Wednesday 22 April 2009

Mobile? It’s loyalty Jim but not as we know it

There have been a number of attempts to get the mobile phone integrated into the heart of loyalty with many viewing this as the next big thing - essentially using the mobile as the loyalty identifier, communicator and reward channel.

The argument put forward to support this is that it un-burdens consumers from having to carry loyalty cards and instead enables loyalty using a device which consumers would never forget to carry – their mobile phone.

Indeed, the latest new mobile loyalty offering is Taggo – Tap And Go – from real time loyalty veteran, Aneace Haddad. On the newly launched website for Taggo, Aneace puts across the reasoning for linking all of your loyalty cards into your mobile device stating “Retailers in nearly every market and every region are finding it more and more difficult to get customers to join their loyalty programs. People don’t want to fill out forms for yet another card that will make their wallets even fatter, and customers that are already enrolled often leave cards at home, causing them to miss out on discounts.”

Yet to launch service, Yoose has a similar aim, stating “Never forget your coupons, loy
alty cards, shopping lists.... Keep everything in your pocket - all the time - on your cellphone.”

Is the mobile channel about to turn loyalty on its head? I think so - but not for the reasons stated.

I don't think either of these solutions have really cracked mobile loyalty yet and its worth looking at their arguments to understand this in more detail.

The basis of these propositions seems to hinge on opening loyalty up to more customers who would otherwise not bother. The assumption is that there is a latent desire to take part, but that wallet space prevents this from happening.

I don't agree with this. Loyalty is not about customer acquisition, its about retaining your best customers.
A regular customer will be attracted to the overall loyalty programme because both the rewards and the benefits work for them - and it's for this reason that they'll make an effort to take part. In fact you positively want them to make an effort.

Every time I go into Homebase (a UK DIY retailer) I get asked if I have a Homebase card – and I answer no (adding I don’t want one). Actually this is a lie, I do have a Homebase loyalty card, but I have no idea where it is. There is a reason for this and it’s simply that I’m not loyal to Homebase. I use B&Q for my DIY needs probably 70% of the time, just using Wickes or Homebase if I want something I know they will stock and I don’t want to drive a little bit further to get to B&Q.

Am I missing out on “loyalty value” – you bet! However,
would it actually add up to much given the amount of times I use Homebase? I think not.

In fact, encouraging loyalty transactions from a disloyal or disengaged base can actually cost money. I’ve seen a retail programme where there was extremely high loyalty basket penetration (% of baskets tracked to a loyalty account), but where programme engagement as measured by redemption of coupons was low.

The reason for this was because the phone number was used rather than a card so disengaged or disinterested customers simply gave their number in response to the request without really being engaged in the scheme. This pushed up the costs of the pr
ogramme in terms of points liability and communications without seeing any associated benefits from increased share of wallet.

I have genuine concerns that these solutions may actually weaken loyalty

I think in some ways there is a risk that a single branded application for loyalty identification may dilute branded programmes, making them all look the same and making them too easy to sign-up to so that people have membership to many more programmes in the same categories. In the end this may reduce overall loyalty to any one brand.

Loyalty managers will have to walk a fine line here in terms of opening up their programmes to a potentially useful solution whilst trying to protect the whole reason for the programme which is brand differentiation. This may require discussions about category exclusivity in order to get the best from these solutions.

That said, having the mobile at the heart of your programme can help streamline the purchase and loyalty process for your best customers and I think this is where the focus should be. Not looking to recruit additional consumers from the passive or disloyal base, but instead using the mobile to make the programme more interactive and relevant for existing, loyal customers.

Both solutions do this to a point by ensuring that loyal customers can always take part, but I think also using it before purchase could be even more powerful. Just a quick look at how developers are using the new G1 Android Google phone shows some of the possibilities.

The application Torrent Droid allows a person to take a snap shot of a DVD barcode in store using the phones camera, and for this to then automatically download at home (illegally) via BitTorrent. Not so much illegal, but every bit as challenging for
retailers, the bar code application Savvy Shopper provides equally amazing features. Consumers can simply snap shot the barcode of an item and be presented with comparison prices locally –essentially showing you where to get it at the best price – as well as customer reviews.

I think any integration between mobile and loyalty has to look at what benefits this platform can bring to both the brand and the consumer.
Letting consumers “check in” when entering the store could allow access to a personal shopper, notification of stock just in or personalised promotions. Taking a snap-shot of a product bar-code in-store could allow the customer to add the item to a wish list, see product reviews, have it despatched directly to home/legally downloaded or simply to total up how much is being spent and the rewards being earned.

Integrating the mobile channel really does allow customers to be rewarded and recognised for their interaction, not just their transaction – allowing a brand to interact further up the buying process and helping to solidify the relationship with a customer.

I'm hoping that services like Yoosh and Taggo continue to develop and that the focus becomes less on the perceived benefits of recruiting from the mass of un-engaged consumers and instead begins to focus on how to deliver desirable and sticky services which enhance the loyalty proposition for an individual brand.

Mobile can be game changing in loyalty marketing – we just need to get more creative with it.

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