The Hidden Pitfall: How Overreliance on Loyalty Services Undermines Potential

The loyalty space has never been more exciting and we’ve had the privilege of watching it evolve over the past 15 years. One of the biggest mistakes brands have made while launching or redesigning their loyalty programs is the heavy reliance on services. Relying on human intervention at each and every turn creates inefficiencies, limits the ability to scale, and stifles evolution. 

Why shun the heavy reliance on loyalty services

When vendors generate 50% of their revenue in services they lose the motivation to innovate. If having a large team with hands-on keyboards makes up the bulk of your revenue, why would you want to make it more user-friendly & innovative? Plain and simple, you wouldn’t. 

Any brand relying on services heavily for loyalty programs is bound towards a slow death. One of the key reasons for requiring a lot of services is poor outdated software design. At Capillary Technologies, we’ve increasingly felt that the loyalty space needs a major shake-up. There are some great things about the “old way” that need to stay. For example, a human-centered approach is a must.  A great strategy must be human lead, but that strategy has to be based on data that moves at the speed of life. 

That’s why we’ve waved goodbye to the loyalty of 80’s and are working with enterprise brands to deliver loyalty programs faster with technology that is focused on making loyalty a profit center. At Capillary, less than 15% of our revenues are from services because our tech is user-friendly and couched in AI. This enables brands to pivot, optimize, and evolve quickly, ultimately creating efficiencies and generating more revenue. More than 15 Fortune 200 companies have embarked on this journey with us where technology plays the central role in delivering loyalty results. 

What does a balanced approach look like

With the leaps in AI and technology, dependence on services will suffocate brands. Yes, loyalty programs are a complex beast and a tech only approach isn’t the answer we’re proposing. For instance, we have one of the best loyalty consultancy practices in the world with Brierley which we acquired in 2023. Tools like the Brierley Loyalty Quotient are a great way to gauge your brand’s loyalty health before diving into execution. Also, system integrators and marquee consulting practices play a very relevant role in the space of mapping the best technologies to achieve the desired goal for a brand. 

As a benchmark, not more than 20% of your resources should be spent on services.

Loyalty technology has reached a level where it can do most of the things for you right out of the box. For instance, can you walk in the office tomorrow and instantly have your solution give you a nudge to make a game changing tweak to your program in an instant? Or do you have to call someone, schedule a meeting in 2 weeks, extract some data, create a hypothesis and ask IT to do some coding when they have the chance? Or maybe pay a vendor to do it? Things like this are very easy to execute on a SaaS platform. 

And with a managed SaaS approach like ours, you can take care of edge cases and configurations required for various verticals and use cases. A streamlined offering with a right mix of services but primarily fuelled by technology is the mantra to scale and succeed.

Interested in talking this through with us? 

Share

Aneesh Reddy is the Founder & CEO of Capillary Technologies. An alumnus of IIT-Kharagpur, Aneesh has been recognized a "Forty Under 40" leader by Fortune Magazine and the Economic Times. He is an active contributor to the start-up ecosystem, mentoring several upcoming SaaS startups. Also a big proponent of meditation, Aneesh guides workshops on Inner Peace for corporate leaders.