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Why mobility is key to creating loyal consumers

By Neil Hickey

Loyalty cards, club memberships, rewards vouchers, discount coupons – for decades, retailers and companies in a variety of industries have relied on loyalty initiatives, vouchering programs and couponing strategies to attract and retain customers.

However, research indicates that most of these programs and initiatives have proved to be little more than names in a database.

A 2009 study from marketing research firm Colloquy showed:

• A 25 percent increase between 2006 and 2008 in loyalty program memberships within the United States alone.

• Fewer than 44 percent of loyalty program memberships showed any activity last year.

What is the key to reversing this expensive trend of stagnation? Mobility.

Mobility adds a new and powerful dimension to customer loyalty, couponing and vouchering programs – especially if these initiatives can be integrated with mobile payment capabilities.

Indeed, mobility can enable companies to get their brand and services in front of customers any time a mobile device is in use.

Unlike a card sitting unseen in a purse or wallet, and unlike sales offers that come through the post or email, a mobile loyalty program can deliver incentives to consumers wherever they are, targeting them for timely promotions and, in the future, even reaching them when they are in physical proximity to a retail location.

Mobility = Efficiency + Loyalty
Consider a vouchering scenario in which consumers receive an SMS notification on their mobile phone with a coupon link. They open the mobile application and download the coupon, which appears as a picture on their mobile display.

Consumers can then go to the identified merchant and spend the voucher in several different ways:

• Manual interaction: The customer provides the loyalty card code or the voucher code and the merchant manually inserts the code into the system.

• Bar code: The customer shows the mono-dimensional barcode to the merchant who then can read it through a scanner.

• 2D code: The customer shows the bi-dimensional code to the merchant who can read it through a scanner.

• Near Field Communication (NFC): This contactless technology allows data exchange from the customer’s mobile phone to the merchant’s reader.

To facilitate continued activity in loyalty programs, mobile applications can be used to remind customers when an offer is about to expire.

As location-based services become more widely acceptable, the application can also alert users when they are in proximity to a store where an active offer is pending.

Cataloging reasons
The value proposition that retailers offer to their mobile-enabled consumers is dramatically improved with integrated mobile payment capabilities.

The actual transaction can take place either by using the device as an equivalent to a credit card or wallet – payments are taken directly through the phone – or by once again using NFC technology to execute a payment directly.

In this sense, the phone functions as a mobile wallet. It also becomes a mini loyalty program epicenter. It can update customers regarding their reward point balance in real time.

If vouchers are catalog-based, they can then call up the catalog on their device screen, browse through available products and services, and redeem their points with a few easy clicks.

Delivery is processed immediately. This is easier for the consumer and for the company as well, which now has less need to print and distribute expensive catalogs.

The conclusion is simple – mobility is a key to the future success of loyalty programs.

Efficient, simple and clear communications creates a loyal and active customer base.

Mobility gives vendors the tools with which to build this kind of brand following. Those companies that do not become early adopters of this technology will be left to ponder why they have been left behind.

Neil Hickey is North America lead for mobile marketing and mobile money management at Accenture Mobility Operated Services, Philadelphia. Reach him at [email protected].