing competition on price and on advertising traffic, e-commerce retailers are increasing their effort on customer retention. In this article, we will describe possible Loyalty program solutions for E-commerce stores.

Key questions for choosing Loyalty program solutions for E-commerce stores

The type of solution most suitable to an e-commerce store depends on many factors, internal and external. Keeping in mind the nature of the business (target addresses, business size, internal competencies, platform technology) and once the loyalty goals are clear, it is important to answer these two questions.

  1.  What level of customization do you need?
  2. Who will manage the program once this is set-up?

These two questions are the 2 criteria we use to develop a framework (a simplification of course) that groups loyalty solutions into four categories.

Many SaaS and standard solutions allow a great degree of “mass”-customizations and configurations. What we mean is, based on your platform, your order processing systems, specific KPI and data requirements or privacy constraints, do you need a totally custom solution? Are you instead looking for a system to issue points and deliver rewards on your store and undertake all the key loyalty activities? Maybe giving them your personal touch (brand, defining value of points, etc.)

Loyalty program management (or delegation), is also very important. Managing a loyalty program can be extremely time consuming. If this is not undertaken correctly the loyalty program could turn out to be ineffective or even counterproductive. Do you have the resources to manage the program? Do these resources have the expertise? Can these resources use their time in a more effective way?

The Loyalty Program framework

Based on the above criteria , we can group loyalty solutions into 4 categories: SWs, BPOs, BPaaS, SaaS.

Loyalty Solutions Framework


Loyalty Software. These are custom software solutions either built internally or procured through software providers or specialized solution providers. Once the software is developed and integrated into the e-commerce platform, the retailer will be trained and then manage all the loyalty processes. These processes include: developing and updating rewards catalog, delivering rewards to users, managing points value, managing user customer care, etc.

Loyalty BPO (Business Process Outsourcing). This solution will require both the external development of a custom loyalty software. However, differently from above, most of the loyalty process will be managed externally.

Loyalty SaaS (Software-as-a-Service). This loyalty solution is delivered via the cloud, so typically through APIs, platform plugins and SDKs and web interfaces. It allows fewer degrees of customization, still most solutions are highly configurable. The e-commerce store will have different options of behaviors that can be rewarded. You will generally be able to adapt the look and feel to the store’s brand and look and feel. There will be some limits that are in the nature of a service which has been designed to be a “One Size Fits All”. After integrating and configuring the SaaS you will need to manage the loyalty process, exactly like a software (the first category of the list).

Loyalty BPaaS (Business-Process-as-a-Service). A loyalty program offered via a BPaaS model is quite similar to the SaaS model. The loyalty program is integrated into your E-commerce platform via APIs and other internet technologies. The difference with respect to a SaaS is that with a BPaaS most of the loyalty process is managed by the provider. The provider will sign-up users, set-up a catalog of rewards and deliver them to the users.


Choosing between the Loyalty Program solutions for E-Commerce Stores

Asking the two questions above and finding in which type of solution is one of the places to start when looking for possible Loyalty Program solutions for E-Commerce Stores. Besides the typical “make or buy” question, retailers should first see if any cloud solutions (SaaS or BPaaS) can suit their needs before seeking a custom solution. A plethora of cloud options is available if the e-commerce platform is built on widely adopted open source or commercial platform (Woocommerce, Shopify, Magento). These range from easy to integrate APIs and SDKs to plugins that require no coding at all.

Managing the loyalty program process may instead be less straight forward than you think. One thing to keep in mind is that loyalty programs must be relevant and rewarding for the user to be useful. Also consider, that the complexity of continuously managing a catalog of rewards and delivering these to users can be tricky. Especially if your customer base is global and requiring international rewards.

Delegating the entire process through a BPaaS to experts can be the safest and most effective solution.

Koomalooma is the world’s first loyalty program with a BPaaS offering for e-commerce and m-commerce stores. If you want to know more check it out here: business.koomalooma.com

If you are running an E-Commerce store on Shopify or Lightspeed please click here: business.koomalooma.com/features#plugins

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