The Forrester Wave : Loyalty Program Service Providers, Q4 2013

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1 For: Customer Insights Professionals The Forrester Wave : Loyalty Program Service Providers, Q by Emily Collins, October 30, 2013 Key Takeaways Loyalty Service Providers Don t Just Support Points Programs, They Help Build Customer Relationships Tight competition for consumer attention is forcing marketers to consider loyalty program strategies that go beyond points or discounts. Loyalty program service providers offer strategy, technology, analytics, and services to build programs that track, understand, reward, and grow customer value and engagement. The Market Is Growing As Marketers Look For Technical Capabilities And Loyalty Expertise Marketers turn to loyalty service providers to help differentiate and execute loyalty programs. Growth in this market is largely due to loyalty marketers need for strategic partners that offer flexible technology, advanced loyalty analytics, and expertise on how to build programs that develop customer relationships and drive business results. Strategy, Tech Capabilities, And Analytics Are Key Differentiators In The Loyalty Services Market As fully customized tech platforms and basic points programs become outdated, flexibility and agility will dictate which providers lead the pack. Vendors that provide differentiated strategies enabled by technology, insights, and services position themselves to deliver scalable, successful programs that incubate customer loyalty. Forrester Research, Inc., 60 Acorn Park Drive, Cambridge, MA USA Tel: Fax:

2 October 30, 2013 The Forrester Wave : Loyalty Program Service Providers, Q The Eight Providers That Matter Most And How They Stack Up by Emily Collins with Shar VanBoskirk, Carlton A. Doty, and Samantha Ngo Why Read This Report Forrester identified the eight most significant customer loyalty service providers Aimia, Brierley+Partners, Connexions Loyalty, Epsilon, Kobie Marketing, Maritz Loyalty Marketing, Olson 1to1, and Tibco Loyalty Lab to evaluate in our 61-criteria evaluation of the category. This report details our findings about how well each vendor meets marketer needs for customer loyalty program strategy, technology, and execution and where they stand in relation to each other. Table Of Contents 2 The Age Of The Customer Elevates Loyalty Today s Solutions Enable Engagement Customer Loyalty Service Provider Evaluation Overview Evaluation Criteria Focus On Breadth And Depth Of Technology And Services Evaluated Vendors Support Program Design And Execution Leading Providers Offer Strong Services Enabled By Technology Vendor Profiles Leaders Strike A Balance Among Services, Technology, And Strategy Notes & Resources Forrester conducted product and service evaluations of eight loyalty vendor companies in : Aimia, Brierley+Partners, Connexions Loyalty, Epsilon, Kobie Marketing, Maritz Loyalty Marketing, Olson 1to1, and Tibco Loyalty Lab. Related Research Documents The State Of Loyalty Programs 2013 October 3, 2013 Intelligence-Driven Loyalty September 12, 2012 The Customer Loyalty Ecosystem September 11, 2012 Strong Performers Offer Competitive Solutions Contender Offers Deep Vertical Expertise But Lags In Strategy 10 Supplemental Material 2013, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester, Technographics, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. To purchase reprints of this document, please For additional information, go to

3 The Forrester Wave : Loyalty Program Service Providers, Q the age of the customer elevates loyalty Engendering loyalty matters more in an age where switching costs for multichannel users are low and customer relationships are the only competitive differentiator. 1 So marketers have an increased need for programs that can provide a measurable framework for tracking, recognizing, and rewarding the customer behaviors that deepen engagement and build profitability (see Figure 1). Figure 1 Loyalty Marketers Want Programs That Engage And Retain What are your top three business objectives for your customer loyalty program/initiative? Customer engagement Customer retention 60% 59% Profitability/revenue 39% Customer lifetime value 35% Customer data collection 31% Source: Global Loyalty Program Service Providers Forrester Wave Customer Online Survey Base: 98 vendor reference clients (multiple responses accepted) Source: Forrester Research, Inc. Today s Solutions Enable Engagement For a long time, customer loyalty service providers primarily offered customized solutions through professional services engagements. But vendors are evolving to meet marketer needs for loyalty programs that go beyond just perks and promotions. Marketers need providers with nimble technology, sharp technical skills, and strategy expertise and services (see Figure 2). Vendors respond with: Productized, proprietary platforms. Today, every vendor we evaluated provides a packaged platform that requires configuration not customization to meet client requirements. Program elements like tiers, segments, and promotions rules come out of the box to speed implementation times; most customization happens during the integration phase. Kobie Marketing, Olson1to1, and Tibco Loyalty Lab have more experience supporting this out-of-thebox approach, while Aimia and Maritz Loyalty Marketing are now migrating clients from legacy systems to a single platform.

4 The Forrester Wave : Loyalty Program Service Providers, Q Insight-driven services. Marketers need an expert loyalty partner not just flexible technology in order to innovate. Vendors such as Aimia and Brierley+Partners offer predictive and industry-specific analytical models to help marketers make informed decisions about promotions management, pricing, and/or program strategy. Other vendors we evaluated like Connexions Loyalty, Epsilon, and Tibco Loyalty Lab incorporate strategic recommendations into quarterly account meetings. And Epsilon recently realigned its account teams by vertical to improve client outcomes. Emphasis on the softer side of customer relationships. Vendors in this evaluation show an increased focus on relationship management in both current offering and strategy over runof-the-mill points programs. Maritz Loyalty Marketing s executive vision specifically intends to evolve loyalty beyond the traditional do this, get that model. And every vendor tracks, recognizes, or rewards engagement behaviors. Figure 2 Selection Factors Hone In On Technical Skills And Thought Leadership Which of the following are the five most important factors when selecting your loyalty program service provider? Their technical capabilities Their thought leadership Reliability of service The strategic contribution they make to our business Their understanding of our business Their ability to design and execute innovative and differentiated loyalty programs 35% 33% 32% 30% 29% 29% Source: Global Loyalty Program Service Providers Forrester Wave Customer Online Survey Base: 98 vendor reference clients (multiple responses accepted) Source: Forrester Research, Inc.

5 The Forrester Wave : Loyalty Program Service Providers, Q Customer Loyalty service Provider Evaluation Overview To assess the state of the loyalty program services market and see how the vendors stack up against each other, Forrester evaluated the strengths and weaknesses of top customer loyalty service providers. Evaluation Criteria Focus On Breadth And Depth Of Technology And Services After examining user needs, vendor and expert interviews, and past research, we developed a comprehensive set of evaluation criteria. We evaluated vendors against 61 criteria, which we grouped into three high-level buckets: Current offering. Forrester s criteria to assess the strength of a customer loyalty service provider s offerings are weighted toward the needs of an enterprise customer. We evaluated each vendor against six dimensions: loyalty platform, loyalty technology functionality, loyalty data management, loyalty strategy, loyalty analytics and measurement, and program operations. Strategy. We compared the product and corporate strategies of each vendor with the needs of marketers and Forrester s forward-looking vision of the market to assess how well each vendor is positioned for success. We analyzed vendors executive vision, road map, and client references. Market presence. To determine the size of each vendor s loyalty business, we evaluated financial strength, target market, total employees, and the number of active and new customers for each firm in the study. Evaluated Vendors Support Program Design And Execution Forrester included eight vendors in the assessment: Aimia, Brierley+Partners, Connexions Loyalty, Epsilon, Kobie Marketing, Maritz Loyalty Marketing, Olson 1to1, and Tibco Loyalty Lab. Each of these vendors has (see Figure 3): Comprehensive loyalty services offerings. Our primary selection criteria were breadth of loyalty services spanning technology, strategy, analytics, and program operations support. We looked for vendors whose clients use three or more of these loyalty services. Demonstrated market momentum. We also looked for vendors with considerable and growing market exposure, which we defined as: 1) an installed base of at least 15 loyalty program customers; 2) at least $25 million in loyalty services revenue; and 3) serving customers across at least three industries. Strong customer interest. We also used the volume of client inquiries and results of ongoing conversations with players in the market in the screening process and selected vendors with significant demand for this evaluation.

6 The Forrester Wave : Loyalty Program Service Providers, Q Figure 3 Evaluated Vendors: Loyalty Service Provider Information And Selection Criteria Vendor Aimia Brierley+Partners Connexions Loyalty Epsilon Kobie Marketing Maritz Loyalty Marketing Olson 1to1 Tibco Loyalty Lab Ownership Publicly traded Private Private Alliance Data, publicly traded Private Private Olson, private Tibco Software, publicly traded Date evaluated Vendor selection criteria The vendor has a comprehensive loyalty services offering. Our primary selection criteria were: breadth of loyalty services spanning technology, strategy, program management, and analytics and support for the entire loyalty life cycle. We looked for vendors whose clients used three or more loyalty services. The vendor has demonstrated market momentum. We defined this as: 1) installed base of at least 15 loyalty program customers; 2) at least $25 million in loyalty services revenue; and 3) serving customers across three or more industries. The vendor has strong customer interest from Forrester clients. We used the volume of client inquiries and selected vendors with significant demand Source: Forrester Research, Inc. Leading providers offer strong services enabled by technology The evaluation uncovered a market in which (see Figure 4): Aimia, Brierley+Partners, Epsilon, Kobie Marketing, and Maritz lead the field. Epsilon, Brierley+Partners, and Kobie Marketing claimed leadership positions in Forrester s first customer loyalty service provider Forrester Wave and maintained their positions this year with the study s strongest current offerings a combination of technology capabilities and breadth and depth of services and continued growth. Aimia and Maritz Loyalty Marketing strong performers in the last evaluation moved into the leader category this year. Maritz Loyalty Marketing differentiated itself through its corporate strategy, and Aimia s analytics capabilities rose above the rest.

7 The Forrester Wave : Loyalty Program Service Providers, Q Olson 1to1 and Tibco Loyalty Lab offer competitive options. Olson 1to1, a newcomer to this evaluation, brings a solid offering and good client reference reviews. Tibco Loyalty Lab holding steady in the strong performer category bolstered its vision and program support this year, but its overall current offering lags and customer feedback was mediocre. Connexions Loyalty lags. Another new entry to the Forrester Wave evaluation this year, Connexions Loyalty specializes in building financial services, travel, and automotive loyalty programs. It brings strong rewards fulfillment and partnership capabilities, but its outlined capabilities and planned developments don t align with its vision. This evaluation of the customer loyalty service provider market is intended to be a starting point only. We encourage clients to view detailed product evaluations and adapt criteria weightings to fit their individual needs through the Forrester Wave Excel-based vendor comparison tool. Figure 4 Forrester Wave : Loyalty Program Service Providers, Q4 13 Strong Risky Strong Bets Contenders Performers Leaders Kobie Marketing Brierley+Partners Epsilon Go online to download the Forrester Wave tool Current offering Connexions Loyalty Olson 1to1 Aimia Maritz Loyalty Marketing Tibco Loyalty Lab for more detailed product evaluations, feature comparisons, and customizable rankings. Market presence Weak Weak Strategy Strong Source: Forrester Research, Inc.

8 The Forrester Wave : Loyalty Program Service Providers, Q Figure 4 Forrester Wave : Loyalty Program Service Providers, Q4 13 (Cont.) Forrester s Weighting Aimia Brierley+Partners Connexions Loyalty Epsilon Kobie Marketing Maritz Loyalty Marketing Olson 1to1 Tibco Loyalty Lab CURRENT OFFERING Products and services offered Loyalty platform Loyalty technology functionality Loyalty data management Loyalty strategy Loyalty analytics and measurement Program operations 50% 0% 5% 20% 15% 20% 20% 20% STRATEGY Corporate strategy Partner strategy Cost Client references 50% 80% 0% 0% 20% MARKET PRESENCE Financial strength Total employees Physical locations and geographic reach Target market Installed base 0% 50% 25% 0% 0% 25% All scores are based on a scale of 0 (weak) to 5 (strong) Source: Forrester Research, Inc.

9 The Forrester Wave : Loyalty Program Service Providers, Q Vendor Profiles Leaders Strike A Balance Among Services, Technology, And Strategy Epsilon. This is the second time Epsilon qualifies as a leader in this evaluation. Its experience delivering successful loyalty solutions at scale for clients shows in its strong current offering and strong company strategy. Its technology functionality falls in the middle of the pack, but Epsilon is investing significantly in platform improvements. And it recently introduced more rigor including additional staff and processes into its product discipline to support ongoing product development. Clients view Epsilon as an important strategic partner, but they could be more satisfied with its value and flexibility. Large organizations seeking an experienced and reliable partner will find it an especially good choice. Brierley+Partners. This is the second time Brierley+Partners qualifies as a leader in this evaluation. Brierley+Partners maintains a strong current offering, led by its loyalty technology functionality and strategy services. And its customer references are the best in the entire evaluation; customers praise the dedication of the vendor s leadership. However, we hear from some clients that Brierley s desire to deliver on client needs sometimes overreaches its demonstrated loyalty capabilities. From our experience, we agree that Brierley has zealous leadership and a strong culture. Potential clients drawn in by its technology and service offering need to make sure that the chemistry is good before signing on the dotted line. Maritz Loyalty Marketing. Maritz Loyalty Marketing moves into the leader category this year because of its services and stand-out executive vision. Its current offering scored average marks, partly due to lagging technology capabilities. But its professional services are solid particularly its creative, partnership, and campaign management services. And we really like Maritz Loyalty Marketing s psychological approach to loyalty strategy. 2 Despite its technology shortcomings, clients praise Maritz Loyalty Marketing as a strategic partner and thought leader, and marketers craving strategic input and hands-on support will appreciate Maritz Loyalty Marketing s thorough approach. Aimia. Marketers looking for a global perspective on loyalty will like Aimia s international presence. The largest vendor we evaluated, Aimia has 30 offices in 20 countries and, in addition to proprietary programs, it runs several global coalition loyalty programs. In this evaluation, Aimia s loyalty analytics and program operations shone. It has dedicated resources to thought leadership, launched a single loyalty platform, established a product strategy group, and redesigned its product management approach to focus on client needs. However, there is more work to be done. Its loyalty technology functionality lands in the middle of the pack, and Aimia clients give the vendor only average marks even though they like the firm s discipline and exposure to emerging market dynamics and trends.

10 The Forrester Wave : Loyalty Program Service Providers, Q Kobie Marketing. Kobie Marketing is growing fast and has the best current offerings in the evaluation. Marketers seeking a tech-oriented partner should note this firm s high marks for loyalty technology functionality, analytics, and program operations. And clients praise Kobie for the quality of its leadership, its collaborative nature, and for its understanding of clients business needs. However, despite mostly positive feedback, some clients note personnel turnover and a drop in proactive outreach. Kobie s stated executive vision is promotional in nature and doesn t reflect the innovation and depth of capability that we observe in the evaluation. Strong Performers Offer Competitive Solutions Tibco Loyalty Lab. Marketers looking for direct control over their program operations will like Tibco Loyalty Lab for its largely self-service technology platform. But more full-service-oriented marketers will find that Tibco s strategy, analytics, and program management services lag; it received the lowest customer reference scores in this study. Since our last evaluation, Tibco Loyalty Lab has refined its company vision and road map to be more in line with marketer needs, like developing right-time engagement and applied behavioral models. Olson 1to1. The youngest provider we evaluated, Olson 1to1 began offering strategy, technology, analytics, and creative services as Denali Marketing in Its current offering lands near the back of the pack in this study, but its technology functionality and client reference scores are both good. In fact, Olson 1to1 earned the second highest Net Promoter Score in this study; clients praise its flexibility and responsiveness. And while marketers looking for a more traditional agency partner will appreciate Olson s dedication to meeting client needs, its track record is not as deep as with some of the veteran firms in this study. Contender Offers Deep Vertical Expertise But Lags In Strategy Connexions Loyalty. Connexions Loyalty provides a reasonable offering for financial services, travel, and automotive clients looking for deep vertical experience and robust rewards catalogs and fulfillment features. But it lags in strategy, and we found a disconnect between its vision to create brand advocates and its road map, which focuses on expansion into new verticals and regions. The clients we spoke with are satisfied with Connexions Loyalty s work ethic, integrity, and accuracy, but they wish for more dynamic implementations and proactive strategies, ideas, and solutions. Marketers looking for bleeding-edge strategy will find the other providers we profile more suitable.

11 The Forrester Wave : Loyalty Program Service Providers, Q Supplemental Material Online Resource The online version of Figure 4 is an Excel-based vendor comparison tool that provides detailed product evaluations and customizable rankings. Data Sources Used In This Forrester Wave Forrester used a combination of three data sources to assess the strengths and weaknesses of each solution: Vendor surveys. Forrester surveyed vendors on their capabilities as they relate to the evaluation criteria. Executive briefing and product demos. Once we analyzed the completed vendor surveys, we conducted vendor briefings to gather details of each vendor s strategy, road map, and client case studies. We also asked vendors to conduct a brief demonstration of their product s functionality. We used findings from these briefings and product demos to validate details of each vendor s capabilities. Customer reference calls and online survey. To validate product, services, and vendor qualifications, Forrester also conducted reference calls with three of each vendor s current customers and an online survey of at least 10 of each vendor s current customers. The Forrester Wave Methodology We conduct primary research to develop a list of vendors that meet our criteria to be evaluated in this market. From that initial pool of vendors, we then narrow our final list. We choose these vendors based on: 1) product fit; 2) customer success; and 3) Forrester client demand. We eliminate vendors that have limited customer references and products that don t fit the scope of our evaluation. After examining past research, user need assessments, and vendor and expert interviews, we develop the initial evaluation criteria. To evaluate the vendors and their products against our set of criteria, we gather details of product qualifications through a combination of lab evaluations, questionnaires, demos, and/or discussions with client references. We send evaluations to the vendors for their review, and we adjust the evaluations to provide the most accurate view of vendor offerings and strategies. We set default weightings to reflect our analysis of the needs of large user companies and/or other scenarios as outlined in the Forrester Wave document and then score the vendors based on a clearly defined scale. These default weightings are intended only as a starting point, and we encourage readers to adapt the weightings to fit their individual needs through the Excel-based

12 The Forrester Wave : Loyalty Program Service Providers, Q tool. The final scores generate the graphical depiction of the market based on current offering, strategy, and market presence. Forrester intends to update vendor evaluations regularly as product capabilities and vendor strategies evolve. For more information on the methodology that every Forrester Wave follows, go to Integrity Policy All of Forrester s research, including Forrester Wave evaluations, is conducted according to our integrity policy. For more information, go to Methodology Forrester fielded its Loyalty Program Service Providers Forrester Wave Customer Online Survey to 98 individuals who are current clients of the vendors included in our Forrester Wave evaluation. Each vendor was asked to supply a minimum of 10 customers. For quality assurance, panelists are required to provide contact information and answer basic questions about their firms revenue and budgets. Forrester fielded the survey from June to August Respondent incentives included a copy of the published research. Endnotes 1 With empowered customers and disruptive technologies changing business models, obsession with customer knowledge, needs, and attention will define leaders across all industries. Customer obsession is not just about spending more money or doing better ad and product targeting. It means shifting spending to real-time customer intelligence and enhanced customer experiences as well as shifting the sales and marketing mindset from push to pull with more interactive and engaging content. See the October 10, 2013, Competitive Strategy In The Age Of The Customer report. 2 Maritz Loyalty Marketing s approach grounds program design and execution in four basic drivers of human behavior: the drive to acquire, the drive to defend, the drive to bond, and the drive to create.

13 About Forrester Global marketing and strategy leaders turn to Forrester to help them make the tough decisions necessary to capitalize on shifts in marketing, technology, and consumer behavior. We ensure your success by providing: Data-driven insight to understand the impact of changing consumer behavior. Forward-looking research and analysis to guide your decisions. Objective advice on tools and technologies to connect you with customers. Best practices for marketing and cross-channel strategy. for more information To find out how Forrester Research can help you be successful every day, please contact the office nearest you, or visit us at For a complete list of worldwide locations, visit Client support For information on hard-copy or electronic reprints, please contact Client Support at , , or We offer quantity discounts and special pricing for academic and nonprofit institutions. Forrester Focuses On Customer Insights Professionals As a data-driven marketer, you re responsible for capturing, managing, analyzing, and applying customer knowledge and insight. You draw from all sources of customer data, marketing automation technology, and customer analytics to improve marketing and business performance. «CHARLES IBRAHIM, client persona representing Customer Insights Professionals Forrester Research, Inc. (Nasdaq: FORR) is an independent research company that provides pragmatic and forward-thinking advice to global leaders in business and technology. Forrester works with professionals in 13 key roles at major companies providing proprietary research, customer insight, consulting, events, and peer-to-peer executive programs. For more than 29 years, Forrester has been making IT, marketing, and technology industry leaders successful every day. For more information, visit

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