Think “rewards card,” and a bar-coded keytag or a dog-eared punch card emblazoned “Buy nine subs, get the 10th free,” likely comes to mind. But powered by mobile, loyalty and rewards programs are getting more sophisticated every day.
That may not come as a big surprise — every aspect of web marketing has been affected by the rapid, widespread adoption of smartphones. Tracking points and rewards is not only a natural application for touchscreen interaction -- it’s an effective one.
According to a study from Forrester Research, 64% of retailers surveyed said that loyalty and rewards programs are “the best way” to connect with consumers, ahead of mobile apps (56%). Almost half (46%) said that loyalty programs are also the best sales drivers.
“A rewards program may only be one weapon in the retail arsenal, but it’s a particularly effective one that gives something back to customers for their loyalty, and makes them feel like an insider with access to special benefits and privileges,” Jay Lewis, national account manager at ELO Touch Solutions, told BizTech.
Going digital with delivery
While there’s nothing wrong with a keytag or punch card that logs purchases and racks up rewards, more chains are experimenting with loyalty programs that use smartphones to register customer activity and deliver rewards directly from a mobile site or app.
Most of the big gas-station/convenience store chains allow customers to accrue points to get discounts on their phones; some, like Speedway, even allows points to be redeemed for food, coffee and gift cards in-store.
Target is testing a new loyalty program, REDperks, which allows mobile users to earn 10 points for every dollar spent by scanning a bar code with their phones. And Macy’s mobile app offers a My Wallet feature to track promotions, points and payment methods.
Macy’s also recently joined Plenti, a loyalty program operated by American Express that rewards customers for spending money with any company in a coalition that includes Rite-Aid, Hulu and AT&T.
Payments and perks
With phones quickly becoming a means of payment, combining loyalty programs with the mobile wallet won’t be far behind. In fact, the desire for loyalty programs among U.S. consumers may ultimately help drive the mobile wallet’s success.
“Having access to loyalty program points and rewards within a mobile wallet is the No. 1 feature [consumers] are interested in,” Forrester Research analyst Thomas Husson told The Wall Street Journal. “Moving forward, we will see some mobile wallets morph into rich marketing and commerce platforms.”
Kohl’s loyalty app, for example, has already encouraged the average user to spend $80 more per year than the average non-user by issuing special offers through its proprietary in-app mobile wallet system.
“It makes things very easy for our customer, because they don’t have to print out that [offer] email, bring it into the store and then scan it,” Ratnakar Lavu, Kohl’s EVP for digital technology, told The Wall Street Journal in December. “They can take their mobile device into the store, open up the wallet, open up a rewards certificate [and] scan it in the store.”
Big data, big rewards
Armed with mobile data, loyalty programs can do more than just reward repeat business; they can help retailers hone offers and drive new sales. “If you know who [customers] are, what they bought, what they spend, you can give them a more personalized experience,” BigCommerce co-founder Mitch Harper told ZDNet.
Loyalty specialist Punchh offers small businesses apps that not only offer the typical bonus after a desired number of purchases, but also surprise frequent customers randomly with freebies or deals on about 20% of visits — essentially the same strategy that gets casino visitors to keep pulling the lever on a slot machine.
“You’re not only rewarding the customers who are coming more frequently, you’re also giving people an incentive to show up,” Dylan Bolden, a partner at the Boston Consulting Group told The New York Times. “I can come in and potentially get something for free. That’s awesome.”
You can’t do that with a punch card, and people rarely leave their phones at home in a drawer. “Clearly, this is the best of times for loyalty programs,” Bolden said.