Why Loyalty and Mobile Marketing is the Future for Retail
You’re a customer that does all your food shopping at your favourite grocery or deli store.
When you get there, you see the normal weekly flyer that has the current offers. Some you might be interested; others, not so much. So you flick through the flyer, then leave it at the bottom of the shopping cart.
You wander around the store, grab the things you need, then go to pay at the checkout. You might have a loyalty card for that store, so you swipe it and grab your points, and leave.
Job done for another week or so (more, if you do a large monthly shop instead). Then you’ll repeat the routine in a month’s time, and then the following month, etc.
But it could be so much more.
The Relationship to the Sale
According to a new report from eMarketer, consumers aren’t just looking for the latest and greatest offers. Sure, price plays a part in any sales process, but that’s just part of the story.
The biggest part? We want to be educated as well, as this chart from the eMarketer report shows.
What’s interesting from this chart isn’t the fact that consumers want to know how your prices compare – that’s a given. Nor is it getting or redeeming coupons – again, that’s almost a given with any retailer.
It’s the remaining pieces of information – the parts about getting nutritional information, reading product reviews and visiting the company’s site for information.
Oh yeah – and the part that this is all via smartphones while the consumer is shopping.
So, looking at the report a bit further, it’s essentially saying we, as customers, are on our smartphones while shopping to not only see if there are any online discounts available, but to see if we can find more information about what we’re about to buy.
Now how could you, as a retailer, use that information? Because it’s clear our normal shopping methods are changing, and you need to change with that. So where do you start?
Loyalty on the Go
If you’re a retailer, there’s a good chance you already have a loyalty program in place to reward frequent shoppers (I’m looking at this from a medium-to-large retailer point of view; although smaller retailers could benefit as well from a low cost loyalty program).
But how well are you using that with mobile marketing? Are you using it at all?
In Canada, for example, loyalty programs are hugely popular, with almost 94% of consumers belonging to at least one loyalty program. If you’re a Canadian retailer (or have a presence there) that equates to almost 15 million consumers to target (working on the assumption half the population are minors or children).
We know that population is increasingly smartphone savvy – as this 2009 Nielsen report shows, Canada accounts for 12% of the smartphone market (which is probably more now that the iPhone and Android are available in Canada). This equates to about 4.8 million Canadian consumers on smartphones.
So let’s think about that a second. Loyalty is huge in Canada; more Canadians are using smartphones – so the obvious next step is to combine the two with your marketing (and this can be across markets – I just used Canada as an example as that’s where I live).
- Tie in your loyalty card to a mobile app. When consumers sign up for your card, advise them of your mobile app. When they download, they enter their loyalty card number and that ties their accounts together.
- Monitor the usage of the app. Is it for coupons? In-store specials? Research? Build a database of your consumers’ use of your app, and build loyalty offers into that. Offer small tips on nutrition, product energy usage, etc, depending on the products you sell. Give shoppers a reason to stay in your store.
- Make it easy to shop with you. Best Buy and Future Shop currently have an app that offers a ton of features to make the consumer’s experience more enjoyable. Browsing and buying options, easy check-out, barcode and billing options are just some of its features. Tie that into the Best Buy / Future Shop card, that rewards your app use with physical points, and you can see the benefits immediately. (At Bonsai Interactive, we’re currently building a bunch of apps that take this to the next level for multiple retailer industries).
- Have price comparisons at the ready. Saying you offer the best value is one thing; showing it is another. Have mini-chart comparisons on prices for you and your competitors – that keeps consumers off your competitors’ mobile sites and interacting on yours.
- Pro-active use of loyalty points. Because your mobile app is tied into your loyalty card, you can instantly advise consumers of when they’ve reached a certain plateau. The app recognizes how many points has been accrued and lets the consumer know via an alert. They can then buy direct from the phone with smart, targeted and mobile-friendly ads and purchases (which then gets added to the loyalty card).
And on it goes – these are just some ways you could combine your offline loyalty card with your online mobile marketing. And we haven’t even discussed where social media or location-based marketing comes into the mix – combine that with existing marketing and mobile promotions, and the sky really is the limit.
We’ve all heard the line, “Social media is changing the way we do business”. But perhaps the real line should be, “Mobile and loyalty is changing the way consumers need us to do business.”
So how far along the line are you at making your mobile customers loyal?
Image: LearnVest
17 Responses to “Why Loyalty and Mobile Marketing is the Future for Retail”
I agree with you almost entirely, Danny – but have a few more perspectives to offer:
1. Loyalty programs are typically forced sign ups – even if they are free. With regards the 94% number for Canada, it would be interesting to what proportion are active and with what frequency.
2. Loyalty programs tend to breed only selective loyalty. Unless I need to get the job done, I tend to shop for certain items only at Costco and Walmart. Everything else comes to Walgreens, CVS et. al.
3. Loyalty and mobile marketing unfortunately do not equate to brand value and/or recognition. That comes first, and is intrinsic – everything else comes later, and is extrinsic.
4. In India and China – two of the biggest emerging retail economies, smartphone penetration is still pretty low (8.2% combined per http://www.scribd.com/doc/17361921/Global-Smartphone-Market-Sizing). That would kill the idea in those economies, until both retail and smart phones reach a critical threshold there.
Kapil Apshankar recently posted…. Will You Use Expanded Follow Fridays Starting Today FFEXP
Hi Kapil,
Always good to have additional views – that’s the beauty of blog comments.
With regards your points, a few additions to the original post:
1. Not sure which loyalty programs you’re signed up to, but I’ve never been forced to join one at any time.
For active use, this report from Colloquy offers some insights.
http://www.loyaltyone.com/whoWeAre/NewsReleasesItem.aspx?id=0c8362ed-851c-4d7c-a688-84e9dafc86ca
Canadians are active in 9.2 programs per person (many loyalty programs use cross-brand promotion). Aeroplan, for example, gave away two million rewards (retail, gifts, flights, etc), with air travel accounting for 1.5 million round-trip flights.
http://www.cbc.ca/consumer/story/2009/08/06/f-reward-cards.html
Scotiabank, one of Canada’s top banks, has a program called SCENE, which ties both financial spend and movie-going to rewards that see you get free movies, VIP offers, etc.
2. That’s the reasoning behind loyalty cards – ensuring you shop at the location for specifics, as opposed to a generic retailer. Wal-mart’s an interesting one, as they’re branching into so many areas at the minute (look out for auto sales within 5 years), it could be they’re too stretched. But get a great reason to use their loyalty program and that could change fast.
3. It depends on what’s being offered, and how that relates to the user experience. The example of Best Buy shows that brands can, and do, get that part right, and that can only increase with feedback from the programs. Loyalty and apps offer a better chance to build brand equity, as opposed to generic marketing and sales offers.
4. The Chinese and Indian markets need to be priced more aggressively by the carriers. As you rightly say, they’re two of the fastest-rising economic nations, but the comparison between currencies isn’t coming across. Particularly in the unsubsidized field:
The way I see it, if you’re in any business the key to surviving is loyalty. It’s less expensive to make sure existing customers are happy than it is to market to new or potential customers.
If businesses miss out on that, they might not be in the game long enough to source new customers anyway.
Just my thoughts – as always, love having you over here.
The “forced” perspective I have is a bit different Danny. I go into a store, and the clerk at the checkout counter asks me if I want to sign up for a free loyalty card to save a few bucks. I say – sure.
Problem is – there are many loyalty programs that I sign up for, but don’t remain loyal to
. That’s where the active users statistics would come in handy.
Kapil Apshankar recently posted…. Will You Use Expanded Follow Fridays Starting Today FFEXPAh, gotcha. Do like the drug adverts advocate, mate – just say no
Good to see someone else thinking along these lines. The rewards card is truly an understood marketing aspect of most companies.
1. I sign up for your rewards card to show I appreciate your company. I give you my name address and email.
2. You send me emails, letting me know about sales and promotions.
3. You send me coupons. Coupons that I must print out in order to gain savings at your business.
4. You are truly in business with HP, Canon, Epson, Lexmark. Not me. I have to spend my ink and paper in order to participate in your promotion. Huge fail.
5. I mention in more than a few locations, that my smart phone coupons should be proof that I am your customer. Ask why I need to print coupon and get a 1975′s like answer from clerk. “we must have tangible proof that you made this purchase”. Huh? The money in the till is not good enough.
I suggest that 99.8% of Rewards card programs are failures as they do not reward the customer for their efforts. A smart phone, or even the card itself, could track patterns and give feedback to a company that in turn could give discounts to customers without all the printing of coupons and “fairy dust” that accompanies the email.
One store in our area actually does this. I signed up, and use card each time I visit store. They now have a kiosk in store that I visit upon entering location of choice. Wave my card under the laser reader and receive coupons to use while at that location. One improvement that could be done is printing coupons specific to me, based upon previous purchasing patterns, and asking if I want to opt in to other offers.
The best option would be to, at time of purchase, swipe card, and then give consumer all available discount that apply to the purchases made at that time.
I’ve been thinking and thinking about how to best approach the “new thinking” of the rewards card with retailers. It seems you and I are moving along the same paths.
Great piece Danny!
robynski recently posted…. Onion Fields- Calandri-SonRise FarmsHey there Robyn,
Sadly that’s where many retailers (or anyone with a loyalty program) falls down. They make it too much of a basketball hoop approach; the higher you jump, the more likely the reward.
But why? Why not make it as easy as possible to use the program? Wouldn’t that make uptake even better?
Your retailer example sounds like they have the right idea. Even then, as you say, it could still be improved a little.
So imagine if businesses took the time to make everything easier, and available the way that folks prefer? I know I’d use my card more in that store, even though it sounds like they do a great job already.
Danny,
Your arguments make sense. In an economy where people will drive miles for a .03/gallon cheaper gallon of gas, the loyalty of the name brand-with readily available information for big-ticket items makes intuitive logic. Obviously, the changeover will be a slow process as habits die out, and the public adjusts.
You must know some of my family, David
Agreed, though – people are looking to buy from you, why not make it easier all round to keep that mindset?
Very interesting post!
I’ve just seen the news that a mobile loyalty app has just launched in Canada! From their blog, they seem pretty active on getting companies to use their application in Europe. Maybe you also should check them out:
http://www.cardmobili.com
http://www.marketwire.com/press-release/Cardmobili-Launches-Mobile-Loyalty-and-Member-Service-in-Canada-1312495.htmAnd keep on with the good work!
Danny,
Again I think you are spot on and you have hit another one out of the park!