You have a big choice when planning your loyalty programs – you can run them in-house, or you can use a specialist, and each path changes how you deliver customer benefits and build real long-term relationships. When you outsource, you trim your staff count and bring some fresh knowledge to your campaigns. Try listing the tasks you’d save time on and weigh them against what you give up. Why wait when you can tap into outside expertise faster and hit the ground running?
When you stick with an in-house team, you might miss a requirement or have your campaigns stall if you don’t have every skill in place. You might think you save money. But hidden costs can show up later when least expected. The problems add up fast. Try mapping out each step to see where the gaps might appear.
When you bring in a partner, you get extra hands and some specialist skills. But you still need to keep a close watch on every move. Make sure that you set clear roles so nothing falls through the cracks.
Either path will need you to be clear about costs and ready to give up some control for better results. You can run the numbers to help build your confidence and see which path fits your budget.
Here, we can also look at how those costs affect your ROI. Take some time to list each factor before you choose – that way, you can get a fair view of possible gains and tradeoffs.
The long-run payoff can be worth it – now it’s time to get real about the figures driving these decisions!
Cost And Resource Tradeoffs
You can see a difference when you compare the cost of building your own loyalty team to what you pay a provider to manage it. You might only look at the full outsourcing sticker price without adding up what you spend to run a program yourself. The math shows that outside help comes out ahead.
Payroll costs can run high since you pay for salaries. You also pay for annual benefits and taxes for each loyalty specialist. Plus, you need to train your team to get up to speed on new tech and best practices. Those costs show up every year and climb as turnover grows. It can add up faster than you’d think. Try to run the numbers for yourself – you could be surprised.
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Standard software licenses and tech infrastructure add another layer of cost. Your IT team has to support those systems. They also need to update them, and you will end up with unexpected fees scattered across budget lines. Don’t let that surprise hit your budget.
One time, I worked with a retailer that moved its rewards program in-house to save some money. Months later, they’d blown their budget by hiring consultants to patch the customer gaps, and they finally ended up rebuilding their points system.
Outsourcing turns your internal cost swings into predictable, steady fees and can give you some access to expertise without capital outlays. What a real relief that can be for you. It frees your team to focus on strategy while the provider works on routine day-to-day tasks.
External providers can also boost resources during especially busy seasons without you having to hire extra staff, and their technology tends to improve as they serve multiple clients – giving you some business-level tools for a fraction of the cost.
Depth Of External Expertise
You can see some fast gains when you bring in a third-party team to improve your rewards program. These experts have industry-leading certifications and experience your team might not have. They live and breathe loyalty programs every day.
You can tap into the resources that most businesses can’t reach on their own. The third-party partners work across a number of businesses and industries – this gives them fresh ideas for the challenges you might have. Member engagement jumped significantly for an airline after the experts overhauled the app experience – this works. They delivered the results in half the time your in-house team expected. Why wait when you can see those changes faster?
You can roll out the features that you couldn’t build on your own and let members see the improvements. Work with the specialists on new tools, too. Businesses still worry about communication problems. That concern fades fast. One marketing director said, “They spoke our language after week one.” The learning curve is much shorter than you might think.
The specialists bring fresh ideas from other industries. Everyone needs fresh eyes. They find the patterns and opportunities that your team might miss. An outsider’s view is what your program needs to grow.
You can stay on top of non-stop tech changes when experts track them as their day job. They test new strategies with other clients before sharing proven services with you.
You can also get stronger data and analytics plans when you work with specialists. The proof is right there. They compare your results to wider benchmarks. That helps you see if your program performs well or just looks good. They bring deeper industry knowledge and experience to every project.
Control, Quality, And Brand Risks
You’ll give up some of the control when you hand off your rewards program. The vendors sometimes use generic catalogs that just don’t fit your brand’s personality. Here, timing is everything. Campaign adjustments can take much longer when someone else works on them for you.
Your own team might change things in minutes. However, a partner could need days or weeks for the same update. If a social media crisis suddenly hits, can you pause or change your rewards messaging quickly? Your customer service can take a big hit, too, when a vendor’s team communicates directly with your most loyal shoppers.
They might follow a script that sounds robotic or impersonal when people expect your personal touch. You’ll learn this lesson the hard way. One retailer sent out cheerful emails about the bonus points right as they were recalling a product due to safety concerns. The disconnect felt awful.
The customers got very mixed messages and ended up feeling even more upset. You should ask some tough questions before you sign any deal. How fast can they roll out the updates when the market suddenly changes? What guidelines do they follow to keep your brand’s voice and look consistent? And who handles the customer complaints about the program?
You’ll still hold the final responsibility for your program’s success. If the rewards arrive too late or they mishandle the customer data, your customers won’t blame some unknown company – they’ll point right at you instead. Your reputation takes the hit even if someone else made the mistake.
Legal And Data Compliance Duties
You can pass on a chunk of the legal responsibility when you hand off your rewards program to another company – but you don’t get a free pass. It never stops changing.
The data protection community is changing as new laws pop up all over the place. Your outsourcing partner also has to follow the GDPR in Europe and the CCPA in California. These laws change how you manage your customer info across borders.
Your contract needs to spell out who’s on the hook if something goes wrong. You should check your partner’s compliance practices to stay away from any nasty surprises. Ask for some proof that they verify the transactions and review their processes. Request the reports that show they’re following the rules.
When customer data moves between countries, different places have different rules. Why leave your business guessing when your partner helps you through the maze?
Make sure that they know how to get through those laws – don’t let your business face any unexpected danger. You could be tempted to skim over the fine print, but it matters quite a bit. Make sure that your partner gets the customer’s consent for personal info and has some systems in place to stop fraud before it happens. Say you have a yearly legal audit – it can save you from big problems down the road.
Have someone review your outsourcing arrangement each year to just catch any new compliance problems.
Integration With Internal Teams
You might have a culture question when you bring in an outside partner to manage your rewards program. You’ll worry about how these external teams will combine with your marketing, customer service, and operations.
That concern makes perfect sense. The integration goes much smoother when everyone works side by side. Your in-house team already knows your values and speaks your language. They’ve been in every conversation from day one, so they get why you make each choice.
You’ll see some giant savings when you manage the onboarding process right. Six months after she started working with an outsourced partner, she had time for strategy instead of routine maintenance tasks. You can set up shared dashboards so everyone can see what’s going on across teams.
The distance and different time zones can create barriers. It can seem isolating. You can solve this with weekly video meetings or a dedicated Slack channel for loyalty updates and quick feedback. Why wait to connect?
Small moves like these can build long-term relationships that stretch past geography. You should closely watch employee morale when you bring in outside experts. Team members might worry they’ll lose their jobs suddenly. Clear, consistent communication about roles can help cut back on fears. When you handle the program in-house, you can pivot faster when market conditions change quickly.
External partners might take longer to adapt to what you need each day. A vendor’s standard strategy can give you a functional program. But it might not capture what makes your business look great in its market. Your customers expect an experience that aligns well with your brand personality.
You should appoint an internal loyalty liaison to bridge the gap between your company and outside partners. That person speaks about your culture and the rewards program in line with your brand voice and values.
How To Measure Outsourcing ROI
You can get a picture of your rewards program’s performance when you track the numbers. You should have incremental revenue as your first step. It shows how much extra money comes in directly from your program.
Why guess when the numbers have your answer? You should track the redemption rates to see if your members use their rewards.
If the rates stay low, your rewards aren’t fun enough, or the redemption process feels too tough. You can also look at the customer lifetime value to measure the long-term results of your best customers. Loyal customers like to spend more over time, so this metric shows how your program pays off down the road. You need to track the Net Promoter Score to find out if customers recommend you.
You can compare the NPS before and after your program to see how much you’ve moved the needle. You should also factor in the operational savings.
A well-run program cuts other marketing costs or helps with customer service. The charts that show before and after make those numbers more real to executives. They like to see visual proof that their investment indeed delivers results. You should build an easy framework to bring together your strategy – you can define what success looks like, track the right numbers, and adjust based on what you find.
Don’t get fooled by vanity metrics that look great but don’t connect to real business results. Numbers can be deceiving. A high member count means little if most members never buy again. You might see businesses brag about their enrollment numbers while their redemption rates stay low. One retail brand improved its program engagement when it tracked active members instead of total members. They started counting the members who bought something each quarter – this change doubled the engagement in just six months. They stopped chasing new signups and focused on giving existing members reasons to come back.
Level Up Your Incentives and Rewards
When you bring in the right external partner, it frees up more of your time and sparks some fresh ideas. But you also have to keep a close eye on quality and make sure they match your values. It takes some balancing. But the payoff is worth it. Every option has tradeoffs – on where you’ll focus your effort and where you’ll need a tighter grip – you end up with more confidence and security.
When you have completely figured out where outsourcing fits in your loyalty toolkit, you can map each important factor against your company’s goals, culture, and budget. You can use a self-assessment worksheet to help with questions about resource commitments, brand standards, and performance goals. You can also try a vendor comparison checklist to see the pros and cons side by side at a glance and make quicker decisions.
At Level 6, we help level up your business through a number of incentive programs designed to drive engagement and growth. The learning curve isn’t too steep, so you can get started faster. We can improve your sales team’s performance and boost employee morale with branded debit cards, rewards and recognition programs, and sales incentive plans designed just for you.
Why would you wait when you could turn your incentive strategy into a real growth engine that fuels long-term success? We know that picking the right path can seem hard. But we’re here cheering you on toward a choice that works for you. You can reach out for a free demo and see how we help high-performing businesses improve their ROI and sales results.
Claudine is the Chief Relationship Officer at Level 6. She holds a master’s degree in industrial/organizational psychology. Her experience includes working as a certified conflict mediator for the United States Postal Service, a human performance analyst for Accenture, an Academic Dean, and a College Director. She is currently an adjunct Professor of Psychology at Southern New Hampshire University. With over 20 years of experience, she joined Level 6 to guide clients seeking effective ways to change behavior and, ultimately, their bottom line.
