The Future of Customer Loyalty Is Mobile
IR asked mobile experts to share their opinions on marketing, mobile CRM and why the future of customer loyalty is mobile. Jason Cross, Marketing Director at Incentivated, comments first.
Customer loyalty programmes are driven by technology. Green Shield stamps flourished in an analogue world, but quickly died as soon as the capacity to handle large volumes of data became a reality. The first card-based systems like Sainsbury's Homebase Spend and Save Card (launched in 1982) disappeared with the advent of more sophisticated, integrated schemes like Nectar.
The next major technological development in loyalty programmes will be the integration of smartphones into existing schemes. Already, 60% of the population has a smartphone and spends more than two hours a day using them. And they offer a permanently connected link to the internet that can be activated by location and will link seamlessly to other digital devices, whether at home with smart TVs or in-store with POS systems or wifi. This adoption of smartphones will be the most influential marketing development of this decade and will allow retailers to create direct, personalised links with their customers and revolutionise loyalty.
According to ABI Research, nearly half (45%) of smartphone users with a retailer-branded app visit the retailer's store more often. However, in the face of incontrovertible proof, brands and retailers have been slow to react to the full scale of the mobile opportunity, doubly so when one considers the relatively low cost of development and the potential high reward.
According to research by Incentivated, only 31 of the FTSE 100 companies have mobile optimised sites and many have poor functionality, work on a limited number of devices and are non-transactional.
It’s almost inevitable that mobile wallets will replace the current card-based loyalty programmes. Evidence suggests that consumers are still wary of mobile transactions and mobile payment systems, but actively use mobile loyalty products. We have seen this with the innovative programme we recently launched for fashion retailer Monsoon .
The app has a built-in ‘loyalty card’, but also allows targeted offers to be communicated and details about a customer’s personal interaction with the brand to be stored. Launched recently the stats are encouraging: Average session length is five minutes; the majority of those who have downloaded the app have already begun to use it on a weekly basis and 20% of app downloads come from social media links, indicating the app is being shared and recommended virally.
Mobile is going to revolutionise loyalty marketing and increasingly apps are the tool of loyalty and customer relationships. Whereas company websites are a useful source of information for customers at fixed locations, consumers will download apps for brands they want to deal with regularly.
And its benefits are clear. Firstly, the consumer is constantly in contact with the brand, meaning latest offers and information can be communicated. Secondly, specific targeting is possible; especially with vast amount of data that mobile creates. For example, targeting by location, time of day and via social media – almost any permutation is feasible.
Thirdly, for a brand, it’s a cheap means of communication. It’s faster, more reliable and secure. It will create greater efficiency – consumers don’t have to have cards or redeemable vouchers - everything is contained within a piece of technology permanently with them, packed full of history on their activity with the brand.
Fourth, it’s connected with all other marketing activity. Mobile will be connected to smart TVs and allow interaction with brand advertising. Retailers can advertise on TV and alert a viewer with a tablet or mobile about a specific offer.
The customer can then either redeem the offer via ecommerce or in-store. Near Field Communication (NFC) chips and the development of mobile ‘wallets’ will enable customers to manage transactions and pay through an app, or equivalent, on their phone. Mobile has an effect at every stage.
“This is a great time to be a shopper,” says Steve Mader, Senior Analyst for Kantar Retail. “The shopper’s entire path of purchase is evolving and it is becoming more fluid across channels and more fluid across mediums. I think that retailers and brands are going to have to push themselves to be where the shopper expects them to be.”
Given that more than half of a shopper's decisions are made in-store, then mobile is the technology that will enable retailers and manufacturers to better understand that decision-making process and, perhaps, to influence some of those purchase decisions at every point of consideration.Incentivated predictions
Why Apple’s Passbook will transform retail
- Smart phone penetration will reach 75% with 12 months. Over the same period tablet penetration will leap from 11% to 33%;
- Consumers will, on average, download five interactive retail apps. They will spend, on average five minutes a week with each app;
- Within two years, apps and smart TV sites will become the key conduit for remote shopping and loyalty programmes;
- Within two years 25% of consumers will use mobile phones to manage loyalty cards;
- Within two years a UK-based retailer will launch a fully-integrated m-commerce channel; a TV app containing content and offers that integrate with mobile devices that can be redeemed in-store.
By Krishna Subramanian, CMO, Velti
While the sudden appearance of the Passbook icon on the iPhone’s home screen may have some users scratching their heads, its premise is simple; Passbook is an app for receiving, managing and using offers, tickets and loyalty points. People can receive these items, called “passes”, via email, web or SMS, or they can be delivered directly into Passbook via a brand-specific, Passbook-capable app offered in the App Store. To use the pass, the user simply clicks on it and a barcode appears. The merchant then scans it to apply the discount, redeem loyalty points, accept the ticket and so on.
Brands and consumers in the US have already been quick to embrace the new service and Passbook-enabled apps for brands such as Ticketmaster and American Airlines quickly entered the top ten free apps in the App Store. Uptake in the UK has not yet been as rapid but once brands begin to integrate and promote the new service, it is likely to become equally as successful here.
On the face of it Passbook is a nice convenience and offers consumers a simple way to manage and make use of the offers they find useful and without having to stuff their wallets with coupons. However, on closer consideration it delivers much more than that and is poised to become a major force in retail and in the customer loyalty space.
Customer loyalty programs often seem better on paper than they do in practice. By rewarding customers with loyalty points that they can redeem for goods and services, you build stronger relationships, encourage higher spending, and foster brand affinity. However, it’s clear that not all customers find points useful. A third of reward points go unredeemed and expire and to a large extent this is because they are difficult to track and redeem. That means that typically more than a third of loyalty programmes represent wasted effort by the brand and undelivered value for the customer.
With Passbook, loyalty points are updated in real-time as they’re accrued; customers can see how many they have at a glance, and can redeem them as easily as swiping their phone. Higher redemption rates may require brands to reconfigure the economics of their programmes but the impact on customer loyalty makes them well worth the effort.
Mobile marketing is already transforming the way brands engage with consumers and drive business. Passbook represents a fresh opportunity for brands and advertisers to bring the online and offline worlds together in a way that makes sense for consumers and businesses alike. The advent of Passbook could herald the start of a new era where the integration of promotions, redemption, and on-going loyalty deliver more value than ever.