How to extend your product with API-first loyalty and gamification features

In recent years, the loyalty industry has become fiercely competitive, as more and more businesses have chosen to incorporate loyalty programs into their offerings. As such, loyalty features are no longer simply a nice-to-have that gives brands a competitive edge over the pack, instead, they’ve become the very point on which that competition hinges. And as businesses set out to catch up with this trend, resolving to invest in loyalty features, they face crucial practical dilemmas relating to their choice - to build or to buy? What many don’t know is that these dilemmas can be alleviated by the API-first approach, which offers the ability to pick and choose ready-to-use white label loyalty features without the trade-offs imposed by traditional monolithic loyalty solutions.

In this piece, we explore the question of how businesses can easily extend their product with a wide range of white-label loyalty features and enjoy the benefits offered by the API-first approach.

Key takeaways:

• Loyalty features are no longer a nice-to-have perk; they’ve become a focal point of competition among brands big and small.
• Consumers’ expectations with regards to loyalty programs are higher than ever. It’s no longer enough to offer run-of-the-mill campaigns and uninspired feature configurations.
• More and more companies decide to enrich their products with loyalty and gamification features in order to bring more value with their core system.
• The build vs. buy dilemma is one that businesses still face when deciding how to go about enriching their product with loyalty, gamification and retention features
• The API-first approach offers a break away from the outdated build or buy approach, which hinders creativity and business results. Instead, you can both build and buy, letting your team focus on what is core to your business and use white-label features to do the rest of the work for you.
• Thanks to the API-first approach and composable architecture, you can easily extend your product with best-of-breed loyalty and gamification components to create your desired solution.

Engaging today’s customers

In recent years, the loyalty market has been enjoying unprecedented popularity, as increasing numbers of businesses have grown to appreciate the impact of loyalty on customer experience and its potential in terms of attracting new customers and retaining existing ones. And so, despite growth challenges posed by the COVID-19 pandemic, the global loyalty market is projected to grow from 5.57 billion USD (2022) to 24.44 billion USD (2029), amounting to an impressive CAGR of 23.5%.

The benefits of well-executed loyalty programs hardly bear repeating at a time when loyalty market saturation is at an all time high and more and more businesses are launching theirs. As customer expectations increase and competitions gets ever so fierce, loyalty is no longer a fun perk meted out as part of a larger marketing strategy. Instead, it’s become a must-have that can mean the difference between a quarter that’s successful and a quarter that’s less so. 

Nevertheless, while loyalty programs have been shown to promote lasting relationships with customers and ensure future spend, the intense competition in the field also means that businesses need to be innovative, original and flexible with regards to their loyalty propositions. Offerings need to be highly personalized and customers’ fleeting attention spans need to be catered to with a variety of engaging features. Gamification features such as challenges, milestones, badges and quizzes are an especially popular trend in loyalty at the moment, and one that - if executed well - offers great returns on investment. 

Other features that most top loyalty programs tend to have include points, tiers, vouchers, coupons, and referrals, all of which offer numerous benefits that help make the program successful. 

While you may have an idea of what features you would like to use to enrich your product, you may be wondering how best to go about implementing them. It’s no secret that doing so requires a significant investment in terms of time, money and resources. So, how do you reconcile your vision with the options currently available on the market and their individual limitations?

To build or to buy, that is the question

If you’ve spent any time researching loyalty software options, you will have come across the inevitable build vs. buy dilemma. The conundrum of whether to build a loyalty solution from scratch in house or to purchase an off-the-shelf solution is one that our clients and prospects ask us about regularly. Both options come with their own set of benefits and drawbacks that can be tricky to reconcile.

On the one hand, we have the “building from scratch” option, which involves businesses building the loyalty program from the ground up internally. The reason behind its popularity lies in the fact that it allows a great deal of control over the design and development stages, and the ability to tailor the end product to the company’s individual needs and vision. Nevertheless, the option is also associated with high development and maintenance costs, and protracted time to market. 

Most crucially, however, building from scratch means having to contend with countless unavoidable issues that require constant attention, and take away from the bigger goal, which is focusing on elements that are core to your product and business, and provide you with the flexibility, control and speed you need to respond to customer needs.

Then, we have the “off-the-shelf” option, which involves purchasing a ready-made solution from one of the many SaaS companies offering the service. The biggest advantages of this avenue are time and cost savings as well as the quality assurance offered by the software. After all, it will have been tried, tested and optimized, and used by many other brands prior, which means the solution is fit for purpose right away. Furthermore, the program will also be easily integrated into other systems and processes, such as POS and CRM systems, making it user-friendly for both the business and its customer.

Of course, this option also comes with its unique set of drawbacks. The main one comes down to the limited control businesses have over the final solution. What this means is that, very often, loyalty marketers will need to re-adjust their original vision and compromise on the desired shape of their loyalty program on account of the software’s built-in limitations. As such, they’re leaving a lot to chance with regards to the quality of customer experience due to not being able to craft customer journeys in line with their own ideas and understanding of their customers.

With all of the above in mind, we can see just why this dilemma is such a pivotal one, and why businesses may have a hard time committing to either option. However, as you’ll see below, you no longer have to. Instead, you’re better off buying what is foundational and boring, and building that which helps your business stand out using the API-first approach.

Adding features with the API-first approach

Despite the build vs. buy dichotomy being a pervasive one, the good news is that companies looking to extend their product with loyalty, gamification or retention features are no longer limited to either of the two options. With the multitude of options and possibilities afforded by APIs and composable architecture, businesses are able to pick and choose features that are congruent with their overarching vision and merge them with their existing systems. 

The benefits of the API-first approach are many - from cost effectiveness, fast time to market, to the ability to incorporate user interfaces of any shapes across all touchpoints, in addition to retaining the option to quickly apply any required changes.

Thanks to a flexible set of building blocks, enterprise clients can benefit from fast and seamless implementation of original and engaging white-label loyalty features without many of the issues posed by legacy loyalty systems, such as restricted autonomy, scalability or customization.

The above is made possible by composable architecture - a design approach that involves building software systems using multiple independent components that form a complete system. 

The nature of the composable architecture design allows you to select different best-of-breed elements and combine them to create your desired solution. The elements can be arranged so as to meet your needs; they can also be extended and swapped whenever you need to scale or customize your solution. API allows for all the different elements within the stack to communicate with one another, which means developers can take a step back and you save time, money and resources.

Companies choosing to go with the API-first approach are spoilt for choice. They can plug any and all of their desired features into an existing architecture; they aren’t bound by the need to build anything themselves and instead have the option to craft original customer journeys using various white-label elements; and enjoy full control over the process.

This is a win-win for both the business and its customers, who get to enjoy highly personalized customer experiences designed specifically to appeal to their likes and dislikes. The specific features, interfaces and customer journeys are all selected and crafted to appeal to the business’ customer base - something that would have hardly been possible within the limitations of monolithic architecture. 

While it seems to have risen to immense popularity overnight, the API-first approach isn’t new, however. Many companies - from fintech to healthtech - have chosen to go this route in enriching their products with loyalty capabilities and are reaping the benefits it offers.

Market example - how Ugami extended their fintech product with API-first loyalty and gamification features

An example of one such company is Ugami, a fast-growing fintech offering debit cards specifically designed for gamers. The company has used white-label APIs to extend their fintech product with loyalty and gamification features without having to compromise on its original interface or the quality of its customer experience.

Ugami’s loyalty program is based on points (Ugipoints), which users earn every time they top up their debit card or use it to carry out transactions. The accumulated points can then be used on things like gaming equipment and gift cards.

The program employs a lot of gamification features such as tiers, streaks, badges and lotteries, all of which have been shown to be very effective in terms of boosting engagement and building lasting relationships with customers. More importantly, gamification is one of the hottest loyalty trends, and one which many businesses are scrambling to invest in. This puts Ugami ahead of the competition, all thanks to its decision to use the API approach.

Had Ugami decided to incorporate these features using the “build from scratch” option, there’s a chance they may have gone out of business due to the costs of such an endeavor. Likewise, it’s unlikely an “off-the-shelf” solution would have allowed them to retain this much originality, and Ugami probably wouldn’t look or feel as cool as it does currently.

Ugami is a perfect example of what can be achieved with today’s APIs, which allow unprecedented creative freedom without many of the trade-offs required by legacy loyalty systems.

Next steps if you decide to extend your product with white-label loyalty features…

1. Map features that you need to deliver and receive most value
2. Build a reasonable and realistic roadmap. Do not try to implement everything at once; instead, plan a pilot on a smaller group of clients to test the business value behind the new features
3. Discuss the API-first approach and how your new white-label loyalty features should supplement the existing tech beind your product.
4. Evaluate the available loyalty technology and choose solutions that allow you to add white-label loyalty features via an API. 
5. Sketch out a simple proof of concept according to the plan e.g. implement one feature at a time with the new tech, and let your tech team get familiar with the API.
6. Scale the solution and roll it out; seek to add more and more value to the users of your product as you go.

Final thoughts

We all know by now that simply having a loyalty program is not enough.

Today’s consumers are characterized by high standards and lofty expectations with regards to the brands they do business with, which is why it’s more important than ever to offer original and engaging loyalty features. Doing so within the constraints of the build vs. buy dilemma may be tricky and require many compromises along the way. Unnecessarily so, as we believe the best approach is to do both.

Build that which is core to your product and business, and will set you apart; buy the boring stuff that has already been mastered by others, and let API be the cherry on top that allows you to implement exciting features without having to sacrifice all your time, money and resources.

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To get some loyalty program inspiration, check out the Top 100 Loyalty Programs report, or peek into the future of the loyalty industry with our Loyalty Trends research.