The right loyalty program can help retailers build stronger customer relationships, enhance customer retention, and increase revenue.

Loyalty and rewards programs give brands a tremendous advantage when implemented and supported correctly by creating stickiness for customers through personalised offers, discounts, and rewards, especially when many Australian shoppers are abandoning their go-to stores amid the ongoing cost of living crisis.(1)

Selecting a loyalty program is not a decision to take lightly, and choosing the wrong program can do more harm than good.

Service failures such as difficulties connecting loyalty programs with payments online or instore, problems tracking loyalty points, or more severe issues like data breaches exposing personally identifiable information (PII) can all impact on customer loyalty. Modern retailers are increasingly moving towards digital loyalty programs to deliver frictionless shopping experiences for consumers as well as comprehensive security, helping to combat the loss of loyalty from today’s customers.

It’s essential for brands to select a loyalty program partner that enhances the customer experience (CX) instead of potentially driving down sales if the program doesn’t integrate into the retailer’s operations seamlessly, securely protect PII, or support how customers pay, shop, and interact with a brand. However, not every loyalty program offers the same benefits or level of security, so it’s crucial for retailers to do their due diligence before engaging a preferred loyalty program provider.

Brands need to understand the specific objectives they want to achieve with a loyalty program, from increasing purchase frequency to raising average order values or enhancing customer lifetime value. Each goal requires a different approach to the loyalty program’s design, with tailoring to meet specific customer and business needs. To meet those goals, it’s critical to ask the right questions of loyalty providers to ensure a solution meets both brand objectives and customer expectations without creating friction or disconnects.

Sophisticated loyalty programs must seamlessly integrate the program with a business’s technology ecosystem, including point-of-sale (POS) systems, e-commerce platforms, and customer relationship management (CRM) solutions. This ensures customer interactions are captured and rewarded consistently across all touchpoints while ensuring unified CX.

Insufficient integration leads to disjointed CX and operational inefficiencies, as well as security concerns, particularly with large amounts of customer data captured and processed to personalise loyalty programs and rewards to individual customers.  

Given how much data retailers capture, and loyalty programs rely on, the highest levels of data security are non-negotiable. Retailers should only partner with loyalty platform providers that are capable of ensuring compliance with stringent security standards, such as providers that are Payment Card Industry Data Security Standard (PCI DSS) Level 1 Certified. This builds customer trust in the program and reduces the risk of customer details being leaked or stolen.

A loyalty program that offers flexibility to adapt its structure, rewards, and communication channels as a business grows and market dynamics shift is also valuable. Customer longevity is at the heart of many programs; however, technology, digital experiences, and customer expectations constantly change. Adaptability ensures the program remains relevant and engaging for customers, sustaining its effectiveness over time.  

One way loyalty programs can stay ahead of the curve and meet customer demands is through advanced analytics and segmentation capabilities. These capabilities let businesses deliver highly targeted and relevant offers, enhancing the perceived value of the program to consumers. Ease of use for customers and employees is also critical.

A straightforward and frictionless process to join, earn, and redeem rewards is key to adoption and sustained customer engagement. For employees, an intuitive interface for program management ensures efficient operation and enhances their ability to provide excellent customer service. It also minimises—or eradicates—any problems loyalty members might experience.  

Selecting the right loyalty program is a strategic decision that can significantly impact a business’s ability to compete in an evolving economic climate. A successful loyalty program, delivered by a trusted partner, that meets immediate needs will position brands for long-term success by building deeper, more valuable customer relationships.


Anurag Vasisth is co-chair and group CEO of Loyalty Now.