Augmented Reality for Loyalty Programs: Real Potential or Passing Fad?

Jan 16, 2015

With any emerging technology, it takes a while to move beyond the fad phase and show enough user adoption and traction to drive development. Augmented reality is an example of this. Although augmented reality is still “proving its worth” – much like mobile marketing had to do over the last 5 years – brands are now experimenting with how it can be leveraged beyond the “wow” factor to influence purchasing behavior.

In general, augmented reality promotions could be an effective part of loyalty as they allow consumers to interact with a product in a unique and personal way. Research proves there is potential for augmented reality’s success in terms of brand revenue generation:

  • In 2013, the total generation of revenue from AR was around $300 million.
  • Nearly 30% of mobile subscribers will use AR at least one time per week in 2014.
  • In 2014, AR technology will be enabled in over 864 million smartphones.
  • AR revenue is expected to be more than $600 billion in the next two years.

Augmented Reality In Loyalty - blogTime will tell how well augmented reality can impact loyalty, but plenty of brands are already banking on its potential. The following are three recent examples of augmented reality’s application specific to loyalty programs:

  1. Walgreens: Last year, Walgreens tested an augmented reality program using Google’s indoor mapping technology, Project Tango. Using the Walgreens mobile app, customers receive help navigating the store layout with relevant promotions popping out along the way, including offers tied to rewards points.
  2. Century 21: The New York-based retailer launched a pilot program last year that leverages mobile technology and augmented reality to increase memberships. Customers use their smartphones to scan shopping bags and spin a virtual wheel full of offers. The push toward a more immersive in-store experience is part of Century 21’s goal to increase loyalty program sign ups by up to 34% last year.
  3. Kraft: Last summer, Kraft launched an augmented reality campaign to encourage Walmart shoppers to use their mobile devices to scan campaign signage and logos that link to digital assets connected to a larger campaign and sweepstakes. One example is “Paisley Points,” which offered shoppers points redeemable for autographed Brad Paisley merchandise when they upload images of Walmart receipts with proof of a Kraft purchase.

We’re likely to see a lot of brick-and-mortar retailers follow Walgreens’ lead this year and through next. Most will share common goals such as increasing frequency, spend and engagement.

What’s Next for Augmented Reality and Loyalty

Wearable technology has sparked renewed buzz around augmented reality, with lots of potential around Google Glass and the recently launched Apple Watch. This may open up a completely new category for augmented reality compared to what we’re used to with respect to simple smartphone interaction. Wearable technology can tie consumers into the real-time data stream where they can reveal more about their preferences and behaviors. From there, marketers can gain more insight into what to market to them, how to communicate with them about the things that get them excited, and filter out unwanted or irrelevant content – all of which could lead to greater personalization and contextual relevance.

Augmented reality stands to become an increasing component to the loyalty marketing mix as brands aim to create more memorable, personalized experiences. Expect to see augmented reality tied into more loyalty strategies if marketers can prove how it can engage consumers, draw them into physical locations, encourage frequency, and build brand advocacy.