Customer Loyalty Programs

Published by Steve Davis on July 28, 2023

Customer loyalty programs play a crucial role in cultivating customer satisfaction, driving customer engagement, and ultimately contributing to the growth and profitability of a business. Frequently, redemption of loyalty rewards is a factor of e-commerce operations. OrderCloud’s principle of flexibility over features is proven in supporting the management of loyalty reward programs for your e-commerce solutions.

There is a myriad of loyalty reward programs in existence. Retail, airline and travel, hospitality, restaurant, entertainment, automotive, and subscription-based loyalty programs. Each with distinctions on how points are accumulated, or how discounts are earned. This article will focus primarily on how points that have been earned can be applied as Payments for products chosen as reward program merchandise and a brief mention of using Promotions to fulfill on discounts. The key to allowing point redemption in OrderCloud rests with the Spending Accounts resource.

Spending Accounts are funds given to users by a managing entity and are managed as part of a user's account. These funds are generally used as "corporate dollars", "rewards dollars", or "gift cards". They can be used to pay for all of or part of an order with parameters that control account expiration, balance available, balance renewal, user access and overdraft. Multiple spending accounts can be assigned to a member of an organization and applied to all transactions, but only one can be used as a payment method. When multiple Spending Accounts are used on a transaction each is deducted individually.

Basically, spending accounts can be created and assigned to Buyers, User Groups, and Users to be applied as Payments and Transactions on any Order. They are treated the same as credit card payments. You can choose to allow for split payments of loyalty points in combination with credit cards or for the entire balance. When the order is submitted the spending account balance is automatically adjusted. Amazon’s loyalty program, often co-branded with credit card companies, has a useful “apply points for payment” option during the checkout process.

Managing the spending accounts is a business operation decided by the implementation partner. OrderCloud’s composability allows for up to the moment accuracy of account balances as well as opportunities to perform more validation before payment is authorized. Performing an update, PUT or PATCH, on a spending account is all that’s needed to set the value of the spending account. It is recommended to create a dedicated API Client with proper credentials to make these updates and isolate the security to that channel. Spending accounts have tremendous flexibility to support many different use cases. Loyalty programs are likely targeting individuals, so you’ll probably focus the creation and assignment of the spending account at the User level. Once this relationship is defined the User can list their loyalty account on the Me endpoints and have insight into their account balance. This balance can be displayed and applied as a Payment towards the Order total balance.

Another highly recommended practice is to use a pre-webhook call on the Payment endpoint to validate the balance as a secondary check. The pre-webhook call can be received by a middleware system with access into the loyalty program to confirm the balance is correct and available and then respond positively to allow the API call to complete and a Transaction to be applied to the Payment. Once the Order is submitted OrderCloud will validate directly against the Spending Account once more and decrement the balance on completion.

Lastly, it’s important to also understand how to leverage Promotions in support of loyalty programs. Some rewards are more simply managed with Promotions vs Spending Accounts. For example, an initial discount for new users or rewards less connected to monetary value such as free products.

Promotions are available to be assigned to Buyers and UserGroup. A workflow where a new User is added to a “New” or “Initial” UserGroup. Promotions have a property, “RedemptionLimitPerUser”, to guarantee a new user only redeems the offer as many times as you decide. Promotions, supported with the Rules Engine, have tremendous power and flexibility.

The combination of these two core resources of OrderCloud enables the creation of a robust loyalty reward program.

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