What is Loyalty as a Service (LaaS)?

Gone are the days when a simple punch card or generic discount was enough to keep customers loyal.

Nowadays, where options are endless and competition is just a click away, e-commerce brands need to up their game. 

That's where LaaS comes in, offering a dynamic, technology-driven solution to foster customer loyalty in ways that are personalized, engaging, and, most importantly, effective.

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What does Loyalty as a Service (LaaS) mean?

Loyalty as a Service (LaaS) is a tech-driven approach that enables e-commerce brands to offer personalized and engaging loyalty programs to their customers, fostering repeat business and deeper brand loyalty.

Loyalty as a Service (LaaS) is essentially a modern twist on traditional loyalty programs, but it's delivered as a service by external providers. 

It's designed for e-commerce brands, like yours, to help keep your customers engaged and encourage them to keep shopping with you. 

These external providers, like us, use sophisticated software to create customized loyalty programs that can include rewards, points, or exclusive offers tailored to your brand and your customers.

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The key here is personalization and automation. 

LaaS platforms collect data on your customers' shopping habits and preferences, then use this information to offer them rewards that are meaningful and motivating. 

This way, every interaction your customer has with your brand feels personalized and special, increasing the likelihood they’ll stick around for the long haul.

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In short, a LaaS helps you create a deeper bond with your customers. It turns occasional buyers into loyal fans by making them feel appreciated and understood, all with the help of technology. 

It’s a win-win: your customers get rewards they actually want, and you get their continued business.

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The 5 main benefits of Loyalty as a Service

Let's explore how loyalty as a service (LaaS) seamlessly integrates into your business, transforming customer engagement through a blend of digital innovation and personalized experiences.

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Easy to implement and manage

One of the biggest perks of LaaS is that it's incredibly user-friendly. 

Instead of pouring resources into developing your own loyalty program from scratch (which can be both time-consuming and costly) LaaS offers a plug-and-play solution. 

This means you can roll out a sophisticated loyalty program quickly, without needing a team of developers or a hefty upfront investment. 

Plus, managing your program is a breeze, thanks to intuitive dashboards and analytics that help you track customer engagement and program performance in real-time.

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Boosts customer retention

Here’s a no-brainer: happy customers come back. LaaS turns this simple truth into a strategy. 

When you offer personalized rewards and experiences, you make every customer feel special.

This personal touch encourages customers to return to your store, not only for the products, but also for the unique shopping experience. 

Over time, this repeat business transforms one-time buyers into loyal customers, significantly boosting your customer retention rates.

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Increases Customer Lifetime Value

Loyal customers don’t just shop more often. They tend to spend more too. 

With LaaS, you’re not just rewarding customers for shopping with you; you’re incentivizing them to make larger purchases.

Tailored offers and exclusive rewards make customers feel like VIPs, encouraging them to add just one more item to their cart.

This increase in purchase frequency and order size directly contributes to a higher customer lifetime value.

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By the way, check this post to know how to calculate LTV.

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Enhances customer engagement

Engagement is the name of the game in e-commerce. 

LaaS programs are designed to keep your brand top-of-mind through regular communication and rewards. 

Whether it’s a points milestone, a birthday treat, or an exclusive sale, each interaction increases engagement.

This constant engagement helps build a strong emotional connection between your brand and your customers, making them more likely to choose you over competitors.

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Provides valuable insights

Knowledge is power, especially when it comes to understanding your customers. 

LaaS platforms are gold mines of data, offering insights into customer preferences, buying behavior, and loyalty program performance. 

This information is crucial for refining your marketing strategies, personalizing customer experiences, and making informed decisions that drive growth. 

Essentially, LaaS doesn’t just help you reward your customers. It helps you know them better.

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How Loyalty as a Service works?

When a brand decides to implement a loyalty and/or referral program, it partners with a LaaS company. 

This latter provides a digital platform that manages all aspects of the loyalty program, from enrollment to points tracking and rewards redemption. 

This digital approach means everything is handled online, making it accessible and convenient for both the business and its customers.

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Take a look at our comparison of the 7 best LaaS platforms on the market

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First off, customers can sign up for free. Yes, free. This is a huge draw in itself. 

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Once they're in, they can start earning points not just through purchases but through a variety of actions. 

For example, engaging with your brand on social media, referring friends (hello, referral bonuses!), or even giving feedback on products.

These points can then be redeemed for rewards. And we're not just talking about generic discounts here.

The best LaaS platforms allow businesses to offer a range of rewards, from exclusive products to unique experiences, all based on the customer's preferences and past behavior. It's personalization at its finest.

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But here's where it gets really interesting. Behind the scenes, the LaaS platform is gathering data on every interaction. 

This isn't just about banking points. It's about understanding what makes your customers tick. 

Armed with this knowledge, you can tailor your marketing efforts, product development, and even customer service to better meet their needs.

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Moreover, LaaS platforms often integrate seamlessly with other digital tools and services your business uses, from e-commerce platforms to social media channels and even emailing and CRM tools.

This integration means you can offer a smooth, hassle-free experience to your customers, whether they're shopping online, in-app, or in-store.

Loyoly, for example, integrates with Shopify, Klaviyo, Instagram, TikTok, Gorgias, Judgme.me, Recharge and many more.

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Check every Loyoly’s integrations here.

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Fintech plays a role here, too, especially in how rewards are redeemed.

Some LaaS platforms allow customers to convert points into digital currency or use them directly for online purchases, making the rewards feel as valuable as actual money.

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The future of Loyalty as a Service in e-commerce

The future of Loyalty as a Service (LaaS) in e-commerce looks incredibly promising, with emerging trends and predictions indicating an even tighter, more evolved relationship between e-commerce brands and their customers. 

As we move forward, the dynamics of loyalty programs are set to become more integrated, personalized, and flexible, driven by advancements in technology and changing consumer expectations.

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One emerging trend is the shift towards mobile-centric loyalty programs. 

Companies are recognizing the ubiquity of smartphones and are leveraging mobile platforms to offer more accessible and engaging loyalty experiences. 

Customers will increasingly earn rewards, manage their points, and redeem benefits directly from their mobile devices. 

This shift not only makes loyalty programs more convenient but also allows for the incorporation of mobile-specific features, such as location-based rewards or augmented reality experiences.

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Another trend is the integration of LaaS with broader digital ecosystems. 

Loyalty programs will become part of a seamless digital experience, interconnected with other services and platforms customers use. 

For example, integrating loyalty points with mobile payment systems so customers can easily earn and redeem rewards with each transaction. 

This approach not only enhances the customer experience but also opens up new avenues for rewards beyond the traditional points-for-purchases model.

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Artificial intelligence (AI) and machine learning are also playing pivotal roles in the evolution of LaaS. 

These technologies enable loyalty programs to offer hyper-personalized rewards and experiences by analyzing vast amounts of data on customer behavior and preferences. 

Companies will use this insight to tailor their loyalty programs in real-time, offering rewards and benefits that are most relevant and enticing to each individual customer.

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Sustainability and social responsibility are becoming increasingly important to consumers, and we predict this will reflect in the future of LaaS. 

E-commerce brands might offer rewards that align with customers’ values, such as donations to a charity or rewards for environmentally friendly purchases.

This approach not only boosts customer engagement but also helps brands strengthen their social responsibility efforts.

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Finally, we foresee a future where loyalty programs are more than just a tool for customer retention. 

They become a key part of a company's value proposition. 

Innovative reward schemes, such as offering access to exclusive content, educational resources, or unique digital experiences, will become more common. 

These types of benefits go beyond traditional discounts or products, offering real value that can enhance the customer's lifestyle or interests.