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The Truth About Loyalty Programs and Mobile Apps

THE TRUTH ABOUT LOYALTY PROGRAMS AND MOBILE APPSOver the past decade, a number of major factors have significantly disrupted the retail and restaurant industries, including the evolution of eCommerce, the rise of social media and the emergence of Millennials as a customer base. None of these, however, have been as disruptive as the mobile device – and the broader mobile channel itself.

According to MIT, 80% of store shoppers check prices online, and the web influences $1.1 trillion in store sales. A 2013 study also found that 81% of consumers have searched for a restaurant on a mobile app, and 75% said they often choose a restaurant based on those search results. These changes in consumer behaviors have forced traditional brick-and-mortar businesses to adapt to the new mobile world or get left behind.

Retailers and restaurants have responded to the challenge with omnichannel strategies that create a seamless experience between brick-and-mortar and mobile, and the results are clear — according to one study companies with the strongest omnichannel customer engagement strategies retain 89% of their customers, compared with 33% for companies with weak omnichannel strategies.

Mobile devices are not just gadgets. They have become the center of users’ daily lives and how they engage with the world. If brands want to engage customers, they have to go through a mobile device first. The mobile channel, therefore, must become central to brands lives, too.

The Consumer’s Center of Universe: The Smartphone

With mobile retail payments expected to reach $707 billion by 2018 and restaurants already the most searched industry on mobile apps and browsers, smartphones have become the center of the ‘new consumer experience,’ and brands have to unify their strategies and tactics around this center if they want to remain part of consumers’ lives.

Advances in mobile technology have paved the way for restaurant and retail loyalty programs to employ strategies that move “beyond the discount.” By delivering timely messaging and offers that focus on increasing member engagement and are relevant in real-time and in-location, marketers can ensure a consistent brand experience that nevertheless personalizes engagement for each channel and each program member.

Retailers and restaurants have begun to recognize this omnichannel approach as more than just a trend or buzzword – it’s the new normal. Omnichannel marketing opens up more sophisticated ways for brands to create program awareness, improve the shopping/dining experience, and ultimately, drive loyalty and customer retention. 

Mobile Tech Trends Make Loyalty Marketing Easy and Entertaining

Geo-location features like GPS allow retailers and restaurants to target customers where they are and create real-time and relevant offers and messaging that keep brand awareness alive, attract brick-and-mortar traffic and incentivize ongoing spending. This fits into the omnichannel goal of managing the entire customer experience before, during and after shopping or dining.

In line with this goal, Taco Bell and McDonald’s are also introducing mobile ordering, a trend that reflects the growing importance of omnichannel marketing in the restaurant industry. As Taco Bell’s mobile lead put it, “Mobile is the biggest shift in QSR since the drive thru. If you can get 10 million people to download your app, you’re putting a portal to Taco Bell in 10 million pockets.”

Marketing aside, mobile devices as a whole are also changing in-store interactions for retailers and restaurants industry wide. New POS and mobile payment systems, for example, are helping streamline the payment process by allowing diners to pay with their mobile device, therefore making service more efficient for staff and adding value to the transaction. Many retailers and restaurants are also implementing tablet strategies and equipping locations with these devices to help customers browse, order, customize, pay – or even play games to keep them engaged with the brand.

Pizza Hut, for example, recently announced plans to implement its own digital signage tabletop where diners can customize their orders – from the size, toppings and crust of their pizza, to side dishes, wings, pastas and desserts – and even play games while they wait. This kind of in-store technology helps create a brand experience that simultaneously improves retail and restaurant operations – like staff efficiency, reduced wait times and increased spending. According to Ziosk, tablet menus increase tips by 15% on average, and at Chili’s, they increased dessert sales by about 20%.

Some restaurants have taken gamification to the next level with mobile apps that create brand awareness and let customers play games to win free products and impact the local community. The sandwich chain Blimpie’s, for example, developed “Blimpie’s Run,” a mobile game that randomly selects participants to win free subs for an entire year. Chipotle, on the other hand, uses mobile apps to get customers on board with their company philosophy. Its “Scarecrow Game” teaches consumers of all ages about the importance of pro-sustainable farming efforts, a standard operating procedure for the healthy Mexican food chain.

Ultimately, the goal of omnichannel and mobile marketing is to help drive lasting customer loyalty, and for retailers and restaurants in particular, mobile devices have to be loyalty drivers. JiWire’s recent Mobile Audience Insights Report has some interesting stats on diners:

  • 39% of consumers use mobile apps over other methods to find information on QSR and casual dining establishments.
  • Restaurant review apps are second only to word-of-mouth advertising for determining where to eat.
  • 83% of consumers rely on their mobile device for dining decisions while traveling, compared to 65% while in their home market.

Loyalty programs have to adapt to the new environment where mobile devices drive consumer decisions in real-time. Mobile loyalty apps should, at the very least, make it easy for program members to manage their account, earn points and redeem rewards with a swipe of their touchscreens. Pouch, an experimental new loyalty app, is trying to consolidate cards, vouchers, content and other loyalty features into one convenient platform, while also using Bluetooth beacons to target mobile users when they are near a retail or restaurant location.

Once they have a solid management platform in place, retailers and restaurants can focus on creative and effective tactics to drive loyalty among mobile users. Fashion retailer GUESS rolled out a new mobile app earlier this year, providing points earning opportunities, personal customer service, fashion updates, photos and videos of merchandise and the ability to cross-sell and up-sell. That is the omnichannel range of mobile devices, consolidating the entire brand experience into one platform, creating new opportunities for spending and engagement, and ultimately, tying everything into customer loyalty programs to create lasting value for both brands and consumers.

The Wrap: Six Reasons Why Brands Can Benefit from Applying a Mobile Mindset to Their Loyalty Programs

Given advancements in mobile technology, research shows there are six ways that companies can benefit from integrating their loyalty programs with a mobile platform:

  • Mobile loyalty programs drive activity and increase ROI. Smartphones drive the way consumers interact with brands today. Mobile loyalty programs give customers another reason to stop by (physically or digitally) and make a purchase.
  • Mobile loyalty programs are easy to administer. Instead of printing out punch cards or replacing lost loyalty rewards cards, mobile programs need only a smartphone (which most consumers always have with them) and most can be changed, as needed, from the app dashboard. In short, they are clean, elegant and cost-effective for restaurants and retailers to manage.
  • Mobile loyalty programs reduce churn and improve loyalty. Having a mobile platform that consumers can easily access is another incentive for them to choose one program over another.
  • Mobile loyalty programs are a solution to loyalty program fatigue. Consumers like carrying loyalty cards less and less. Mobile loyalty programs make it really easy for consumers with a tap, click or swipe.
  • Mobile loyalty programs improve customer satisfaction. Mobile loyalty programs provide a way for brands to remain connected with their members at all times and offer a vehicle for instant feedback and dialogue, just like social media.
  • Mobile loyalty programs track customer activity. Mobile loyalty programs provide data that allows retailers and restaurants to see what rewards are motivating, how fast members redeem and what items they frequently purchase. This data is key to knowing what to offer customers and how programs can be improved incrementally and continually.

More than any other industry, the retail and restaurant industries – which are both very social by nature – have tremendous opportunities to capitalize on customer loyalty through the mobile channel and the most intimate marketing tool, the mobile device. Leaving traditional marketing tactics behind, mobile technology has paved the way for a loyalty marketing landscape that centers on the omnichannel experience and garners success by reaching consumers wherever they are.

Bram Hechtkopf

Bram Hechtkopf