Mobile loyalty programs fail to take off
Mobile loyalty programs, while still in their infancy, aren’t so far wowing customers, according to two recent surveys.
Bond Brand Loyalty said its "2015 Loyalty Report," based on an online survey of 11,316 consumers, revealed "mobile loyalty apathy."
According to the survey, while 12 percent of loyalty program customers have downloaded a program app (an increase of five percent over the prior year), 61 percent of smartphone owners are not aware whether or not the loyalty programs in which they are enrolled even offered a mobile app.
The mobile engagement rate contrasts with the 48 percent of members who agreed they would like to engage with their loyalty programs through their mobile device.
On the positive side, 62 percent of customers using the program’s mobile app are satisfied with the program, as compared to only 45 percent among members who have not downloaded a mobile loyalty app.
Meanwhile, a study from Inreality, based on a survey of 1,361 consumers and numerous follow-up interviews, found a much higher 40 percent use loyalty programs via their mobile.
Source: Apple/Sephora
But, according to the study, only 46 percent of shoppers who use loyalty programs via their mobile considered them to be important in their purchase decision. More troubling, 71 percent of shoppers who use loyalty programs on their mobile still use their mobile for price comparisons. That compares to only 55 percent of shoppers who do not use loyalty programs using their mobile device for price comparisons.
The Inreality study also found mobile loyalty programs reaching a rather narrow audience — mainly women (61 percent) and the most budget-squeezed age group, ages 25 to 49 juggling early careers and young kids.
To entice the majority of shoppers to enroll and encourage mobile carrying loyalty members to do more than price check, brands and retailers need to increase the benefits of these programs by catering to specific demographics, Inreality said. They can also offer early access to new merchandise, private showings and additional advantages.
"There is a large opportunity for brands and retailers to rethink loyalty," wrote Inreality. "How can loyalty be better integrated into the shopper experience as more than just another discount outlet? And, should brands look into integrating other functions into loyalty apps, such as, social sharing, etc.?"
- 75 percent Of All Shoppers Are Now Using Mobile In-Store, With 25 percent Actually Making A Purchase – Inreality
- The 2015 Reality of Retail Report (report) – Inreality
- Consumers are more motivated by loyalty programs than ever before – Bond Brand Loyalty
- 2015 Loyalty Report – Bond Brand Loyalty (report) – Bond Brand Loyalty
Discussion Questions
What opportunities does mobile present for retailers to engage loyalty program members? Why are many mobile loyalty efforts failing to catch on with shoppers?
Poll
BrainTrust
First, retailers need to get it right when it comes to delivering a mobile app that is easy to use and effective. If consumers get frustrated when they are trying to search for a product or complete a purchase, they will abandon the mobile experience. Second, the mobile loyalty program must be relevant and unique — to give shoppers a reason to not only download the app but also to use it on a regular basis.
Mobile loyalty programs offer two-way communications for retailers and their customers. A way to not only let loyal customers know about the store, sales, etc., but a way to listen to their customers if done correctly.
It is still early in the technology and a lot of consumers need to be convinced to join mobile programs. The fact that they have not taken a liking to them may mean that the programs and offerings are not up to their standards. Retailers need to treat loyal customers who use the mobile applications to better offers if they want to keep them loyal.
Social programing is nice, style advice is nice, but saving money and/or getting stuff for free after a big purchase is a lot better and will win more customers to the mobile applications.
Consumers are inundated with endless promotions from airline, travel, clothing, food and other merchants trying to get their attention. Spam on your phones is worse than your laptops. I believe people want their phones as free of ads as possible, and would rather use their laptops or desktops to scan the offers they get. I have blocked many from getting into my phone, and others have as well.
Smartphones are nice, but the serenity of searching for stuff and texting your friends is what most of my friends use it for. The apps available on the phone won’t stalk you, and if you want to yelp something you can do it without being spammed. Just my opinion, but in talking with my friends this is how they feel as well.
I second Debbie’s comments, but will expand on her second point.
Last year I had the opportunity to chat with Urban Airship, the firm behind Starbucks’ very popular mobile app. The most important takeaway I got from them is that it is all about value exchange. If people don’t get significant value from using the app (or mobile loyalty program), they’re not going to bother. Starbucks is a great example. All retailers should be saying to themselves, what special offers, discounts, opportunities or first dibs are we going to give up as the catnip to keep our loyalists coming back?
The challenge is that it’s so darned hard to get retail leadership to approve the kind of offers that are going to make using a mobile loyalty program a happy habit. But there’s so much upside if they do true cross-channel analytics, deep shopper basket data, the ability to cross sell/upsell digitally at every purchase point and more. They just have to realize that you have to give to get.
Gamification of the program is a good way to improve loyalty on mobile devices. Mobile devices offer a far richer medium for loyalty. Creating a game where you simply keep score for purchasing a variety of items may be a good way to boost usage. Allowing one customer to answer another customer’s question and providing points for answers is also a good way. The points are just a way to keep score as opposed to providing discounts. Perhaps top scorers get invited for some event.
It would be really interesting to see if any retailer would partner with another retailer of complimentary products to offer cross-promotional opportunities. Clothing stores and footwear for example. Purchasing an outfit provides a time limited offer to a footwear retailer in the same mall. Although this doesn’t combat the discount aspect, it does discount products that the customer probably would not have purchased otherwise.
It’s not mobile, it’s the quality of loyalty programs. Every retailer has one and most of them have little or no relevance for consumers. The current programs do not address individual consumer’s needs and offer relatively little value. Why do I need another app that only tries to sell me something rather than making my shopping experience easier, faster or less pricey? Retailers need to wake up to modern reality and take a hard look at whether or not their loyalty programs resonate with consumers.
Loyalty programs, mobile or otherwise, need to generate compelling reasons for shoppers to leverage them, or they will ultimately be seen as “me-too” programs. There is nothing but opportunity to capture the market with a true loyalty program, however most of these programs are nothing more than mass, un-targeted discount programs via mobile or other channels. Simply because a program has deep user base penetration that doesn’t mean the shopper is loyal to your site. They just know they need to join the program to get the rewards/discounts. They most likely are also shopping your competitors’ sites and are a part of their programs, too.
Shoppers want to control their space. A shopper’s mobile device is her key to the world SHE lives and not just another technology avenue for disrespectful marketers and merchants to sling their traditional fare. Secondly, apps rarely work! Shoppers are using their mobile devices but they are NOT opening a retailer’s app every time they walk into your store. This fact will not change.
There is, however, an opportunity to present relevant and valued content in real-time with select beacon-based technology. This technology will enable brands and retailers to serve meaningful content in real-time to a shopper who has expressed an interest and/or requested that particular information. This technology could have tremendous value for a host of products and services that could benefit from telling their story through video or pictures.
You want “reality”? Techies with new toys think they will change a world that their understanding of is near zilch. Best retailer quote: “Why would we do these things if no one is paying us to?” And notice the brain-dead strategy of “paying customers to buy,” AKA price promotions and discounts.
There is not much room for loyalty in the search for price, availability, directions and delivery. These are the purposes for a mobile hand-held device search and it will remain so for the life of these devices with their current technologies and software.
There are some fundamental realities as to why mobile loyalty programs aren’t more successful.
First, loyalty programs aren’t mobile by themselves. They need to be wherever the customer experience is, and while that includes mobile, for retailers it’s not mobile first (today).
As one example, we are working in a category (professional sports) where some teams are taking a mobile-first (and only) approach. It’s a strategy that is inherently limiting, and it’s clearly reflected in the size of their membership. It limits the appeal and by definition lacks integration with a majority of a team’s touchpoints.
This leads to the imperative that loyalty programs should exist, i.e., be integrated, with whatever the existing mobile customer (brand) experience is, rather than a separate mobile app. Retail as an industry, especially legacy retailers, are only now gaining e-commerce proficiency. Mobile is an entire step further, so it’s little surprise that retailers aren’t seeing success in loyalty there.
Loyalty marketing is not just about transactions, and the best opportunity within the mobile environment is a combination of integration and utility. The latter is not necessarily about offers, points or rewards but rather about brand-delivered benefits that make things better for customers. Mobile loyalty programs, as a standalone idea, are rarely sufficient by themselves.
Mobile is still viable, but it hasn’t hit critical mass. Part of the reason is people haven’t accepted it and, more importantly, the value isn’t there. It is working for some retailers. Find out what these retailers are doing that is different and you have part of the answer. Key is simplicity and value.
Tony nailed it. Increasing numbers of people — from young children to the elderly — have smart phones and love them. We all use them in different personalized ways for many different reasons — connecting with friends, music, weather reports, sports, directions, games, and breaking news. Having our phones clogged up with loyalty apps and retail ads is just not one of those compelling reasons, and I doubt ever will be.
While many companies today have launched some type of loyalty program app or mobile site, only a small percentage of them truly are optimizing these programs as powerful platforms and incorporating customer feedback to improve the experience. In many ways, the data created from the programs lies as an untapped resource while the program is used as simply a new channel to blast out untargeted, hard-to-navigate communications to customers.
In particular, modern consumers have an increasing demand for speed and ease of use when it comes to programs on mobile devices. Consumers are basically intolerant of slow websites or a clumsy site or program, and if you have one, you risk losing that consumer forever.
I’ve bought golf equipment from the seat of a plane 30,000 feet in the air, and have had prescriptions filled at drug store chains hundreds of miles from my home. I have the ability to move my finances around by phone. Fast-and-easy delivery is tantamount to the customer experience, and the definition of speed and ease is advancing every day. Companies need to keep up.
And if you want to maintain long-term customer loyalty, then you have to invest your talent and resources in creating relevant ways to interact with customers across all channels, including mobile. Reducing friction for the customer to interact with you product or brand is essential to earning long-term loyalty.
I think mobile loyalty programs will inevitably displace cards as the generations change. Cards are clumsy, bulky and more expensive to distribute than apps. But we’re still in the early stages of user experience development. Integration with the mobile wallet may move the ball forward, but older consumers may never get on board with this.
Regardless of the mode of contact, success will depend on maintaining a seamless, lightweight interaction that provides an exchange of value. Value, in this instance means ease of use, speed, helpful information and, yes, the right promotions in the right moments.
Considering women still influence up to 85 percent of all retail purchases, there should be no surprise that mainly women are early adapters to mobile loyalty programs. Also there should be little surprise that those most looking for retail/shopping value “ages 25 to 49 juggling early careers and young kids” represent the demographic finding mobile loyalty programs conducive to their lifestyle needs, etc.
Like any retail loyalty program, to be successful the retailer must first and foremost offer real value and lifestyle relevance. The best way to do that in this “Brave New World” of omnichannel retail transformation: Leverage the customer data to be as lifestyle relevant to your customers as you possibly can, and deliver that value seamlessly and conveniently (integrated) across channels.
A great example of a highly data-driven and lifestyle relevant (and yes, successful) retail loyalty program fully leveraging the convenience and customer “enablement” that mobile can and does bring to the party is Nordstrom Rewards. It is a multi-channel/integrated, multi-format loyalty program platform that seamlessly covers the Nordstrom portfolio (Nordstrom, Nordstrom Rack, HauteLook) and the different core demographics across those banners, with benefits and privileges that resonate lifestyle-relevant value. The stronger the mobile capabilities to deliver that lifestyle-relevant value, the better when it comes to those the up-and-coming Millennials that Nordstrom needs to replace the aging and now less free-spending Baby Boomers (the generation that has propelled the impressive Nordstrom growth over the past two decades).
Mobile loyalty programs are struggling to catch on because of a lack of clear benefits to consumers. The consumers who do download the app are highly engaged mobile shoppers and, as such, price compare frequently and do not have much loyalty at all in the first place.
For “loyalty” programs to engage their best consumers, the truly loyal ones, the content must be personalized and also not just focused on transactions and points, but genuine content as well.