Although smartphone-specific rewards programs have gained significant traction among merchants and consumers alike this year, mobile loyalty is expected to reach staggering heights in 2016, thanks to wider adoption of digital wallets and payment platforms.

2015 saw brands including Starbucks, Dunkin’ Donuts and GameStop fine-tune their mobile loyalty programs, enabling users to collect earned rewards within in-application wallets and redeem them via personal devices. However, the growing proliferation of Apple Pay, as well as recent releases from new players such as Samsung Pay and Android Pay, suggests that mobile loyalty has not yet hit its peak, but will do so in 2016.

“Mobile loyalty during 2015 has continued to slowly gain ground, but it will likely reach a true breakout stage in 2016,” said Dr. Lance Eliot, global vice president of information technology at Interactions. “There are a wide variety of approaches vying for traction in mobile loyalty.

“For example, the approach of an in-store kiosk that allows shoppers to enter their mobile phone number to then keep track of customers for loyalty purposes is unlikely to survive in the long-term, and instead the use of a mobile app that shoppers download to their phone is bound to gain more popularity,” he said.

“Smartphone users are comfortable with using mobile apps and if the mobile app seems bona fide, beneficial and attractive, it will get downloaded.”

Opening up mobile wallets
Mobile wallets have undoubtedly received the stamp of approval from a plethora of loyalty programs, aided by consumers’ desire to have their coupons and rewards points stashed in a singular digital location. Shoppers rarely prefer carrying around large pouches of print coupons that can easily be misplaced or lost, paving the way for mobile platforms to cement their must-have status.

Consumers flocked to well-constructed loyalty programs this year, with My Starbucks Rewards emerging as one of the clear winners. Users appreciated having the ability to accumulate a “star” for each purchase made, and pay for their orders by using the contactless Apple Pay service.

This eliminates the need to carry around a physical wallet when popping out to pick up some coffee.

“The introduction of Apple Wallet and Apple Pay obviously pave the way for better integration of loyalty programs with mobile, for sure,” said Dave McIninch, chief revenue officer of Acquisio. “The latest version of iOS replaces Passbook with Wallet and integrates with retailers’ loyalty apps.

“Eventually the wallet and the plastic cards we carry are going to go away. Merchants and loyalty program providers should know this and need to be ready for the wave of customer experience changes that are going to have to come along with it.”

Consequently, consumers can expect to see even greater integration between mobile wallets and rewards platforms next year. Android users will be able to select from several digital payment options – including Samsung Pay, Visa Checkout, Chase Pay and Android Pay – while Apple Pay continues being perfected within contactless terminals in retail stores.

Beacon technology is also likely to play a larger role in mobile loyalty next year, following several pilots by major retailers. Location-based data was one of 2015’s top buzzwords, thanks to the sheer amount of quick service restaurants and bricks-and-mortar stores leveraging it in a bid to attract passersby with coupons and targeted deals.

“2016 is probably the year mobile payments really take off – as a result, merchants and providers need to make changes to their POS systems to support mobile payments and consequently mobile loyalty programs as well,” Mr. McIninch said. “Evidently, location-based apps and in-store promotions will be equally popular and a great way to engender brand loyalty and extend rewards to people who perhaps not only buy, but promote the store they are in or the product they are buying.

“Call it multi-channel loyalty and rewards with mobile (and in all honesty, Apple Wallet) leading the way.”

Powering up gamification
While gamification played a starring role in select marketers’ rewards programs this year, it is bound to be apparent in a much wider net of platforms in 2016. In-app gamification is an optimal way for brands to appeal what some refer to as the “Candy Crush generation.”

Enticing millennials to download a new retail app with a welcome offer may be a successful tactic, but it will not guarantee that these mobile-savvy customers will give up their prime smartphone real estate to keep the app running without further engagement.

This conundrum has prompted several brands to include gamified loyalty campaigns and rewards tie-ins.

For example, Taco Bell recently introduced an in-app loyalty program with a gamification-heavy focus on rewarding customers for repeat ordering and engaging on social media, a move that is likely to appeal to younger consumers (see story).

“The laggards of brands and stores that have not ventured into mobile loyalty will finally dip their toes into these waters during 2016,” Interactions’ Dr. Eliot said. “Meanwhile, we’ll see more of the high profile splashiness of mobile loyalty programs such as the recently announced social media and gamification approach of Taco Bell.

“Its innovation will spur copycats by major brands and stores that realize the value of mobile loyalty programs, and spark industry-wide mobile loyalty programs that are spruced-up and layered with the capabilities that get especially millennials engaged. Mobile loyalty programs will evolve to become mobile experiences – that’s what will lead to a true breakout for mobile loyalty programs.”

Final Take
Alex Samuely, staff writer on Mobile Commerce Daily, New York