Pizza Express app - a glimpse into the future of VRM?

Pizza Express have launched a new iPhone app which redefines the space for retailers and at the same time provides a possible glimpse into both the future of payments and CRM (but more on that later).

The application includes a number of clever features such as allowing customers to view their past receipts (great if you need to expense something), create "favourite" restaurant locations and pre-book a table. The really interesting part however is a deal with PayPal that also allows a customer to pay their bill directly via their mobile by entering a unique 12 digit code printed on their receipt - letting the customer then simply get up and walk out as it's seamlessly integrated into the restaurants POS.

This in itself is an interesting loyalty play as Pizza Express get to know who the customer is, what they purchased and how often they come and there is not a loyalty point in sight. It's a compelling application that smooths the purchase process, making the next purchase more likely.

Whilst this is a really innovative app for Pizza Express it's actually part of a wider trend to disintermediate the payment eco-system and the functionality is quite similar to that offered by payment start-up Square.

Jack Dorsey, Square's founder is quoted as saying that they want to replace cash registers, wallets and loyalty cards. Rather than simply trying to replace a specific part of the existing process - exchanging the plastic card for the mobile phone - Square are actively trying to join the whole process up with Mr Dorsey saying:-

"We think it should be one system"

One really interesting innovation within Square is their application Card Case. This allows a customer to create a list of their favourite places and to setup a tab with them, simply paying by giving their name - no swipe of the card necessary. Like the Pizza Express app it also provides access to your receipts; in essence centralising your payment and purchase history and making it accessible.

This is a really interesting feature that both Pizza Express and Square have in common - the provision of customer data back to the customer - and it is becoming increasingly common as customers begin to expect their data to be collected, but increasingly consider it "their" data. When I shop at Tesco I know they are tracking my purchases, however when I go online and see new products added to my favourites list it begins to actually feel like my data.

This trend of providing information back to customers and giving them access to and ownership of it is also gathering pace.

Within websites and applications for example you are increasingly given the option to login via social networks such as Facebook or Twitter. While you still login, connecting via a social network provides a subtle change. You are actually granting permission to that application to connect to you rather than the other way round. At any time, I can review my relationships with different applications and simply close them down by removing the authorisation. I can also look at the permissions I've granted to those applications and change what information they can see.

There has been a transfer of power within identity management. It's now my identity and I can choose who has access to it, how much access they have and when I want to end it.

Imagine this trend being extended to all your interactions.

Within a supermarket loyalty programme for example you could link your purchase history to an app from a CPG manufacture like Unilever. You'd be doing this in the full knowledge that Unilever could then access your purchases and provide you with relevant offers (or reward points). You'd be choosing how to use your information for your benefit.

This is a really amazing thought and something that has been termed VRM or Vendor Relationship Management by Doc Searls, a veteran technology journalist and key founder of ProjectVRM which he describes, saying:-

Since the dawn of the Industrial Age, large companies have been working to "capture" and "lock" customers inside what we today call "silos" and "walled gardens."... ProjectVRM is a new Berkman Center research and development effort that is working to provide customers with tools that provide both independence from vendor lock-in and better ways of engaging with vendors -- on terms and by means that work better for both sides.

I love the idea of this - letting customers engage with brands on their terms with their data - and can see many applications across different industries.

How far this can go will be interesting to see (and to define), but the principle of making customer's data accessible to customers is a key trend. Facebook, Twitter et al. have already proved that making their systems open and giving customers control has only made their service more compelling.

Brands and loyalty programmes collecting customer data and interactions may have to take a leap of faith and empower the customer for the greater benefit of both the customer and the brand.

As Doc Searls said in his earlier thinking within the Cluetrain Manifesto:-

We are not seats or eyeballs or end users or consumers. We are human beings—and our reach exceeds your grasp. Deal with it."

Soap.com washes away points based loyalty

Sometimes it's good to remember that loyalty marketing doesn't necessarily mean points marketing. Whilst points provide a great way of letting customers track their progress over time and link multiple purchases into a continuous journey, they are not the only way to execute a loyalty programme.

Within a loyalty programme, what we're trying to do is link one purchase to the next - to build a context around the purchases. Sales promotion tends to encourage a single purchase, typically rewarding customers instantly with a discount or premium. This is normally aimed at customer acquisition or as a way of lifting short term sales. Loyalty on the other hand tends to recognise behaviour over a number of transactions to create repeat purchases. Ideally it recognises and rewards regular custom without discounting products and services to new customers.

A good example of this is Soap.com, an online retailer of cleaning, health and beauty products. They have developed a programme which allows customers to nominate 5 products for which they want to receive a discount on with future purchases. The customer can then change these nominated products every 90 days.

Whilst on the face of it this may not be considered a traditional loyalty programme, there are in fact a number of interesting loyalty mechanics at play here:-

• Scarcity Dynamic - By limiting the discount to just 5 products, it forces the customer to really think about the products they buy (and the ones Soap.com sells). The limited number will make it more valuable for customers and something they'll want to use wisely.
• Commitment - By getting customers to select 5 products, they essentially get the customer to psychologically commit to buying these before they actually purchase. Research in this area would suggest customers committing for a small thing (creating a favourite) then go on to commit to a bigger thing (the purchase).
• Appointment Dynamic - The change every 90 days means a customer keeps the discount front of mind. They know they have a window of opportunity to "re-stack the decks" and so this forces them to think about their purchases (and Soap.com).

Discounting would not be a traditional loyalty mechanic. Points are normally used to provide price differentiation without actually changing the price. However, this programme design is clever in that it limits the discounts, personalises them and gets full price for the rest.

There are some other levers which could have been used such as a Progression Dynamic which could have allowed a customer to unlock more discounts over time, but it's still a strong design.

An online retailer like Soap.com doesn't need a loyalty programme in order to identify their customers, they need one to change behaviour. Their programme design would seem a great fit for their audience and a clever use of loyalty mechanics.

American Express provide another good example of this in what could be described as both a sales promotion or a short term loyalty programme. The programme, called "25" encourages customers to use their card in 8 out of a possible 18 outlets. In return, the customer is awarded a £25 statement credit.

As with Soap.com there are a number of mechanics used within the programme design that make this effective.

• Appointment Dynamic - The programme is time limited meaning customers have to do something now in order to benefit.
• Repeat Purchases - It encourages multiple purchases, reinforcing the right behaviours that Amex are looking to promote.
• Behaviour Change - Not only are Amex trying to get customers to use their card, showing their wide acceptance, but they are also trying to get customers to understand that they can use their card for smaller purchases, with brands such as McDonalds or Pret.
• Collection - The programme materials include a reminder card which shows the 25 participating brands and a visual cue to the 8 needed to collect. Customers can tick each brand off as they shop.
• Recognition - The reward on offer is motivating enough for most customers to at least think about taking part.
• Customer Identification - Whilst Amex already know who their customer is, the programme requires an email address to take part, helping to make it easier to communicate with them in the future.

Again, this isn't a traditional loyalty programme; however, the loyalty mechanics are still clearly in operation. This is a great example of targeting specific behaviours with a targeted programme.

When we think about loyalty we need to make sure that this isn't limited to an always on points programme. There are many different ways of engaging customers, creating repeat custom and recognising changes in behaviour.