Andy Chang | May 9, 2012
Here comes the next big local marketing platform for the group-buying-fatigued retailers: mobile loyalty programs. If you are not yet familiar with this segment, look up start-ups Chatterfly (U.S.), Stampfeet (U.K.) and Perx (Singapore-based, backed by Facebook co-founder Eduardo Saverin – so it appears he is investing his newly minted billions here in Asia. Good man.)
These businesses all share a similar operating model: Leverage mobile to make loyalty programs card-less and easily discoverable by location. Your customers earn points after they patronize your retail store and are given a unique QR code (as proof of purchase) to scan. Users can then redeem points or stamps for freebies during future visits.
Customers love this because they can manage all their programs with different retailers on one device, and discover new businesses to earn points from. Retailers like it for the same reasons that they love traditional loyalty programs: repeat customers. Another key benefit is that these platforms are cloud-based, so now any retailer with an Internet connection and printer can inexpensively launch a loyalty program and hug trees at the same time.
Stamp, chop and rock-n-roll, baby!
(If anyone knows of any company offering this type of platform in China, please tell me about it in the comments section.)
It’s a smart use of mobile technology to digitize a proven offline marketing practice. I think these programs will be everywhere in a few years time, like group buying is in just about every city and continent except Antarctica these days.
If group buying is pitched to retailers as good for customer acquisition (some would disagree with this claim), then mobile loyalty is good for bringing customers back as well as allowing new customers to discover you. For group-buying merchants struggling to get customers to return after selling products at a steep discount, mobile loyalty programs can potentially address that problem and open up a whole new area of sales analytics – what types of customers are trialing and returning?
Many retailers in Singapore have embraced Perx as evidenced by the company’s rapid growth. F&B businesses are the first to sign up mainly because they are familiar with the value proposition and business model behind loyalty programs and punch cards. What I will explore in this article is if there is an opportunity for brands to incorporate mobile loyalty and punch card programs into their marketing strategy.
Offer Suitable Incentives
Regardless of the era, I think it makes sense for any brand with a retail presence to have loyalty and rewards strategy. Although some brands will immediately reject the idea of digital punch cards because it appears trite and potentially cheapens the brand, it’s worth taking a second look. The truth is that all brands want to know who their best customers are and better retain them. The key is really finding the right earning mechanics and rewards that fit and enhance your brand experience.
Buy-8-and-get-1-free offers may not be appropriate for a luxury brand like Prada, but I bet that loyal Prada customers would certainly appreciate, perhaps even expect, some gratitudine. For these brands I recommend rewards that further enhance the brand experience (and make them sing more praises), instead of outright giving them perks of defined (and therefore limited) value. In these cases, small not-for-sale gifts and exclusive event invitations make a lot of sense.
I’ve recently had discussions with a retail banking client and shopping mall client, and both expressed interest in rewarding their customers for transacting at retail outlets. Both wanted to incorporate cross selling so that their customers are also incentivized to spend more time with the brands. For the bank it makes sense to offer attractive and unique discounts to other financial products. For the mall it was free parking, and coupons to shops and restaurants that wanted more foot traffic. The rewards would create win-win for both the brands and their customers.
Reward More Than Purchases
Based on my company’s research, the average fan base engagement rate for Facebook pages is at around 1 percent. While significantly higher than online advertising click rates, it indicates that there is room for improving fan engagement on social media and other channels.
This aligns with what I’m hearing from my clients: they want to encourage their customers to engage across more brand touch points, and in new and different ways – I alluded to this briefly in my previous article, “What’s Next for Social CRM?“ This type of cross-channel interaction is incredibly powerful for marketers because the customers are not only engaging more and experiencing the brand in different interactive ways, but they are also revealing how they prefer to engage on an individual basis.
Here are some concrete customer actions that my clients would like to encourage and reward, with the goal of driving business and marketing benefits. I imagine many brands would like to achieve the same.
- Sign up for e-statements
- Buy online / execute a transaction online
- Like our Facebook page
- Refer a friend to become a new customer
- Check in at our store using Facebook or Foursquare
- Upload a picture of the customer enjoying our product or service
- Share content or comment on our website
As mobile loyalty platform technology matures and the industry grows, I’m certain the solutions will become more flexible and can be custom-tailored to fit individual brands’ needs. So I recommend brands to not focus immediately on the technology and its pre-defined usage framework, but instead on how to best engage customers and create memorable, useful and rewarding brand experiences. The technology is like water. It will follow and change shape.