Running a business, whether on a small or large-scale, involves a lot of recurring and one-time costs. Be it for the initial set-up or for driving the success of the channel partner loyalty program, businesses have to allocate subjective budget to every single need for smooth operation of the business.
In case of small to medium-sized businesses, the budget naturally stands out in the front. To drive the success of your business, you need to focus on loyalty programs that truly speak to your channel partners, ones that go beyond the simple point-based reward system.
This defines the need for a well-rounded and customisable loyalty management software (LMS), designed for your channel partners and last mile advocates. However, is it an expensive luxury, or is it a strategic investment that can bring in exponential growth? This 1Channel guide will break down all the details.
What Constitutes the Real Cost of a Loyalty Management Software?
While the software itself accounts for the “biggest” expense, it is not the sole one. The real cost goes beyond just the subscription or licensing fees of the software.
Implementing a loyalty management tool involves:
- Software Costs (Subscription fees, one-time setup fees)
- Integration Costs (Connecting with your CRM, ERP, POS, etc.)
- Training & Adoption (Getting your channel partners on board)
- Rewards & Incentives (What will you actually give as rewards?)
- Ongoing Management & Support (Ensuring smooth operations)
This means that when estimating the cost of your loyalty management system setup for your small or medium-sized business, you have to think beyond the cost of “just the software.”
Understanding the Individual Components that Add to the Cost of LMS for Small and Medium-sized Businesses
Since there are several components that make up the successful deployment of a loyalty management platform, you need to be aware of these individual factors without second thoughts.
Following are all the factors for better understanding:
1.Software Costs
Starting off with the most common cost your small business would have to incur when it comes to implementing an LMS – the cost of the software. Now, there are two routes to consider:
- Subscription-Based (SaaS) Model
- One-Time Licensing
The one you choose will depend on the kind of budget your business can spend and also the kind of channel loyalty programs you’d like to curate.
As the name suggests, subscription-based models usually operate on a Software-as-a-Service (SaaS) model, meaning you pay a monthly or annual fee to use the platform. So, if you want a scalable, customisable and hassle-free solution where you can automate the entire loyalty program and relax, consider investing in a subscription-based model, much like 1Channel’s.
One-time licensing models, also known as the “on-premise” models mean that you pay a one-time fee and purchase the software and install it on your own servers. These do have a high one-time upfront fee and the level of customisations you can implement are limited as well. This kind of model works great for businesses operating in an industry with strict data security requirements where there is a need to have complete control over the system.
So, unless you have a strong reason to go for an on-premise setup, SaaS is usually the smarter and more cost-effective choice for SMBs.
2. Integration Costs
The next thing that contributes to the cost of implementing a loyalty management program is the integration cost, aka connecting it to the pre-existing systems that the business uses.
If your LMS doesn’t sync and integrate with other tools like CRM, ERP, e-commerce platform or other business software, it will fail to collate all the relevant data into one place. For example, proper integration of the CRM and LMS means that the rewards will be automatically updated based on the sales that the channel partner makes. There’s no need for manual intervention anymore.
As an SMB, consider looking into loyalty management platforms that come with pre-built integrations because they reduce both costs and implementation time.
3. Training & Adoption Cost
Up next in the checklist adding to your business’ LMS implementing is training and adoption. Can you justify paying hundreds and thousands of dollars and none of the channel partners utilise the platform?
Sounds like a complete waste of money, doesn’t it?
Even the most comprehensive loyalty program is useless if your channel partners and sales advocates don’t engage with it. You’d be surprised to know that 3 out of 5 times, the engagement ratio is low because the channel partners aren’t aware how to use the program.
This defines the importance of training and adoption of the LMS. With 1Channel, you get to rest back in ease because our team takes care of the training part, allowing your channel partners to adopt the program in no time.
4. Rewards & Incentives Costs
What is your budget for motivation?
As a small or medium-sized business, there are high chances that you don’t have the extensive budget that the large corporations do. However, even with the limited budget available, you need to offer rewards that truly speak to your channel partners.
The biggest mistake companies make is under-budgeting for rewards. If the incentives aren’t attractive, why would your partners bother participating?
So, when curating the rewards and incentives, offer choices. Instead of only keeping monetary or non-monetary bonuses, keep both. Let your channel partners choose what best sails their boat. Furthermore, gamify the entire process of loyalty by including badges, digital rewards, etc.
Sorting out the budget for your rewards and incentives will also factor into the cost of implementing the loyalty management software.
5. Ongoing Management & Support
Last but definitely not the least includes the ongoing management and support. Despite whether you are relying on a subscription-based model or a one-time model, once your LMS is up and running, you still need ongoing support, maintenance, and upgrades.
Consider this situation like owing a car. Your expenses don’t stop once you have purchased your car. In fact, it is followed by costs for fuel, servicing, and insurance, etc.
1Channel’s LMS comes with a strong customer support and ensure your expenses are managed comprehensively without you having to fret about it every single moment.
How Much Should SMBs Budget for a Loyalty Management System?
To lay out a number would be impossible because every business’ objectives and loyalty programs are customised to their individual needs and channel partner involvement.
So, if you’re a small to medium-sized business looking to implement a Loyalty Management System for channel partners and last-mile advocates, you first have to be aware of all the individual components that add up to the cost and then allocate how much you are willing to spend in each one of them.
For example, a SaaS model LMS software can cost between $200 to $2000 per month (or more). The integration costs can start from $500 while training and application can either be free (depends on the service provider) or have a nominal fee.
At the end of the day, the total cost you spend on your loyalty management software should at least bring back 10-20% increase in the channel sales, justifying the investment you made.
1Channel LMS: A Partner in Your Success
Investing in a comprehensive and customisable loyalty management software like 1Channel is 100% worth it for a small to medium-sized business. It acts as a partner in your success, fuelling your sales to next level by fostering loyalty among your channel partners and last-mile advocates.
Without it, your channel partners may not have the right motivation to push your product. So, the real question isn’t "How much does it cost?" but rather, "How much are you losing by not having one?"
So, are you ready to adopt an LMS for your business? Book your free demo with 1Channel today.
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