A Blog by Jonathan Low


Dec 13, 2014

Mobile Is Shaking Up Traditional Loyalty Programs

The equation is changing. The customer has more information, more power - and less time.

Maybe not less time in the real sense, but less attention-span or less tolerance of anything that doesnt immediately capture their interest. Because, in part, there are just too many competing alternatives.

So, loyalty, such as it is in a global, technologically driven economy, is harder to create and harder to hold.

Companies have responded to this by reducing the size and longevity of rewards. Consumers, who may not have been driven all that much by these programs in the first place (after convenience, price, convenience and price and...) have taken note.

So, as the following article explains, the entire relationship has become more transactional. Loyalty is becoming less general and more specific. Possibly more episodic. Nothing personal, just self-interest. It remains a potentially valuable asset which reduces costs and improves future prospects. But merchants will have to respond to changing mores by offering more compelling but more limited opportunities to demonstrate the value of the relationship. JL

Lars Albright comments in Advertising Age:

More and more digitally-savvy consumers are giving up on traditional one-size-fits-all loyalty programs and choosing mobile-driven offerings that fit their specific needs.
Loyalty programs have been incredibly enduring -- from that very first American Airlines frequent flyer program in 1981 to the Starbucks Card Rewards program nearly 30 years later. The average U.S. household now takes part in 21.9 loyalty programs every year, according to Colloquy research.
Yet mobile is shaking up the traditional loyalty model, just as it's shaken up so many other things. The mobile phone has become the remote control for life, and we're using it to change channels on our loyalty programs as well. More and more digitally-savvy consumers are giving up on traditional one-size-fits-all loyalty programs and choosing mobile-driven offerings that fit their specific needs.
And that's very good news for brands. Because the mobile phone is where brands can reach consumers anytime and anywhere -- where they'll find engaged users who are ready to receive valuable and relevant messages.
American Express' new partnership with Uber, for instance, represents a huge milestone for mobile commerce. It's powerful and yet so simple. Under the program, participants pay with AmEx when they ride Uber, earn two times the rewards points and can use those points to pay for future Uber rides.
That's it. If you're the customer, all you need to do is what you're already doing -- riding Uber across town and loving it. You get "paid" with loyalty points when you do.
Other brands are thinking the same way.
WalMart and Walgreens are using apps to make personalized offers to shoppers right as they're in the store. The apps also keep track of past purchases, brand preferences and where people like to shop.
Starbucks has a wildly successful mobile payments app that saves coffee drinkers money while giving them great offers they really want on -- surprise! -- coffee.
You probably have other brands and programs on your own phone. And you'll notice that besides being direct and easy to use, they all rely on -- and even revel in -- data.
This one-two punch of ease plus data is driving the loyalty programs of the future. Mobile phones help brands make it easy, if only because nobody has to forget their coffee card ever again. And they also give brands unprecedented first-party data and targeting. They're called "smart" phones for a reason: They offer copious insights not just on demographic details but on actual specific consumer preferences, spending and shopping habits, location and contextual relevance.
Mobile is the glue that unites traditional offline with new online programs in a way that is far more meaningful and relevant to each consumer. Marketers who want to get ahead of the pack should consider these three core tenets:
1. Personal choice is critical. Know what your users really want to receive and experience. A coupon for a purple sports drink is not a reward if the recipient likes coconut water to stay hydrated. Offer your users engaging rewards that suit their changing moods and needs from day-to-day and location-to-location.
2. Outline the rules of engagement. It's clear that many people like some "surprise and delight" in their loyalty program -- like a free upgrade when they check in to their favorite hotel. However, we've found that the majority of consumers don't want their rewards program to be a 24/7 surprise. Communication is key. While you're making your program easy, also make the rewards clear.
3. Understand the numbers. Besides those happy customers, the biggest win you'll receive from your loyalty program is the rich data it provides. Respect it. And use what you learn to drive better business decisions.
As the advertising industry continues to become more automated, more systematic and more data-driven, tapping into the insights and connection points that help marketers build authentic relationships with their customers will be more important than ever before. Mobile-driven loyalty offerings are a clear solution to build these relationships.


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