You’ve made the decision to run a loyalty programme, and you’ve got fantastic ideas for all facets of the customer experience, from incentives to in-store activities. However, there is one crucial query that all businesses must address: How much will the loyalty programme cost?

In order to properly manage their budgets, many of our clients ask our staff what kind of fees to anticipate with a turnkey loyalty programme.

Don’t worry if you believe that cost is a grey area. We are at your service.

Here is a checklist to get you started on figuring loyalty-related costs. It includes a worksheet, an ebook, and a video, among other things. Since no two loyalty programmes are the same, it’s not all-inclusive, but it’s a wonderful place to start. I’ll also offer some advice on how to make your plan cost-effective.

1. Deciding on a development strategy
   Prior to beginning budgeting, you must make one choice that will have an impact on the entire budgeting procedure: who will create your loyalty programme? There are three choices available:

Internal development: You have complete control over the entire process when the loyalty programme is created internally. However, developing a loyalty programme from scratch could take a long time. You must learn every aspect of creating and managing a loyalty programme from scratch.
Agency custom development: Working with a third-party agency is comparable to working with your in-house team, except that you’re outsourcing the task to a business that already has the workforce. The most expensive option is to ask them to do the entire project, so bear that in mind.

Using a Loyalty Software: The key advantage of a SaaS loyalty software is that the company that created it has the expertise and technology needed to set up and manage your loyalty programme more quickly than any of the other options. You simply need to worry about the concept and the frontend because the backend is already configured and prepared.

2. Costs You Can Expect: Marketing, Management, and Technology
   Any expense that can be reasonably easily mapped belongs in this area. How many people, for instance, do you intend to devote to managing the reward programme? What size launch campaign is ideal? If you choose a SaaS solution, you may also plan for how much the annual subscription charge will be.

HR expenses: This reflects the overall number of people employed in launching new marketing and maintaining the loyalty programme. Working with a loyalty software provider has the advantage of providing a platform that is created with accessibility in mind.

Marketing expenses: Any kind of advertising should be included in the marketing budget, especially in the weeks leading up to launch. Spend as much money as necessary to advertise the reward programme across all platforms once it has launched. Make sure it is prominent on your website and that you advertise it as a feature of your value proposition in commercials, on social media, and in videos.
Cost of technology: Technology costs are the easiest to understand of the three because they include all of the money you spend on the backend of the reward programme. This can be an unforeseen expense if you decide to create the programme from scratch. A SaaS loyalty management software will probably have a set or scaled monthly subscription if you opt to use it.

3. Rewards with Less Predictable Costs
   Because incentives frequently change, it is more challenging to calculate the costs associated with your reward system than it is with marketing and technological costs. You will need to make adjustments based on client input, such as deleting unpopular awards or adding new rewards for holidays or special events.

If you approach the expense of rewards in the proper way, they’ll boost your revenue growth rather than stunt it. See how LuisaViaRoma used rewards to their advantage below:

Events
Events happen in different forms and sizes, from intimate neighbourhood events held in-store to enormous anniversary parties attended by influential people and notable figures. It is challenging to estimate their actual cost because of this. Luxurious activities like cocktail parties should be priced so that only your best ranked members may attend, but movie nights or store openings should be open to everyone. This will help to guarantee that community building doesn’t significantly reduce your profit margins.

Early entrance
Few people are aware that early access is one of the best incentives. Simply give a small group of customers the chance to buy new products before the general public, and that’s it. This not only costs you nothing, but members who enjoy this benefit often go above and above to take advantage of it, boosting their lifetime value. Early access should always be reserved for top-tier or VIP members, encouraging them to advance.

Content
These might be exclusive blog articles for members or videos with suggestions and guidance on a subject you are knowledgeable about. These are the best entry-level incentives for tiered or benefit schemes that can increase membership. Either your team members or an outside company can create the content. However, based on the amount of content you plan to produce annually, you may estimate the total cost of the creation.

We’ve included a template here that might help you create your loyalty programme reward system because one of the most crucial components of a loyalty programme is the incentives (which can include both monetary and experience benefits).

4. Online Loyalty Program ROI (Video)
   Many businesses are concerned about whether they will receive a return on their investment despite meticulous planning. When asked about the subject, I usually mention that properly implemented loyalty programmes will aid in the expansion of your company.

However, ROI is a broad and challenging topic, so we chose to talk about it in an episode of Customer Loyalty Minutes with Jörn Roegler, VP of Strategy & Insight at Antavo. In the podcast, Jörn made the point that loyalty programmes make money in a number of ways, including through influencing consumer behaviour, using loyalty points as cash, and educating you more about your customers. Here are a few more of the video’s highlights:

[Tweet] “Measuring the effectiveness of an online loyalty programme is easy if you have a clear KPI and a stated target.”]

[Tweet] “Lack of a client retention tool can give your competitors an advantage.”

Tweet “Customers request a loyalty programme because they want to be recognised for their loyalty.”]

Everything is in control at this time.
These are the fundamental costs of a loyalty programme that you should take into account when designing one. Our team is here to assist you if you want to speak with a budgeting, ROI, and optimization specialist about loyalty programmes. Request a demo from us to find out more.

Don’t forget to download Antavo’s Customer Loyalty Report 2022, a comprehensive report that offers a wealth of data and upcoming market trends to assist you in navigating the world of next-generation loyalty programmes.