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Mobilizing Your Loyalty Programs

Last weekend I was out shopping for apparel for my family at a retail outlet I prefer for all my clothing purchases. Being a weekend, the queue at the payment counter was characteristically long. After what seemed like an interminable period, I finally arrived at the counter. The visibly harried and overworked lady at the counter mechanically and efficiently calculated the bill amount and repeated the well-rehearsed query “Do you have a xxxx loyalty card?” I distinctly remembered that I did have the store’s loyalty card and fumbled around my wallet, which is typically flooded with plastic cards of all kinds-credit cards, debit cards, driving license, along with at least ten loyalty and rewards cards from multiple retailers. As the long queue behind me started becoming fidgety and restless, I gave up my search, upon which I was requested to furnish my mobile number. But again, I was not sure if my loyalty card was registered using my wife’s number, my personal number or my office phone number. As the assistant tried two different numbers that turned out to be invalid, the shopper behind me snapped at me for holding up the queue. And yet again, like on countless such occasions in the past, I could not avail any benefits of the loyalty card and ended up antagonizing a bunch of strangers. 

Has this happened to you?
I’m sure that most of you, certainly those from India, would have experienced this. The solution appears rather straightforward and obvious—mobile wallets.
Of course, countries such as India still have a long way to go in terms of establishing the requisite payment ecosystems, merchant POS integration, smartphone usage and consumer conditioning.
However, for countries that do have the systems in place, loyalty programs could provide the much-needed fillip to encourage the adoption of mobile wallets.

Mobile Wallets were supposed to be a roaring success. So what happened?
Till date, even in countries that do have the payments infrastructure in place, mobile wallets have not taken off in a big way simply because consumers don't see a distinct value-add. Tapping a mobile device to make a payment is not too different from swiping a card; it does not reduce complexity. So why would a consumer go through the trouble of installing an app and changing buying behavior?
This is where loyalty programs delivered through mobile devices could become the compelling reason for mobile wallet adoption. Who wouldn’t want a convenient and handy replacement for a bloated physical wallet stuffed with a bunch of loyalty cards?

Digitized Loyalty Programs: Power in the Consumer’s Hands
From a retailer’s perspective, a digitized loyalty program offers benefits over and above the cost benefit when compared to physical loyalty cards. Integration of loyalty programs with existing payment systems helps build consumer trust. As against the physical card, the digitized loyalty program makes the consumer an active stakeholder, allowing users to check their point balance, check out rewards, and even gift items out of their points.And there are a number of big names that have been using loyalty programs to boost the use of mobile wallets, with varying degrees of success.

Of course, we'll talk about Starbucks
Everyone seems to be talking about what Starbucks is up to. Starbucks declared that its mobile payment and loyalty app was used by 10 million customers, with an average of 5 million weekly transactions. The loyalty program has been routinely described as 'awesome' and with good reason. The rewards are amazing: a point accumulation system, membership level increments, reward redemption as free food, drinks and drink refills, and random jackpot prizes regardless of membership level. Starbucks found the way to make their loyalty program fun and engaging—and integrate it with their mobile payment process.

They also aren't the only ones…
Yogurty, a frozen yogurt chain, worked with D1 Mobile Corp to launch a mobile app that integrated their loyalty program with a payment system. Yogurty's app offers 500 bonus points, just for the download of the app. Users can check their point balance, check out rewards, and even gift items out of their points. Purchases are also not the only reward mechanism—Yogurty runs a monthly photo contest as well, for additional benefits.

Basically, the success stories for mobile wallets and loyalty programs are already out there. The need for value in the mobile wallet space—as opposed to bare-bones functionality—has been identified.
We're seeing numerous innovations and success stories in the digitized loyalty programs space, and it won’t be long before we see loyalty programs delivered through mobile devices significantly spurring the adoption of mobile wallets.


Comments: (1)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 27 June, 2014, 17:17Be the first to give this comment the thumbs up 0 likes

This resonates very well with my own experiences covered in Mobile Wallets: Fix What's Broken - And It Ain't Payments and Accelerating Mobile Wallet Adoption By Fixing What's Broken. Since I wrote these posts, I came across a neat implementation of a mobile commerce (loyalty, ordering, payment) app from FAASO's, a QSR that specializes in rolls. For downloading and installing the app, the company gives INR 250 credit, which can be used up through multiple INR 50 discounts on delivery orders placed via mobile app. Interestingly, the same discount is NOT available fororders placed in the company's physical outlets. So, here's one company that has not only launched a mobile app but is pushing it on a preferential basis.

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