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Loyalty Technology Explained


What is Loyalty?

While the generic definition of loyalty is commonly known, what is brand loyalty?
Brand loyalty or customer loyalty is exactly what it sounds like – the loyalty a customer shows to a brand owing to the service and quality of product the brand offers. Loyalty can be seen through repeated purchase, organic endorsement, cheerful outlook, and constructive feedback.

What is Loyalty Technology?

“Loyalty Technology is a collection of digital tools made specifically to simplify execution of loyalty programs. The loyalty platform has distinctive features like data warehouses, real-time data management, customer profile generators, activity monitors, conversational AI and extensive customer databases. The loyalty technology used by an organization may also include customer service, point of sale tracking, email service provision and customer engagement capabilities.”

How does Loyalty Technology Work?

A Loyalty platform can be computer or web/cloud based. Computer based loyalty platforms require a sophisticated support system. All the data collected must be stored securely, in easy-to-access silos.
Cloud-based loyalty platforms, on the other hand, consist of a foundational piece that integrates with multiple tools at once to form an all-rounded marketer’s paradise.

Early marketing was about physical information collection, tele-calling customers to receive feedback and depending on broken or incomplete customer profiles to create a marketing strategy. Digital marketing however is a completely different work culture. Personalization engines, customer data platforms and Voice of Customer platforms are making it easier for marketers to understand what customers want or expect and sketch out loyalty programs. Loyalty technology then helps in the execution of these loyalty programs.

Loyalty platforms allow organizations to understand customer profiles, personalize messaging, and deliver content in the right situations. The data segmentation ability of loyalty platforms helps marketers understand customers and indirectly results in increasing customer retention and growth of verbal endorsement. These platforms can also conduct surveys via e-mail or social media, make real-time recommendations and analyze results.

The functioning of loyalty technologies can be broken down for understanding.


It is extremely important for loyalty technology to have integration capabilities. Since there are multiple channels where the customer may interact and share information, it is important to draw all this information into one database. Inter-departmental resource sharing becomes possible when communication between the systems used by the varying departments happens seamlessly.
Loyalty programs cannot be planned without understanding wide range of perspectives. Using integration with sales, customer service, advertising, and branding tools, loyalty platforms analyze the market. The collection of data allows marketers to comprehend the customer psyche and work towards generating organic growth.

Data collection and Management

A majority of loyalty technology depends on Application Programming Interfaces (API) to fetch information from social media, e-mail and text messaging, mobile applications, e-commerce portals and websites. They also draw data collected at stores, also known as brick-and-mortar venues.
As mentioned above, it is important for loyalty technology to incorporate data collected by other departments. Integrated CDPs make this possible. Without segmentation of information, marketers can access every bit of information received by an organization.
To truly complete the picture, loyalty technology also fetches information from non-purchase channels. This includes social media mentions, non-sponsored promotions, and word-of-mouth recommendations. This gives marketers an idea of customer loyalty apart from interaction with the organization. Feedback that is not directed towards the organization gives marketers an insight into what customers really feel about the brand.
The compilation of digital, in-store and organizational/backstage data results in the formation of actionable / usable data. Loyalty platforms segment this data by customer preference and taste, creating customer personas. Such data has meaning because it is structured in a way that is easy to understand and work with.

AI powered analysis and recommendation

Technologically progressive features like machine learning and graphical representation of data make loyalty platforms a predictive tool. Loyalty technology has built-in pattern recognition software as well as analytical tools that help it create recommendation modules. Some platforms also create a log of the prior purchases and rewards of a customer.
These platforms not only help marketers build a growth strategy, but also supply input in loyalty program structure.

What are Loyalty Programs?

Loyalty programs are a method of rewarding customers who display loyalty towards a brand or organization. Mostly prevalent in the e-commerce sector, repeat customers are offered incentive to keep buying or endorsing a brand.
These incentives occur in various forms, five of which are listed below-

  • Points Programs – Each purchase made leads to a deposition of points in the form of virtual currency that can be redeemed later. Such a system uses real-time calculation of points earned and redeemed.
  • Buy X Get X – This type of incentive helps in increasing cart values. The purchase of a certain amount (in number or value) of goods will result in other goods being excluded from the bill or available at discounted prices.
  • Referral Incentives – When customers refer a service to other potential buyers, they receive rewards.
  • Pre-paid Gift cards – These cards ensure that a customer explores the brand or returns to it to use the gift card.
  • Loadable cards with redemption at multiple merchants – The coalition of merchants helps brands gain visibility in audiences of similar brands or sublets of the same merchant. It allows customers flexibility while maintaining loyalty.
Why is Customer Loyalty Important for a business?

Generating loyalty amongst the customer base is not merely about increasing revenue.
When a brand has a customer base that is loyal to them because they offer exceptional service, their reputation and visibility in the market soars.
Loyalty is also not about incessant advertising. Gaining the loyalty of a customer boils down to the organization creating an environment for the customer in which they feel cared for and prioritized. Triggered messaging, personalized content and exceptional service are only useful when they translate into loyalty from an organization’s customer base. Loyalty technology is a tool meant to spur customer loyalty and make sales and marketing efforts successful.