Digital Loyalty on the rise

The turn of the year is the most important time for retailers as it comes to the highest generated revenues and the highest number of client contacts. Cultivating these contacts and staying in touch with consumers for the rest of the year is a challenge as consumers are overwhelmed with offers, and they are expecting benefits and best offers available throughout the year. In this context, loyalty schemes play an important role and are at the heart of many merchants’ customer engagement strategies.

The transformation of loyalty engagement is supported by advanced mobile technologies available on a broad base and with highly tailored engagement services. A mobile loyalty programme builds not only a new sense of affinity between consumers, brands and merchants but works in line with consumers’ interests. And thus leading to greater customer retention, interaction and achieved sales revenues.

The role of mobile loyalty engagement

To condense loyalty strategies to the core elements, a successful loyalty programme generally (a) motivates consumers within a specific market to return and purchase more often, (b) heavily reduces churn with regular consumer interaction and finally (c) dramatically improves a sustaining brand affiliation.

Of course loyalty programmes also address several other purposes and crucially they are a strong mechanism to enable merchants and brands to generate knowledge about individual behaviours and aggregate these into manageable clusters. A brand can furthermore use aggregated data to gain insights into changing consumer behaviour, such as how the purchase of specific products changes. With this, retailers can use deep knowledge to engage with individuals in context through email, social networks, web sites, mobile apps or other channels.

At the Point of Sale, consumers present their loyalty card to collect points or specific beneficial offers - and the merchant collects transactional data for that individual consumer. More and more these plastic based cards are being supplemented by mobile apps, which leverage existing technologies such as bar codes, QR codes or NFC tokens, to enable the consumer to both accumulate and redeem points, or simply offers consumers better prices.

The rising role of digital loyalty and couponing

Many coupons are issued entirely independently of loyalty programmes to push sales. Nevertheless these marketing tools perfectly complement each other effectively. Coupons are an integral part of the customer engagement and incentivisation process for both brands and merchants. Although coupons are being used as one-off incentive campaign to instantly change a consumer’s buying decision and behaviour, they can also be used to initiate a sign up for a programme and sustain an ongoing relationship within the complete framework of a loyalty programme. It is state of the art, that coupons are issued in many different ways and via various channels such as direct mail, on a pack, via the Internet, inside a magazine and last but not least on the mobile channel. This is indeed one of the most engaging situations nowadays: benefits are delivered directly to the customers’ smartphone regularly, at the right place, in the right situation and at the right time.

The role of mobile first technology for merchants

Merchants can perfectly use mobile technologies and services to attract consumers and guide prospects into their stores with individual communication relevant to the recipient’s context. In-store, merchants use mobile contactless technologies for location aware interactions, such as GPS and Beacons, to influence consumers in a shopping situation such as automatically opening the mobile loyalty card and the distribution of personalized offers and coupons. Moreover, merchants and brands can use mobile technologies and services to increase the effectiveness of marketing campaigns in real-time with proper reach and high relevance, while also reducing coupon-related fraud and closing the coupon clearance loop digitally.

The role of the mobile wallet for consumers

It’s obvious that each and every brand and merchant tries to have its very own app out in the market. As individual consumers interact with many different merchants and brands, the hope is that they will start using all individual apps for their benefits. But this is simply unrealistic, as many of these apps are deleted by consumers after a few months of usage.

On the other side – and this is an important aspect - consumers want to find all benefits in one relevant place. This leads sooner or later to a fundamental consumer decision about which merchant or loyalty app is used continuously. One strategic approach to encourage this behaviour is to extend the communication and service channels in well known mobile-wallets out in the market.

Mobile wallets are beneficial for the ecosystem

Operators of a mobile wallet ecosystem like banks and MNOs can dramatically help merchants or brands to use multiple datasets to ensure their loyalty programmes are directly relevant to consumers. With the explicit permission of the individual, a broad array of contextual data captured by the wallet operators is served to the stakeholders, such as location and interest history. This is then analysed and used to provide utmost relevant information and offers to consumers. Having relevant targeted contextual information, brands and merchants can effectively give customers a steady and seamless customer experience to help them feel cared for and feel that they’re being treated specially.

What’s ongoing in the loyalty ecosystem

In the modern digital transformation age, the smartphone is a multipurpose, “always on” and “always carried” personal device. This enables innovative loyalty use cases in developed markets and is becoming rapidly adopted in developing countries. Today, wallets have been around for a certain time period, but they are still not at the predicted success rates of many analytics and research institutions (Forrester, Gartner, CapGemini et al). Mobile wallets have gained some traction within the millennial group and tech savvy people in the last decade but still lack in broader market adoption.

The easier road to go down in the short term is to do things alone in a closed loop environment, focusing on the own agenda which results in limited relevance again. There’s a huge potential to grow aggregated services that create more and more beneficial experiences that finally drive consumer adoption and secure user retention.

The rise of loyalty and value added wallet services

As we are in the final rise of mobile wallets, the ecosystem should do more to foster appropriate adoption. Having said this, the main aspects and drivers to higher relevance is ensured with a comprehensive set of services like ticketing, access, loyalty cards, couponing, personal ID or smart communication channels. Several reports from the past two years clearly show that loyalty transactions are key for adoption besides frictionless usage. It is possible to build a compelling consumer proposition and get the buy-in of consumers more seriously and especially longterm. And now things appear to be shifting again in the “Wallet Wars”: Along with Apple, Google, Samsung and AliPay, other wallets attached to an off-the-shelf ecosystem are becoming increasingly interesting. An open ecosystem driven aggregator approach is bringing value to a broad range of stakeholders like banks, MNOs, brands, merchants, franchisees and shop owners, and many more. It helps them to protect their stakes with higher reach, relevance and less effort.

The role of mobile-pocket

If you own or operate a mobile wallet, it is both a demanding and privileged situation in segmented European markets. The challenge with user stickiness, convenient loyalty use cases and lack of communication channels for targeted beneficial offerings is always progressing. The mobile-pocket loyalty HUB is built to easily enrich the loyalty services baseline in a wallet. The services are starting from very basic, but relevant, functionality of storing loyalty cards, towards more advanced capabilities of targeting and engaging consumers individually.
While enabling merchant and brand communications functionality, the HUB ensures adoption and active users, increases relevance, pushes transaction frequency, offers higher reach over the HUB ecosystem and maintains consumer happiness.

The joint vision, signed by all partners, is to individually serve the ecosystem, protect their stakes and ensure a sustainable long-term approach – it is simply designed to increase user retention rates, leverage loyalty services and offers convenient incentivisation capabilities for consumers to feel individually cared for.