Is mobile the true future of customer loyalty?

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By: Wise Marketer Staff |

Posted on December 19, 2013

The fundamental principles of customer loyalty remain the same regardless of any advancements in technology, or changes in consumer attitudes, according to Nick Chambers, UK managing director for Stampfeet, who here looks into the future and finds - not surprisingly - customer loyalty increasingly relying on the mobile channel.

From a customer's perspective, loyalty is simple enough: they seek a personalised experience with appealing benefits and rewards that will compel them to further action as part of an on-going relationship with the brand.

But from the brand's perspective, what customer loyalty actually represents is a way of measuring the performance of individual customers - including how much a customer has bought, how often they purchase, how many different items they buy, how long it's been since they last bought or visited.

The primary purpose of any loyalty programme is to utilise this knowledge of the customer to help drive specific behavioural changes. A drop in a customer's loyalty should trigger an offer with an incentive to make a purchase. A rise in a customer's loyalty, or a special event, should produce a 'thank-you'.

The success, however, of the Tesco, Nectar and Boots loyalty programmes, alongside the airline loyalty programmes, has meant that defining 'loyalty', as an outcome of customer behaviour, has now largely been replaced by viewing it simply as mechanism for 'points collection'. As a result, points collection is now firmly entrenched, with both marketers & consumers alike, as the only possible mechanic by which to achieve customer loyalty.

The fact loyalty has become so closely related to a 'points' mechanic has made it difficult for programmes to become more integrated with other marketing disciplines relating to both brand and sales promotion.

The mechanics for building consumer trust have changed since the advent of points based loyalty programmes, with new technologies & social media leading the way for companies to build more interactive and engaging relationships.

Companies are again learning that long-term customer trust & loyalty only comes from building more of an emotional value exchange with customers at all touch points along the purchase journey. It is the unique ability of mobile to combine both digital and real-world marketing which makes it so critical in shaping this new omni-channel loyalty picture.

Mobile is already the customer's first choice
Customers are already using their mobile phones at part of their purchasing journey within stores, checking product availability, posting pictures of products to social media, comparing prices of in-store goods to those online or looking for reviews.

Mobile is therefore the technology that enables retailers and manufacturers to better understand the customer decision-making process and, more importantly, influence purchase decisions at every point of consideration.

Now, location based mobile messaging services allow loyalty operators to send relevant and timely marketing messages that help drive engagement & relevance long before a consumer has even considered making a purchase.

Mobile technology also allows retailers to push offers & promotions to customers they know are in their stores. The integration of mobile with social media lets customers see what their friends are buying and recommend products to their communities. Further advances in mobile technology, most notably in accessing transactional information from tills & the targeting of push notifications, will greatly help to increase the adoption of mobile within a loyalty context - making the most of mobile marketing's unique attributes for loyalty: intimacy, immediacy, and context.

Barriers to mobile-enabled programmes
As a communication channel, businesses continue to be wary of the use of mobile push notifications. When consumers opt in to receive push notifications, it means they trust you to the point of giving you permission to contact them on their most personal devices. If your messages are therefore not relevant, you have the potential to lose your best customers.

Mobile solutions tend to be retailer-specific and still a far cry from the retail-wide acceptance that payment cards & some loyalty cards currently enjoy. Until the infrastructure is universally in place to process mobile loyalty transactions right across merchants, plastic cards and paper coupons will continue to be an attractive solution for consumers.

It also remains highly unlikely retailers and manufacturers across the grocery sector will ever collaborate to develop a uniform, industry-wide infrastructure for mobile loyalty. The mobile movement therefore will be led by individual retailers, many of whom have already invested heavily in the development of card based loyalty programmes to communicate with their members.

Without access to real time transactional information from the tills it is difficult for a loyalty programme, mobile or otherwise, to deliver the real time issuance and redemption services increasing seen by customers as prerequisite to their participation.

Similarly, when it comes to speeding up supermarket queues, it might be natural to assume that a mobile loyalty card would be faster for the customer to locate in a hurry. However, consumers still say they find it hard to locate digital coupons on their mobile phone at the point of sale. This not only has an impact on the customer experience, but it is also has implications for retailers who are understandably keen not to slow down progress at the checkout.

Where focus is centred on the mobile, instant customer communications and response to customer feedback, alignment with social media, increased staff interaction at the point of purchase are all possible. However, such new ways of working always come with their own operational & marketing challenges for an organisation. Changing business processes as a result of new technology is not unique and, as with any new technology, customer interaction with staff is vital for any success transition.

Conclusions on mobile loyalty
For loyalty programmes to remain relevant within the overall marketing mix they must reinvent themselves. Not only in leading the way in the new omni-channel approach to sales & marketing, but also in finding ways to better integrate in the business processes and practices within organisations already struggling with the pace of change.

Crucially, the mobile allows the digital & real world to meet at the same point of delivery: the fundamental requirement for an omni-channel approach to loyalty.

For organisations able to overcome their existing operational & marketing constrains, they can adopt mobile as their focal point for the delivery of loyalty services; member identification, balance updates, location based rewards and promotions. In this way the entire customer experience can become far more engaging & interactive than legacy card based programmes.

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