Shaped by the shifting tides of discerning customer demands and digital investment, the retail landscape is caught in a constant cycle of evolution. Adam Croxen, Managing Director, Future Platforms, shares his insight on how developing mobile loyalty can surprise and delight both retailers and consumers alike.
According to the results of our recently conducted research, the majority of consumers are ready for mobile loyalty, so why, when there’s already a clear immersion of the smartphone in our shopping experience, are retailers falling short?
Cards, stamps, coupons; there was a time and place for them. But the sheer friction of the purchasing and loyalty processes, as well as the disjointed experience they create, has triggered frustration and despondency amongst many consumers, whose wallets now bulge with redundant plastic cards. And so, driven by a transference of customer needs and behavioural patterns, the time has come for retailers to change their game – and investing in mobile loyalty could just be the ace in the pack.
Following our research, which encompassed a cross-section of some of the leading high street brands, we found that the frontrunners who are embracing the mobile loyalty game-plan are already reaping the dividends, though the results indicated that these innovators are few and far between: many businesses are just not pulling it together.
To understand the benefits of developing your mobile loyalty capabilities, we need to take a look at a couple of stand-out examples that were highlighted by our research, John Lewis and Starbucks, both of which are way ahead of the pack and are blurring the lines between service and loyalty in order to craft a seamless experience in which the user can benefit.
In the most basic terms, from logging on to purchasing with John Lewis (whether that’s in-store or online), there’s a comprehensive journey and a collection of history, all gathered together in one place. Meanwhile, with Starbucks, you have the ability to load up a card, use that money to pre-order a coffee and walk in, off the street, to pick it up – with your name already on the cup.
What’s so significant about these examples? Aside from removing the friction of the experience, cleverly amalgamating the loyalty offering with delivering service capabilities achieved better adoption against other brands that roll out separate apps for each aspect.
At best, separate apps cause disgruntlement and confusion, even a sense of a despondency with customers. For the retailer, the repercussions are potentially costly as this makes it difficult to extract and understand the loyalty and purchase cycles of their customers.
Wheels in motion
For John Lewis and Starbucks to up the ante within the mobile loyalty scene, there has to have been a notable increase in consumer mobile usage.
As of Q2, 2016, Starbucks had some 19million app users in the US alone, 21 per cent of the company’s transactions were made via a mobile application and roughly seven million mobile transactions were being made each week.
John Lewis has now called mobile ‘the number one platform to make an emotional impact with customers’ and its app users proved to be the most loyal customers, with nine average visits over a 12-week period (versus 2.1 visits on mobile web).
Indeed, a research study by mobile technology provider Veoo found that 1 in 3 UK consumers use loyalty schemes that are integrated into their mobile phones. That said, the UK falls way behind the US where 48 per cent of consumers use the wallet function on their mobiles – due in part to the fact that UK retailers are comparatively slow off the mark to offer mobile loyalty schemes, opting instead for the antiquated programmes.
Providing further evidence of a hike in consumer mobile usage, research from the Centre for Retail Research found that 50 per cent of UK users now make regular purchases with their Smartphones (which are now the UK’s most-used internet devices), even if there’s a store nearby.
This propensity to use mobile devices shows no sign of abating either, a conclusion bolstered by PayPal’s Mobile Global Snapshot Report that revealed m-commerce as an industry has grown by 42 percent since 2013.
But what’s really driving this upswing? Stepping away from loyalty for the moment and honing in on ‘usage’, there’s a definite shift of weight towards a service-oriented experience. However, do take heed not to fall into the trap: many companies jump onto the mobile tech bandwagon with their initiatives being led by marketing teams. There seems to be a predisposition that lends the thinking process towards ‘how can we market to them’ or ‘how do we push promotions to them’. But the wheels of thought for winning brands are turning differently, and instead they consider ‘how can we improve the service we offer’ – because, if the service is improved, then the consumer will likely engage more.
The brands really taking a view of 'how best can I service my customers needs' are those most successful in gaining increased levels of adoption. Removing the friction from an instore experience - whether that be alleviating the need for queuing, or ensuring my receipts are in one place, regardless of whether the purchase was instore or online - provides huge benefit to a consumer, ensuring continued use of the digital services.
With mobile devices ever-present amidst the majority of consumers, retailers have an opportunity to capitalise: some of the physicality can be simply digitalised – but there’s no need to overcomplicate a loyalty programme either.
Redemption processes can be unclear at the best of times, so without even having to go too far with the technology, the experience for the consumer can be eased. For instance, consumers can be reminded to collect via the use of beacons, so as to ensure they make use of their rewards, which in turn will make them feel the value. It becomes a frictionless process; they have the mobile with them, their knowledge and understanding of how or when to redeem rewards is heightened and overall, it feels more oriented around the user, as opposed to the business.
Beacons of opportunity
The research clearly illustrates that it’s time to increase the pace of innovation in retail with mobile technologies, but retailers are left with a quandary: which technology should I adopt, and why?
In order to seek the right solution, you must first understand your customer. It’s a reoccurring, though imperative, theme. First, focus on the customer and the service that you offer them, and then you can focus on the operational opportunities that the technology presents. I think part of this digitalisation of retail has significant operational opportunities in terms of getting the business to work more efficiently, and identifying cost-savings by having better data from their customers.
In terms of which technology to choose, I believe that beacons offer the stand-out solutions in the physical retail environment. Adoption has been slow, but this is in part because not many physical retailers have got a compelling app strategy.
Loyalty has multiple benefits and can be a real Trojan horse: as an example, if you put the Boots Advantage card onto an app and make that a primary channel, then you will most likely find a greater number of people walking into the store will have that app – and this is where the beacons technology really kicks in. The more people you have using an app, the greater the opportunity there is to use beacons. You’re more likely to engage with a loyalty programme when you can add it on your phone rather than have another card clogging up your wallet, which you’ll most likely forget about anyway. Beacons really are the headline technology in this respect.
Once you’ve decided on which technology to adopt, you can then explore what the stores can do with it too. It works not only for the customer, but also the business. Retailers already have a lot of information about customer flow, but beacons can supercharge this knowledge by getting granular about who’s moving around the store in what way.
In addition to that, you can layer the information, looking at purchase activity or what the customer has done online for instance – and this presents a powerful picture of different customers’ behavioural patterns. The data can then be analysed, information about what’s going on in that business can be extracted, and you can explore how to better support the customer – this could be in terms of store layouts, till positioning, placement of staff – or even increases or reductions to staffing levels. All this will help to reduce costs and drive efficiency.
Surprise and delight
Of course, loyalty schemes should not be limited to either an in-store or an online experience. Ideally, they should be integrated. Whether I’m in-store or online, I want to be able to redeem or collect my rewards. But I want to do this in a frictionless way. Redemption should be seamless, clear and easy. Transparency in this respect is important. And mobile digital presents a great opportunity for businesses to offer customers more clarity.
It also generates real potential for enhanced personalisation; there’s a great sense of benefit from employing surprise and delight. With the data we have about our customers, we can surprise them with relevant rewards, which are wholly unexpected, and therefore create a wow factor for customers. And they could be for surprising reasons too, from ‘because you look down today’ to ‘for having a winning smile’. Or we can delight them by giving extra rewards, tailored specifically based on previous purchases or behaviours. The benefits are real, and can only help to engage the customer more.
The good, the bad and the ugly
If I had to underscore two brands from our research which demonstrate best practice then it would have to be John Lewis and Starbucks. They both have an incredible range of features, and what stands out most is the frictionless nature of them. They’re just simple. It doesn’t take a lot of effort. It’s always with you. Being integrated with the app, you can do a lot more with them.
On the flip side, the worst examples were those still using plastic cards and operating with separate apps for loyalty and ordering. The brands that used them as marketing not service channels also fell off our best practice radar.
To conclude, the driving focus of your mobile loyalty investment should come from within your own business and should be used to create a long-term roadmap and vision for success. Consider how your mobile loyalty solution is going to work both now and in the future, and where your short- and long-term priorities lie. Any mobile loyalty solution requires constant attention beyond initial release. Don’t just ride on the wave of your fanfare launch, but remain committed to revising, learning and growing. Retailers all have the potential to form a winning hand – it’s just finding the right combination of cards to play.