Jon Stanesby, Associate Director of Strategic Services EMEA at Responsys, examines how retailers can make best use of mobile to build a lasting relationship with their customers.
I visit my favourite coffee shop two or three times each week. The coffee is good, the shop is conveniently situated and the staff are friendly. Each time I buy a coffee, they ask me if I want a loyalty card. Such a card would have a clear benefit for me – namely cheaper coffee. But what’s in it for them?
A loyalty card is not going to make me buy more coffee. The net result of me accepting a card would be that I buy exactly the same amount of coffee, but the vendor’s margin would shrink due to me paying a lower price per cup. The point is that loyalty schemes should be designed to build loyalty in new customers, not reward loyalty in existing ones. Very few retailers are realising this and as such they are failing to exploit loyalty schemes to their full potential.
When we talk about loyalty, we should be talking about building an ongoing and mutually beneficial relationship between the brand and the consumer. This relationship is not simply about conversions though, since both conversions and loyalty are byproducts of successful engagement with the customer. Brands using mobile for sales and marketing is nothing new, but now awareness is peaking around the use of mobile to foster loyalty.
Until now, one of the problems was that with such a plethora of devices and channels including mobile, retailers were unsure which platform or environment to use to develop a layer to build customer loyalty. For example, it is time consuming and expensive to build dedicated apps for each mobile ecosystem, but alienation can be solved by using light-weight applications which mostly use web functionality and therefore have much lower development and operating costs. The functionality may be fairly basic, but these apps can still be used to build engagement and drive conversions to your web store. Another technique is to use responsive web and email designs so that your digital channels are optimised, irrespective of device. An email that automatically adapts its layout dependent on the customer’s device removes the need for other more costly device-specific designs to be built.
After a relatively slow start, we are now seeing some genuinely interesting mobile loyalty programmes which encompass all of the principles of successful relationship marketing. Up until this point no single retailer had absolutely succeeded with its mobile loyalty strategy, but after a steep learning curve the retail industry now seems to be reaching a genuine turning point with mobile apps being welcomed as an integral part of loyalty strategies.
One result has been to scale back the role of physical loyalty cards. Physical cards are relatively expensive to produce, prone to loss and breakage and have a knack of never being there when they are needed. By contrast, consumers rarely leave home without their mobile phone. A recent scheme we have been working on replaces physical cards with apps, emails or text messages.
To encourage repeat engagements, these mobile apps must offer benefits to the customer. This programme sends customers personalised offers with fixed or variable discounts depending on customer usage. The principles of customer centricity apply here, and the programme enables the retailer to prioritise its most valuable customers with selected offers while targeting other customers with separate specials.
Perks incentivise consumers to join and then continue using the scheme, with tailored special offers sent to the customer’s mobile being a good example. Offers can take the form of text messages or in-app notifications, and new special offers should be sent out regularly with the aim of encouraging the customer to return to the physical shop or online store to build a real relationship with the brand. If a customer visits once per week when joining the programme, the goal should be to raise this to two visits each seven days through providing personalised, relevant content for that particular customer.
Offers and perks which reward participation are increasing in popularity because they encourage customers to continue to engage outside of the normal purchasing cycle. For example, rewarding customers for sharing the scheme with friends, or for participating in product ratings or reviews are inexpensive ways to extend loyalty beyond the checkout.
OFFER YOUR CUSTOMERS MORE
Personalised special offers are about growing trust and good feeling, rather than sales. Pushing conversions in an overt fashion only results in purchases from people who would have bought those items anyway, and as such the lower special offer prices will simply cost the business revenue. The net result will be customers who simply load up your app in store to check special offers, which is not an example of real engagement.
One way to keep customers coming back to an app outside of special offers is to provide some added value of functionality, such as the ability to compose shopping lists in-app. This has been used to good effect by some retailers, but it is important that it works across channels. A list created on the website should be accessible in the app when the customer is in store. Legacy systems can be a stumbling block here, as these were not designed with mobile and online integration in mind, so some retailers will need to update back office systems before they can offer real time data sharing across platforms.
Smartphones offer another advantage over traditional handsets in that they can access Wi-Fi, and a number of retailers such as Debenhams and John Lewis are already exploiting this feature. Debenhams is using its free Wi-Fi network to push special offers to customers, but also to provide additional product information and stock checks, and enable customers to view store layouts to find products quickly and easily. This is the sort of added value which encourages customer loyalty and repeat visits.
Another advantage of Wi-Fi is that when a customer is connected to a network, the retailer knows their location. This enables brands to push geo-localised content and real-time offers, providing permission has been gained when the customer opted in to the loyalty programme. Mobile is perhaps the most personal channel, and as such any perceived abuse of the format creates instant bad feeling amongst consumers. Poorly formatted or irrelevant emails lead to unsubscribes and bad feeling – the polar opposite of loyalty.
GETTING IT RIGHT INTERNET RETAILING
Customers should trust your brand, feel valued and receive a quality service. Special offers are a part of this strategy, but they must be used in the right way. Mobile should be a vital part of any loyalty programme, and the arrival of mobile wallets and NFC to the mainstream will further drive this. Our relationships with our mobile phones make them the perfect channel to encourage loyalty, and because we almost always have our phones to hand they are as useful for retailers and customers in-store as they are when used online at home.
Mobile is driving new types of loyalty schemes which focus on personalisation, customer centricity and immediacy. A brand can now reach a mobile user who enters the vicinity of a store in a way that would not have been possible five years ago. Loyalty is not a goal in itself, rather it is a product of a brand’s successful relationship with an individual customer.
Above all else a loyalty programme has to offer value to customers, and the mobile channel can drive this in many ways; through geo-localised offers, extra in-app features and relevant content received on-the-go and in real time. Regular customers become loyal customers, and incentivising repeat interactions with the brand is the key to loyalty. Some retailers make the mistake of prioritising conversions over a true customer relationship, but this only ever breeds short-term bonds. The long-term value for retailers and customers comes from a sustained and mutually beneficial relationship, and mobile can be a powerful channel to create this.
