Today’s consumers are presented with a wide array of choices when it comes to loyalty program participation, from co-branded credit cards to subscription-based programs, to frequent flier, frequent guest, and preferred customer programs... and those are just the most common options. Increased loyalty choices, however, can be a double-edged sword for brands, making customer loyalty harder than ever to earn. The result is an evolving marketing landscape, with companies prioritizing stronger relationships and surpassing customer expectations to cultivate loyalty. Shifting needs have also heightened the demand for flexible, future-proof loyalty technology that enables businesses to maintain a competitive edge.
An effective way for companies to access that technology is through the software-as-a-service (SaaS) model. The SaaS sector has seen consistent, significant growth, with the market size reaching $273.55 billion in 2023 and projected to reach $908.21 billion by 2030. Advantages of SaaS utilization across industries include improved efficiency, reduced IT burdens, enhanced innovation, faster time to market, and improved data security.
Following the "As-a-Service" model popularized by SaaS tools, Loyalty-as-a-Service (LaaS) powers cloud-based loyalty solutions that can significantly enhance brand engagement. Companies using a LaaS model can derive many benefits, including enhanced customer retention, data-driven insights, and improved customer satisfaction. They can also leverage this model to create better customer loyalty experiences.
First, let’s define Loyalty-as-a-Service and explore how brands can utilize LaaS to revitalize their loyalty strategies.
Using loyalty programs to engage and retain customers is not a new phenomenon. But companies must work harder to build lasting customer relationships in today's highly competitive and crowded environment. One of the most effective ways to achieve this is through technology designed to deliver more personalized, targeted, and engaging interactions with loyalty program members.
And that’s where Loyalty-as-a-Service comes in. Companies partner with LaaS providers to enable deep and long-lasting customer relationships with innovative technology. More specifically, LaaS providers offer solutions that deliver strategic brand engagement through personalized and unique experiences more efficiently, cost-effectively, and faster than developing and managing a bespoke solution in-house. These cloud-based, API-first solutions are designed to facilitate many integrations that allow businesses to personalize their offerings, ideally creating loyalty and advocacy for the brand.
One of the benefits of this more modern architecture is that it allows companies to deploy solutions with increased agility and scalability, improved maintainability and reliability, and more flexibility compared to the more traditional and bespoke software solutions. This API-based approach to flexibility, along with standardized data exchange and seamless integration with various external systems and applications, ensures faster feature introduction and more accessible adaptation to changing business and end-user needs.
Because of these technological advantages, LaaS solutions allow brands to deliver personalized and exclusive experiences, gather invaluable customer data, and differentiate themselves with unique rewards portfolios.
In the competitive landscape of today's digital economy, brands strive for a distinctive advantage to foster both community and brand advocacy. LaaS solutions enable companies to deliver exactly what their customers and members want, from discount fares and rental cars to uniquely personalized and exotic experiences - all without the upfront program development costs associated with building a solution in-house.
LaaS providers also offer comprehensive services (including design, data analysis, and supply integration) and industry-leading technology to create customized loyalty programs with exclusive rewards. This allows businesses to focus on their core competencies while loyalty technology experts manage brands’ programs from behind the scenes.
While LaaS is an emerging trend, many opportunities exist. The common thread across all As-a-Service solutions is that they exist in the cloud, which provides the benefits of an advanced and accessible infrastructure without the burden of ownership. No two loyalty solutions providers are the same, making identifying the right partner critical for any brand pursuing a LaaS strategy.
Expertise is a crucial qualification for a LaaS provider; understanding the nuances of loyalty programs (specifically, travel loyalty programs) is paramount to developing an effective solution. A partner’s propensity for constant innovation will also ensure that the LaaS solution is adaptable and flexible enough to be credibly called “future-proof.”
LaaS solutions can help businesses create lasting loyalty and boost engagement, but only if those businesses identify and partner with the right technology provider.
As-a-service solutions are the way of the future, and travel loyalty technology is no exception – LaaS will define the next decade of loyalty. Where will your business fit into the Loyalty-as-a-Service picture?