Mobile loyalty programs can have an enormous impact on your business with several projects contributing as much as 5-10% of the total revenue per year and even more in bottom line profit. Yet, most companies fail to leverage the full opportunity as they tweak existing loyalty solutions rather than starting from scratch and designing a loyalty solution based on the mobile user and experience.
Some examples of companies that got it right include:
O2 Priority Moments* – Mobile operator O2 in the UK generated over 1.1 Bn USD (697m GBP) in revenue contribution the first 2 years with the O2 Priority Moments loyalty program.
My Starbucks Rewards – Starbucks turned from revenue decline to substantial revenue growth and increase in customer satisfaction with the help of the Starbucks loyalty apps. The apps drove more than 1 Bn USD in mobile payment revenue in 2013. Read more
Walgreens Mobile Loyalty Card – Provides points for a wide array of things outside as well as inside the store with more than 74 million active members and 7 million weekly visits on mobile alone in 2013. Read more
*Disclaimer: O2 Priority Moments was developed by DMI and played a key role in the development of our loyalty platform MobileEngage
In addition to this, startups such as Belly and Shopkick have proven that there is an enormous demand from retailers and customers for better mobile loyalty solutions.
The theory of customer loyalty is simple: a business that keeps its customers for longer usually makes more money from them at lower cost than one that is constantly paying to acquire new customers.
So what are the key elements of a great mobile loyalty program?
Customer segmentation & analytics
The first thing you need to do is understand your customers. Take all available information about the users and divide into segments to ensure that the loyalty solution is relevant to your target audience (people with the potential to spend with the right incentive). Also ensure that you include analytics as a key part of the platform so that you continuously learn more and more and can personalise the experience for each customer over time.
Loyalty is about rewarding customers for behaving in the way you want them to. This means leveraging the mobile device to track customer behavior (purchases, repeat visits, sharing, brand engagement) and offer rewards based on the behavior, time and location. The most common ways of rewarding customers are discounts based on number of purchases (e.g. every 8th coffee for free), points / gift tokens awarded based on purchase and that can be used to redeem products and services, freebies such as flight, car and hotel upgrades and enhanced service experiences such as lounge access.
Offers & Exclusive offers
Loyalty programs don’t necessarily have to give things away for free or at big discounts (see previous blog about how mobile offers will kill your business). Offers and especially exclusive offers play an important role though. O2 Priority Moments offers customers priority on purchasing concert tickets in partnership with Live Nation and several retailers offer loyal customers priority access to the latest collections and to sales. Discount offers can be used to drive footfall and increase basket size as long as it incentivises the right behavior and increases total customer profitability.
Customer communication and promotion
One objection to apps is often that users have to open the app to engage with the brand. With push notifications this is no longer the case as long as they opt-in, and push notifications have proven to increase response rates by up to 300%. This is not the only engagement method however. Cross-channel retargeting ads, e-mail and SMS all play an important role in every customer communication strategy.
Making payments more accessible
In 2012-2013 one of the biggest drivers to change and improve loyalty has been mobile payments. Online Brands including Uber, Bookings.com, Amazon and eBay drive loyalty by making it easy for repeat customers to pay without having to provide credit card details every time and retail brands such as Starbucks and Pizza Hut make the payment process in store smoother than ever as it combines loyalty with payment.
Personal customer messages and information
Communicating with customer care can often be a painful and cumbersome activity. Many of the financial institutions and carriers provide messaging capabilities within their apps and online experiences that allow them to better customise the experience. Brands are also experimenting with using popular messaging solutions such as Whatsapp to communicate with customers.
Personalising the experience
The more you know, the better you can target and customise the experience for each customer to surprise them in a positive way and continue to build loyalty and engagement. Use all data available to you internally and externally to constantly optimise the experience but respect peoples privacy and don’t make it creepy.
Integrate with in-store experience
Some of the most successful mobile loyalty programs link loyalty to in-store experiences such as show-rooming, improving customer care, product information and more. Best Buy has been working actively to integrate show-rooming as part of their app to make it into something positive for the brand whereas Tesco uses iPads to drive loyalty program sign-ups in-store.
Time sensitive offers
One part of loyalty is re-engaging customers and creating a sense of urgency. Therefore many brands such as Fab.com and Domino’s Pizza provide a countdown for the offers to drive purchase now.
Another successful loyalty method is to engage with the customers for a good cause. Great examples of this include Pets at Home and independent apps such as Blood Donation, Addicaid and Hope. We haven’t seen any branded apps successfully leverage social responsibility as part of their loyalty programs which could be a great opportunity.
Social Engagement and User Generated Content
The majority of all online social activities are carried out from a mobile device. Therefore brands can incentivise reviewers, influencers and content creators to create content from the mobile and share content from mobile devices. This has to be carefully managed however as social engagement does not necessarily come from your target audience. Cosi is a great example of good execution.
We’ve said it before and will say it again. User Participatory Design and Testing is key to success. Design the program together with your customers. Develop the program based on key use cases that will improve the customer experience as well as value perception.