Updating loyalty schemes in era of mobile commerce

20 NOV 2014

It’s a familiar scene – you are in the supermarket, department store or food hall and you are about to pay for goods; at this point, just before you leave the building, you present a loyalty card and collect your points. You also, by associating the card with that day’s shopping, give the retailer a little more insight into your buying patterns and lifestyle.

Your points might – at some stage – turn into cash or vouchers to use at the check-out the next time. They might generate offers in the post – or simply list them on the end of your till receipt as you leave.

What this system doesn’t do is take any advantage of the fact that you, the shopper, were – up until a few moments ago – in the store actually looking for things to buy. The retailer, in fact, starts ‘making eyes at you’ just when you are walking away.

Of course the offers customers receive or the points collected are designed to entice them back again; to encourage repeat custom. But retailers still adopting this approach are missing a trick – in particular, they are missing a mobile commerce trick.

Retailers using card-based schemes – and even those who are early adopters of a branded app – are only scratching at the surface of what the mobile can do to maximise customer loyalty.  Mobiles – and smartphones in particular – have the power to change consumer behaviour.

For example, many consumers today ‘search’ for advertising on their phone. Apps like VoucherCloud are, in effect, highly organised, searchable, retail advertising that uses geo-location to help shoppers look for bargains. If shoppers are out for the day and are about to stop for lunch, one of the voucher apps will quickly tell you which nearby restaurants have a two-for-one deal, or a free glass of wine. People use these apps to search for deals and then take advantage of them.

By integrating store loyalty schemes into app-based mobile commerce initiatives, retailers can take advantage of this changing pattern of consumer behaviour and start to deliver loyalty and reward offers that combine their big data knowledge of that customer and their shopping habits, with their actual presence and arrival in the store.

It’s obvious really; the retailers we use on a regular basis know far more about us, and the things we like, than any voucher-based app can ever hope to know. The integration of that information into mobile-based loyalty schemes provides retailers with a powerful two-way dialogue that can maximise the customer’s physical presence in the store while they are still shopping – and not just as they are about to leave.

Second bite
Imagine this scenario: You arrive at your usual supermarket and immediately open the store’s app and check-in. This could involve scanning a code using the app, by logging onto the in-store Wi-Fi, by clicking on the ‘check-in’ icon within the app or simply through beacon and network presence technology.

At this stage a consumer could be sent a summary of their loyalty points – for example, what they are worth in cash terms if used to pay for all or part of that day’s shopping.  But better than that, they could also be presented with unique offers based on previous purchases. Buy two bottles of Chianti and get one more at half price, for example.  Stores can even use that history to cross-sell and promote other products that work well with past purchases – such as 25 per cent off Manchego cheese when buying a favourite bottle of Rioja.

With this approach, the store gets to ‘make eyes at you’ as you arrive – while your shopping cart is still empty and waiting to be filled. Retailers get to influence behaviour and purchases while a consumer is still in the shop, and they still get the chance to thank and reward them when they pay to encourage a return visit.

Of course, a fully integrated loyalty scheme within a branded store app would also include a pay-by-mobile element. This really completes the loop – check-in on your mobile when you arrive at the store, and check out using the mobile payment feature within the app as you leave.

For the stores, this approach drives up customer engagement, encourages sales and maximises the investment in their loyalty schemes. For shoppers, it means never missing out on an offer, it means always collecting the points they are due, and it could eventually mean an end to a wallet or purse bulging with loyalty and membership cards.

So for stores, the best way to put the customer first – is actually to put loyalty first. And the best way to do that is to use their smartphone.

by Bede Feltham, chief product development officer, Ensygnia.

The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members.