What is a Promotion Engine?
Promotion Engine is a powerful software solution designed to help brands manage and optimize their promo campaigns and loyalty programs. With a Promotion Engine, brands can create, manage, and track personalized promotions, discounts, and rewards across multiple channels, significantly enhancing customer loyalty and retention. For instance, global brands like Michelin, Vodafone, and McDonald's have successfully used Promotion Engines, such as Voucherify, to boost engagement and foster customer loyalty.
But, let's start from the beginning. In theory, you only need a piece of paper and a pen to create coupons. You can think of a code pattern, write it down, share it with customers and ask your IT team to accept it as a, let’s say, -15% discount. In practice, however, you need to operate on the data sets of hundreds of customers, control multiple dependencies and stay within the budget at the same time.
In other words, the rapid digitization has made it impossible to survive and thrive in the commerce space without a reliable system for dynamic and personalized promotions. With an advanced Promotion Engine, you no longer need to distribute different promotions across single-issue software. Instead, you get all promotion types and tools to manage them within a single platform, absolutely suitable for large businesses.
Your Promotion Engine should support the following scenarios:
- Coupon codes campaigns
- Loyalty campaigns
- Referral campaigns
- Cart-level promotions
- Gift card campaigns
- Product bundles
- Digital wallets
- Cashback programs
- Gamification
Additionally, you should be able create targeted campaigns based on specific attributes such as location or store type using a Rules Engine.
If you have selected the right promotions partner, your Promotion Engine should let you create unique and personalized scenarios, without extra input from the dev team allowing you for faster time-to-market and more space for sudden strategy and market shakeups.
Should you build or buy a Promotion Engine?
If you already know what features are needed in any flexible Promotion Engine, you may be thinking about building and maintaining a similar promotion solution in-house.
If you choose to build a Promotion Engine in-house, what you get is a new product that you need to develop, test, document, and manage on your own. On the other hand, with a custom-made promotion software, you get ultimate freedom and personalization, allowing your business to grow its promotional strategies as your needs and expectations evolve.
Pros of building a Promotion Engine:
- You get complete control over the promotion lifecycle.
- The system will be fully compatible with your technology stack.
- You are in charge of the software roadmap and customization options.
- You can address very specific use cases that software providers may find impossible.
Cons of building a Promotion Engine:
- You need to distract your development team from building your core product.
- Your IT team may lack knowledge to know what the best way to design a Promotion Engine is and how to connect it with other business-critical systems.
- It is not enough to build it – you need to delegate resources to maintain, test, and document the platform non-stop, or risk errors.
- You will need to continuously develop the product if you want the system to be always able to cover your use cases.
On the other hand, if you buy a ready Promotion Engine, you can save time and money and accelerate time-to-market, which is essential in today's fast-paced economy. The dilemma here is – you can spend time and money on building an in-house solution that will cover your business-specific use cases or save money and time with a ready-to-go promotion software that may or may not cover all of your requirements.
API-first & Composable Promotion Engines
What is API?
API (Application Programming Interface) is a form of code that lets two software programs communicate with each other in an understandable way. Their conversation takes the form of requests (questions) and responses (answers). For developers, API-based architecture means quick and easy integration. Why? Having a single system to store all the needed data would be a technological nightmare.
Luckily, with an API, a Promotion Engine is able to quickly reach out to other connected systems, e.g., CRM, to ask about needed data and retrieve information which can in turn be used to personalize offers. Additionally, APIs allow businesses to pull data into business intelligence tools to gain insights and improve decision-making related to promotions and customer behavior. If you build digital products, you know all too well about the necessity to integrate plenty of systems with customer touchpoints. And the integration of multiple systems costs. A lot. With the API-first approach, you can mitigate these risks.
What is a Composable Promotion Engine?
Composable software refers to a modular approach where systems are built from interchangeable components that can be combined and reconfigured as needed. Unlike monolithic systems, composable architecture allows each part of the system – like content management, promotions, or customer data – to be selected, connected, and scaled independently through APIs.
Composable software is transforming how brands approach promotion strategies, especially when it comes to building flexible, data-driven promotions. A composable promotion engine brings all the advantages of modular architecture into your marketing stack:
- Flexibility: Choose best-in-class tools, like your CDP, CMS, or messaging platform, and connect them seamlessly with the promotion engine to tailor campaigns to your exact needs.
- Modularity: Swap out or update specific components (like discount logic, channels, or user segments) without touching the rest of your system.
- Omnichannel support: Run consistent and personalized promotions across web, mobile apps, in-store, email, and more by independently connecting each channel to your engine.
- Scalability: Handle high-traffic events, flash sales, or seasonal spikes by scaling promotion services up or down without breaking your tech stack.
How to write a Promotion Engine RFP?
Let's assume that you have decided that buying a ready solution is a better business decision. Now, the next logical step would be a thorough market research and preparing RFPs, so that you can choose the best Promotion Engine for your needs. The goal of an RFP is to outline the details of the project and ask potential vendors to come back with a bid for the work.
How to define requirements for a Promotion Engine?
Generally, there are two types of software requirements you should think of before choosing the right software provider – functional and non-functional requirements.
A non-functional requirement (NFR) is a requirement that specifies criteria that can be used to judge the operation of a system, rather than specific behaviors. They can include, for example, legal, security, scalability, safety, usability, maintainability, testability, privacy, or technological requirements.
How to come up with non-functional requirements for Promotion Engines?
1. Talk to your team
First, talk to your team about what they really need in terms of promotions and loyalty or what your company standards and history in this field is.
2. Get to know the industry standards
You should read a bit on what the Promotion Engines should provide. If you have never purchased a similar software, your colleagues might not know what they need exactly. Listing some feature ideas can help you ask your teams the right questions.
Examples of non-functional requirements:
- Accessibility and usability – who will be the main user? Do you need a user-friendly dashboard for marketing or sales teams? What is the level of technical knowledge within your team?
- Adaptability and flexibility – you should think of where you need the promotion software to be flexible to meet your future needs.
- Auditability – especially when it comes to data processing, privacy and other legal issues. Think of what kinds of audits you would expect the software provider to perform.
- Availability (uptime) – you should define your service level minimum requirements and what kind of outages are acceptable. This depends on how crucial the service is to your core business.
- Available environments – should the software provider offer more than one environment, for example, a sandbox.
- Data backup – you should check whether you need a data backup. If you collect customer and transaction data in the Promotion Engine exclusively, data backup may be needed.
- Data storage – where would you like your data to be stored? Are you willing to accept multi-tenant clusters or would you like a dedicated cluster?
- Data synchronization – what kind of data would you like to use in the Promotion Engine and how would you synchronize it?
- Certifications – should the software vendor have any certifications?
- Compliance – compliance with the law is crucial, therefore you should clarify with the legal department which laws the Promotion Engine should be compliant with.
- Disaster recovery – what disaster recovery protocols are acceptable for your company? What would you need to have guaranteed in the SLAs? This heavily depends on how crucial sales promotions are for your core business.
- Documentation – what are your needs regarding the documentation?
- Integrability – which software technology should the Promotion Engine integrate with? Who should integrate the platform, your team or do you want to outsource it?
- Localization – do you need the platform to support more than one country, language, or currency?
- Maintainability – how easy should it be to maintain the platform? What features should the software have to make maintenance easier?
- Notifications – what types of events would your teams need to be notified about? For example, outages or failed redemptions.
- Open-source – should the solution be open source? Are you planning to introduce any custom code to it on your own?
- Performance/response time – how fast should the Promotion Engine provide responses (for example, responding to the API call)?
- Scalability – how scalable should the promotion software be? Do you plan to connect it with more technologies or launch other promotion types?
- Security – what security level do you need, are there any specific threats you are afraid of? Think of everything you would like to protect yourself from and the ways in which you would like to be protected (WAF, DDoS protection, port/IP restriction).
- Testability – will your developers test the platform or run a POC before selecting the vendor?
- Training provided – you should think of who should be trained and whether they need in-person training or it's enough to provide them with self-service resources.
- Transparency – would your developers need to know the roadmap of the software provider? How much transparency on implemented or planned changes is required?
Besides writing non-functional requirements, you need to collect functional requirements, specifying how exactly you are planning to use the Promotion Engine.
How to come up with functional requirements for Promotion Engines?
Again, the best approach would be to talk to your colleagues first. You can use a list of features based on what the top Promotion Engines provide or based on this guide to start the discussion. There are a lot of variations from business to business on what actually is needed. Think about what are your specific use cases for the Promotion Engine. Based on them, you can specify the functional requirements further.
Examples of functional requirements:
- Basic functionality – what type of basic functionality should the Promotion Engine provide? For example – offer validation, redemption, management, distribution, tracking, and reporting.
- Branding – what are the branding and customization options you need?
- Discount types – what kind of discount effects would you need? For example, nominal, percentage, fixed price, unit, or free shipping. Would you need the discounts to be applied on the order-level or product-level or both?
- List of use cases – a list of all types of promotions you want to launch now and in the nearest future, with all the details of the limits. This is the most important functional requirement. If the software cannot cover your use cases, you will probably need another provider (or a change of strategy).
- Operational requirements – what are some of the features you need to streamline campaign management – campaign cloning, recurring campaigns, or bulk updates?
- Promotions distribution – will you need a built-in distribution tool or any frontend elements from the Promotion Engine?
- Promotion limits – think of all limits you would like to impose, for example, product-, order-, customer-level rules, time constraints, geolocation, budget, or fraud-prevention limits.
- Promotion types – Promotion Engines provide a range of options, among them gift cards, discount coupons, automatic discounts, product bundles, referral programs, loyalty programs. You should decide what you need right now and what you may need in the future.
- Reporting – what kinds of reports will you need?
- Targeting and personalization – what kind of targeting and personalization are you planning to have in your promotions?
How to come up with use cases for a Promotion Engine?
Promotion Engine use cases are the types of sales promotions you want to run and manage using the Promotion Engine. A properly structured use case should describe what type of sales promotion you would like to use, what type of promotion (discount) should be applied, who would the target market be and what kind of limitations (customer-, order-, product- or campaign-level, for example) you would like to use.
There are a couple of things you can do to quickly come up with the initial list.
1. Check your past promotions
Take a look at all past promotions and evaluate if you will still need such scenarios or similar ones in the future. You should check historical data on promotions to determine what has worked best for you in the past.
2. Discuss the needs with various departments
You should also discuss current and future needs with all stakeholders. If they are not sure what they want to do using the new Promotion Engine, you can help them to come up with ideas. First of all, they should think of their target audience and goals. Then, they should think of ideas on how to achieve them. Next, they will need to get the approval from the department heads. If the campaigns are approved for trial, you should add them to the list. If you skip the approval step, you may end up with way too long of a list and choose a more expensive Promotion Engine, while a simpler one may have met your needs as your company may not be ready for the more advanced promotional scenarios (just yet).
3. Check your competitors’ offer
You can check what your competitors are doing. Even if you do not want to copy their strategy to the letter, at least you should check what types of promotions they run – is it discount coupons, automatic promotions, loyalty or referral programs, or sweepstakes? This will help you come up with a relevant counteroffer.
4. Do user research
If you are not sure what promotion types to use, a great solution is conducting research among customers. This can include qualitative user research like customer surveys, target audience research, one-on-one interviews, or quantitative research. You can ask them directly which incentives they like better or what level of discounts would motivate them to perform a certain action.
How to write a use case for a Promotion Engine?
A use case should specify the exact scenario you would like to launch using the Promotion Engine. You should specify:
- Promotion type – would it be a discount coupon, automatic promotion, gift card, referral program, loyalty program or a giveaway?
- Promotion effect – what should the promotion do and how much of a discount should it give?
- Target audience – which customers should it target? You should define all customer-level rules.
- Trigger for the promotion distribution – when should customers get the promotional message or qualify for the promotion?
- Time constraints – should the promotion have time limits? Should it be certain days, hours, a recurring event or should the timeframe be based on a certain event?
- Qualifying orders and products – you should specify all order- and product-level limits, for example, the minimum order value or decide if the campaign should exclude select items?
- Other limitations – you should specify any other restrictions or limits you can think of.
How to choose the best Promotion Engine?
Apart from the vendors’ readiness to deliver on your desired functional and non-functional requirements, here are a couple of factors you should take into consideration when choosing a Promotion Engine.
1. Estimated time-to-market
You should check how long it will take you to integrate the Promotion Engine with your existing stack. A rough estimation from your developers is a good starting point. You should also check how fast it would be for your marketing or sales teams to prepare and ship new promotions. Fast time-to-market is crucial, especially in B2C businesses.
Note that the more time you have to spend on the integration, the more it will cost you. You should calculate it into your pricing considerations between the vendors.
2. Integrations and partners
You should check what integrations they offer out-of-the-box as well as whether they provide developers to integrate the solution or any technology partners that could potentially shorten your integration time.
3. Easiness of use
You should double-check whether selected Promotion Engines have a UI for non-technical teams. Typically, the main users of Promotion Engines are marketers, salespeople, and customer service agents. The dashboard should be intuitive enough to be used by them after initial training and it should perform the majority of the functions, without developers' involvement.
4. Simple maintenance
The less your developers are required to maintain and troubleshoot issues, the better. Features like monitoring logs or the level of support can tell you how much help you can count on if something goes wrong.
5. Possibility to run a POC for free
There is no better way to check whether the software is a good fit than to run a POC to see how it will work with your stack. POC, however, requires time and effort on your part. It is always a nice gesture from the vendor’s side to let you run a POC for free, provide you with the the initial training, and help to set the software and integrations up as well as provide a free sandbox environment for as long as you need one.
6. Frequent releases and improvements
One of the benefits of buying software instead of building it is that you do not have to spend time and money on improvements. The Promotion Engine should give you the best-of-breed technology, while staying up-to-date with new requirements, technologies, promotional scenarios, and communication channels. You can check their release notes and updates to evaluate how often they implement new features. You do not want to get stuck with a vendor that stays behind their competition as this will set you back behind your competition as well.
7. Software flexibility
Promotion Engine should adapt to any sudden changes and support marketers with even the most complex scenarios. Even if you have written down all use cases you could think of and the vendor can deliver on them, you never really know what you will need in the future. Look for features like adding custom data and limits, stacking with a defined hierarchy or custom events. These features will allow you to create complex promotional scenarios you have not thought about so far.
8. Success stories and portfolio
Promotion Engine vendors may brag about features and capabilities but there is no better way to check if it's true than to read their clients' testimonials. Read through their case studies before you make up your mind. You can also check their ratings on software listing platforms but beware as these may have been added by the software vendor’s employees or friends.
9. Future-proof software architecture
The Promotion Engine should be future-proof, meaning that you should not have to change it if you need more features or integrations in the future. Especially check how easy it would be to connect it to a different e-commerce platform, CRM system or channels.
10. Influence on the roadmap
It would be great if you could have any influence on the vendor’s roadmap as this can help you get the features you need faster. Ask the vendor if they allow customers to submit ideas for their roadmap and vote for the most needed ones.
11. Vendor size and market position
The biggest Promotion Engine vendors have their pluses and minuses. On the one hand, they are stable providers and will rather serve you for years, on the other hand, they will probably not adapt to your needs. Small vendors run a risk of bankruptcy, therefore they may be less reliable. A good question to ask a potential vendor is “how much % of yearly recurring revenue will we mean for your business” – this will show you how dependant they are on you as well as how much, more or less, they are making.
12. Price
Price is an important factor and you should definitely go with the best quality-price ratio. This means you should consider the cheapest vendor out of all that can meet your requirements. But if the price difference is not huge, go with the one that is more scalable, future-proof, and trustworthy as this will save you the cost of having to change the vendor in the future. While the price is the deciding factor, you should not only decide based on the monthly subscription cost but also on the cost of maintaining or changing the Promotion Engine, if it does not meet your needs or scale in the future.
13. Possibility to scale the service up or down
One of those additional pricing factors to consider is how easy it is to scale the service up or down. Can you cut back the cost if you are making losses? The easiness of scaling the service up or down is also important. The last factor related to pricing you should consider is the exit options. How quickly can you terminate the contract with the vendor?
What is Voucherify Promotion Engine?
We built Voucherify Promotion Engine with the API-first philosophy in mind. As a leader on the market of API-based & headless Promotion Engines we are ready to build powerful promotions driven by 1:1 personalization. The question is – are you?