Loyalty programs must go mobile

By a MCD columnist

October 5, 2012

By Michael Hemsey

Call it what you will. Smartphone. Digital Swiss Army Knife. The device that brought us Siri. Whatever moniker it goes by, it is safe to say that today’s mobile devices including tablets are rapidly becoming our generation’s most ubiquitous technologies.

The fact that 26 percent of business executives admit to sleeping with their phones drives home this point. As tablets and smartphones become such intimate companions, never more than arm’s length away, loyalty program designers are taking the third screen seriously and making mobile integration a first-order priority.

With smartphone adoption rates now hovering around 50 percent of the populations in at least 13 major countries including the United States —and tablets not far behind—smart brands are beginning to tailor their loyalty campaigns accordingly.

Brands are doing so just as the lines between social media and location-based marketing continue to blur, so much so that the term SoLoMo – social, local, mobile – has become part of the marketing lexicon.

Whether it is supermarkets such as Safeway and its pilot program launch of individualized loyalty-linked product pricing based off a host of mobile-gathered shopper spending habits and purchases or restaurant chains such as BJs encouraging loyalty members to “earn social points” by having members post pre-populated comments about the restaurant and their dining experience on their Facebook, Twitter and foursquare accounts, it is clear that more brand marketers are getting the message.

While more retailers and marketers are embracing mobile, effectively merging loyalty programs to the third screen is low on their agenda.

Too often, loyalty is not viewed as an enterprise initiative and is often an add-on after mobile applications and sites are developed. This is a huge miss.

Loyalty marketers should be breaking through corporate silos to get their loyalty programs integrated into the latest on-the-go gizmos and gadgets to drive incremental behavior.

As part of an omnichannel loyalty approach, it is important to integrate loyalty wherever customers want to engage in a brand’s loyalty program – and that means in the moment.

Going mobile shouldn’t even be a question anymore
Surveys demonstrate that loyalty members are eager to merge their numerous membership programs into the mobile ecosystem – the average American today is a member of 15 loyalty programs.

Or, put another way, consumers want a one-stop-loyalty-shop – omnichannel loyalty, if you will – in an always-accessible environment.

Already, more than one in four members prefers to access a given loyalty program via mobile and nearly half – 47 percent, according to research by Banyan Branch and VIPdesk – of such rewards program providers have or are planning to develop a mobile loyalty app.

If you think about it, this is actually a matter of simple economics: the dollar value that the mobile environment generates is already a factor.

In the U.S. alone, mobile commerce is forecast to net $18 billion by 2014. And through its ability to link, sync, track and engage the consumer in real time at multiple stages throughout the customer lifecycle, mobile provides loyalty marketers with the perfect opportunity to drive loyalty-related outcomes.

The challenge for marketers, however, centers on capturing data across channels.

A May 2012 report, Omnichannel Loyalty: Designing The Ultimate Customer Experience, looks at the need for loyalty marketers to act on insights to deliver dynamic offers in real-time through behavioral triggers across channel, including mobile.

To say that loyalty needs mobile is putting it mildly.

Forrester Research recently stated that, in 2011, 21 percent of survey respondents agreed with the following statement: “Most loyalty programs don’t offer any real value.” This was up from 15 percent in 2008, a jump of over one-third.

The market researcher also said that only 35 percent of customers are members of a loyalty program, mobile or otherwise, and of those, under one-third redeem rewards.

What is more, Forrester says that an “era of pervasive interactivity” has arrived and that 60 percent of Gen Yers (23-31) and Gen Zers (18-22) are considered “always-addressable customers” (AAC). Mobile can and should be the answer for the AAC.

Still skeptical? Try this: of the 89 percent of tablet owners who use their devices at home and 79 percent use them in their bedrooms. If this is the type of device intimacy we are moving toward, then it stands to reason that loyalty should be inexorably linked.

Avoiding app apathy: Navigating loyalty’s mobile future
Of course, even as loyalty marketers embrace mobile’s potential, there are still other hurdles to overcome as the technological frontier continues to expand.

Not only do consumers want their loyalty programs mobile to lighten their cluttered real-world wallets, but the resulting app clutter is becoming an issue too.

Take the iTunes app store, which has enjoyed some 25 billion downloads since its 2003 opening, yet 26 percent of the time apps are ignored after their initial use.

App apathy is very real. Of course, integrating loyalty programs – thinking more enterprise – into already downloaded institutional apps as an “Update” helps cut app clutter as well.

As the numbers of apps and loyalty programs increase, reward program aggregators are beginning to play a role too, examples of which include Award Wallet, GoMiles and MileageManager.

There is also the hybrid approach of cluster programs, where the resources of different loyalty programs are pooled together, allowing users to accumulate industry crossover points.

Whether or not aggregator apps that combine multiple loyalty programs under one umbrella or cluster programs are good or bad remains to be seen, but clearly it is a development that should be on loyalty providers’ minds.

Regardless of anticipated future developments, maintaining loyalty program intimacy and arm’s-length mobile engagement is still key and comes down to upholding several loyalty basics—basics that should not be ignored especially as loyalty becomes increasingly mobile.

Here is a quick rundown:

Keep points in play. While integrating with social media is all the rage as it should be, do not forget that most loyalty members are poised for points as it is the most basic form of loyalty and one that provides instant gratification. Points are already “gamified.” Keep points in play.

Excellence in experience. Do not forget the importance of delivering a quality, engagement-filled experience for monetized and non-monetized elements alike.

Game for gaming. Considering that mobile devices are arguably as much gaming tools as they are portable phones, social media connectors, Web browsers and on-the-go organizers, gamification should be an important loyalty consideration.

Stick to status. Through loyalty tiers and status, earning rewards is central to many parts of our culture, not just loyalty programs. That is especially true for individuals under age 35.

TO SAY THAT mobile is ubiquitous is a profound understatement and the time for full-on action is a must.

Mobile as it relates to loyalty is not just a proverbial game-changer, it is practically re-writing the laws of loyalty and how the consumer-marketer game is played.

The always-addressable consumer is not likely to unplug anytime soon and as such, marketers must ready their ‘A’-games too.

Just as smartphone technology has become embedded in nearly all aspects of consumers and marketers lives, so too must loyalty programs go mobile.

The “line in the digital sand moment” is fast approaching as the age of mobile loyalty continues to unfold.