.

A Consultant's View

Prairie Trail Software, Inc. ............................................................. September 2010

Custom Loyalty Data Capture System

We just delivered a custom loyalty data capture system for a client. This is a good time to review why someone might want to have such a custom loyalty system.

Most credit card processing sales organizations have a gift and loyalty package that they can sell to the merchant. In many cases, it is an easy add on sale and it helps to keep the merchant with the processor when competitive offers are dangled before that merchant. However, for many of those merchants, that loyalty function is either not used or is a cost to the merchant. Rarely can a merchant point to how that loyalty package is making them money.

This is not a new problem. Many years ago, S&H Green Stamps were handed out by many merchants and was the largest loyalty program at its time. The problem was when everyone was giving out stamps; then no merchant got loyalty from the customer. Stamps, points, dollars off, etc. do not by themselves generate loyalty by the customer. Customer loyalty occurs when the merchant has what the customer wants when the customer wants it.

Loyalty packages can be very profitable to the merchant - when used correctly.

There are two parts to making a loyalty program profitable. The first part is finding out who the customers are that you would like to do a better job of serving. The second part is making changes and seeing if those customers like the changes. Both of these require information gathered from the loyalty data. No loyalty program is simply about rewarding good customers. If that were the only goal, there are cheaper and more effective ways to do that.

Identifying the customers who you would like to do a better job of serving can be a challenge. In many cases, you don't want to focus on the best customers because they are already loyal to what you are offering today. The point is to identify the customers who are less loyal today and offer reasons to be more loyal customers.

Tracking the efforts to make these customers more profitable is critical to making a profit from the loyalty system. It is in this tracking where custom loyalty programs justify their existence. Typically, tracking the efforts to make these customers more profitable will require specialized reports, custom mailings, occasional changes to the data capture system, and rapid analysis of the data. These are more challenging to do with an existing "canned" loyalty program.

In this case, we provided the client with the means to modify the system quickly including quick changes to the terminal. They can change what data is captured, what information is given to the customer, and what reports are given to the merchant. (Technologies used: SQL Server, .NET, and Vx570)

In our case, providing such flexibility is giving the customer what they wanted.