I get asked all the time by founders and marketing teams whether they should build their own loyalty program or buy a third‑party platform. The right choice isn’t binary — it depends on your stage, technical capacity, budget and the behaviours you actually want to drive. Over the years I’ve audited dozens of programmes and implemented both home‑grown solutions and off‑the‑shelf platforms. In this post I’ll walk you through a practical decision matrix I use with SMEs, the trade‑offs to weigh, and pragmatic red flags that usually point one way or the other.
Why the question matters
Loyalty programmes sit at the intersection of customer experience, technology and finance. Pick the wrong route and you’ll waste budget on development or struggle with slow rollouts and poor measurement. Pick the right one and you’ll accelerate retention, create measurable LTV uplift and run campaigns that actually move the needle.
My approach is simple: start with the outcome (what behaviours do you want to change?), map the capabilities required to achieve it, and then match those capabilities against internal capacity, time to market and cost. Below I give a decision matrix and practical examples so you can decide quickly.
The core questions to ask first
Answering these usually separates “must‑have” features from “nice‑to‑haves,” which is a pivotal step toward the right decision.
The decision matrix
Below is a simplified matrix I use in workshops. It’s not exhaustive but covers the main drivers and when each option typically wins.
| Key factor | Build (in‑house) | Buy (third‑party platform) |
|---|---|---|
| Time to market | Slow (months to build and test) | Fast (days to weeks for basic setup) |
| Cost profile | High upfront dev cost; lower recurring license | Lower initial cost; predictable SaaS fees |
| Customisation | High control; bespoke UX and logic | Limited to platform capabilities; some customisation via APIs |
| Maintenance | Internal ongoing burden | Vendor handles platform updates and compliance |
| Integrations | Fully custom but requires dev effort | Many prebuilt connectors for Shopify, Magento, POS, CRMs |
| Analytics & reporting | Flexible if you build it well; requires analytics skills | Often strong out‑of‑the‑box dashboards; exportable data |
| Compliance & security | You manage it (GDPR, PCI, data retention) | Vendor typically manages security & compliance |
When I usually recommend buying
I recommend a third‑party platform in most SME cases. Here are the common scenarios where buying is the pragmatic choice:
Platforms I’ve worked with or audited often cited by SMEs include LoyaltyLion, Yotpo Loyalty, LoyaltyLion, Smile.io, and Annex Cloud. They differ in depth and price — pick one that matches your scale and use cases.
When I recommend building
There are valid reasons to build, but they’re narrower:
Even then, I recommend a staged approach: prototype with a third‑party tool or a simple rule engine in your CRM so you can validate assumptions before committing to large development work.
Practical hybrid options (common and often underrated)
You don’t have to choose exclusively. Some SMEs go hybrid and get the best of both worlds:
Checklist: quick diagnostic to help decide
Run through these statements and count your “yes” answers. More yeses in A means buy; more yeses in B suggests build.
| A: Buy | B: Build | |
|---|---|---|
| We need to launch fast | Yes | |
| We have limited dev capacity | Yes | |
| We require highly bespoke reward mechanics | Yes | |
| We need standard integrations (Shopify/POS/CRM) | Yes | |
| We already run complex customer analytics in‑house | Yes | |
| We can tolerate SaaS fees long term | Yes |
Measurement and migration considerations
Whichever path you take, make measurement non‑negotiable. Define a small set of KPIs before launch: member activation rate, redemption rate, change in purchase frequency, and incremental LTV. For many SMEs, a basic cohort LTV analysis before and after launch is enough to evaluate impact.
If you buy first, build your data export and retention strategy into the contract. You’ll want full event dumps (member activity, redemptions, balances) so you can run accurate attribution or migrate later if needed. If you build, plan for vendor‑grade logging and a way to export schema to avoid vendor lock‑in later on.
My favourite pragmatic play
For most small teams I advise: start with a third‑party platform, run a 6–12 month learning program, and only consider building if you’ve proven value and identified specific technical blockers that can’t be solved by an integration or customisation. This approach reduces risk, conserves cash in the early revenue stage, and gives you the behavioural data you need to design a truly differentiated long‑term solution.
If you want, I can help you run a short diagnostic for your business and map the fastest testable route. I often work with teams to set up an initial SaaS stack, define KPIs, and create a migration playbook should you outgrow the platform. Drop me a note via the contact page on Zynrewards Co and we’ll walk through it together.
