This month’s hot topic is mobile loyalty. Pull out your wallet and you probably have a hand-full of various punchcards. Whether it's a "buy 10 meals get 1 free card" from your favorite greasy spoon or a "purchase 5 vitamins get 20% off" at a national retailer like Whole Foods, you likely participate in some sort of loyalty or rewards program. However, the punch card is old school; it's analog, and untrackable. Enter smartphones to save the day. As people overwhelmingly continue to buy smart phones en masse, technology in them will allow retailers to learn more about their customers and provide the platform for a new and improved interactive rewards program. Enter the new school rewards program: mobile loyalty.
What is it?
Essentially mobile loyalty is a new way for retailers to provide added value for consumers. Whether it is for daily purchases such as groceries and prescriptions or occasional purchases like movie tickets or electronics, consumers will take advantage of rewards programs if given the chance. Currently, there are a number of location-based services that moonlight as mobile loyalty programs but the reward system is flawed, and in some cases (Foursquare) can be exclusive. The problem with location-based services as rewards programs is the reward is secondary to the function of the service; you check in to share location with friends, not necessarily to try and win the mayorship and its special.
Functioning like many credit cards' rewards programs, mobile loyalty allows customers to earn rewards on their terms. For example, say a customer is a regular at Best Buy; depending on how the program worked, they could check-in (or auto check-in) every time they visited the store and choose to either redeem a few check-ins for gift certificates or save them up for a discount on TV currently on special.
Why use it?
Given that people have a propensity to join and use reward programs that are relevant to them, extending customers another way to use their loyalty program (and thus become a repeat customer) just makes sense. Smartphones are fast becoming our digital wallets; mobile ticketing is exploding, mobile transactions are just getting started, and Apple's hiring of a NFC (Near Field Communications) expert suggests that micro-transactions between smartphones is a coming reality.
Already there is plenty of demand for mobile loyalty programs. A recent study by eMarketer found that 31% of consumers believe loyalty account access via mobile phone would improve their shopping experience. It's a no brainer for consumers to adopt a digital alternative; instead of having to keep track of numerous loyalty cards for each retailer, they could simply whip out their phone and have access to all the programs they participate in. Some progressive retailers, such as Tasti D-Lite, have even figured out ways to incentivize their customers to share their check-ins via social media.
Services to keep an eye on
Shopkick is currently receiving a lot of attention for its interesting way of rewarding customers. Shopkick is unique in that it rewards customers simply for walking into stores. Shopkick also conveniently allows users to check in automatically, using geofencing to ensure check-ins are accurate. In return for checking in, users are granted kickbucks which can be redeemed for giftcards or merchandise. Currently a number of retailers are testing the service; Best Buy, American Eagle, and Macy's are among the large scale players involved.
Analagous to the reward system of Shopkick, Causeworld is a mobile loyalty app that promotes social good among its users. Instead of receiving points that can be redeemed for merchandise, Causeworld users receive karmas for check-ins that can be donated to real life causes.
Both CardStar and Keyring are competing to become the digital hub for all loyalty programs. These services allow you to ditch the cards in your wallet and save your grocery, drug store, gym, whatever cards right to your phone. Easy access to loyalty accounts and not having to keep track of cards anymore promises to be a big win for consumers.