Why it's time for Loyalty 2.0

Mobile is proving highly disruptive in the retail sector. One area that frequently gets overlooked is what this implies for Loyalty Programmes.

These thoughts first appeared on Adobe’s on 25th February


There is continuing debate as to whether Technology changes human needs. But what is clear is how fundamentally it impacts our attitudes, behaviours, expectations and how we interact with the world around us. Mobile is a particularly powerful example.


By removing the friction of time and place, smartphones give us an unprecedented level of control. Having perfect information and social connectivity at our fingertips 24/7 represents an enormous shift in the balance of power; and inevitably, this is altering the nature of the relationship we have with brands. Not only are we increasingly demanding in terms of product and service quality, we are looking for new kinds of utility and value. In particular, we are gravitating towards brands that help us get more out of our resources; especially resources like money, attention and location that are generally scarce and therefore highly prized.


Which brings us to the topic of Loyalty Schemes.


Consumer appetite for such schemes is high: two-thirds of UK shoppers now belong to three or more programmes. This is hardly surprising: who doesn’t want something for (apparently) nothing, especially in this economy? And companies are keen to meet the demand, recognising that Loyalty Schemes can help maximise share-of-wallet and, just as importantly, provide insight into how customers shop across channels.


Most brands would say that their programme is commercially effective. So why should they re-invent it?


Sponge’s view is that the more Loyalty Schemes proliferate, the more shoppers see them as simply ‘entitlements’. This is partly due to familiarity, and partly because the standard Collector model has become commoditised: I receive one asset (points) in exchange for another (money). There’s a predictability and a proportionality about this that feels flat, uninvolving and out of step with the dynamic individuality of people’s digital behaviours.


Smartphones are driving much of that behaviour; and it follows that Loyalty Schemes should become mobile-first if they are to satisfy shoppers’ radically heightened expectations. In other words, brands need to fight fire with fire.


For maximum effect, we believe programmes should be re-invented around three key principles, all focused on delivering Customer Empowerment:


Recognise shoppers prior to purchase


For marketers, mobile has two exceptional advantages. First, a mobile number is a highly accurate and durable identifier: unlike an email address, there’s every probability that we’ll keep the number we get in our early teens for life. Second, it makes location an exploitable part of the mix. Combined, these two things create the opportunity for personalised communication based on geography; for instance, when someone is close to or has just entered a store.


Of course, not every shopper will be prepared to give you access to such information. But many will (perhaps especially existing loyalists), so long as you get the value exchange right and demonstrably use the data to the customer’s advantage. IPSOS Mori and The Logic Group have found that 42% of us want to receive offers whilst in the act of shopping, not afterwards. If you can satisfy this need, you’ll unlock a rich stream of high quality data that can be put to immediate use.


Provide contextually relevant content


Being treated as an individual is inherently empowering; but the magic comes when personalisation is used to deliver an enhanced level of service.


Having secured permission to access a customer via their mobile number, we can begin to accumulate insight and intelligence around that number: their purchasing history, their loyalty status, the frequency of their social activity, and so on. By combining that data with other contextual factors – stock availability, current offers, new ranges, or even the weather – brands can deliver content of optimum value to individual shoppers. And mobile allows that communication to happen at exactly the right time and place.


Create entertaining experiences


‘Surprise and delight’ is a phrase that’s become cheapened by over-use. But it’s still one of the surest ways of engendering the sort of passionate loyalty to which all brands should aspire.


Another of Mobile’s great strengths is its ability to connect the physical and the digital. It’s therefore the ideal medium to amplify the sensory benefits of shopping, especially on the High Street. By allowing people to discover, participate in and share content, Mobile can help create entertaining experiences that will leave shoppers feeling privileged, empowered and significantly more predisposed towards loyalty.



The above isn’t simply crystal ball-gazing. Whilst we’re not aware of any brand that’s executing brilliantly across all three of these principles, a number (especially in the USA) are making significant headway. Manifesting the zeal of the true convert, BestBuy now encourages customers to scan codes to receive discounts, special warranties and deals on ‘open box’ inventory – all delivered at the local store level. Then there’s the Neiman Marcus Service app, which allows shoppers to build 1:1 relationships with their favourite sales associate via email, IM and face-to-face; a commitment to Empowerment which has recently been extended by offering members of their InCircle loyalty scheme the chance to choose the days on which they’d like to receive double points.


Attracting and retaining profitably loyalty customers is fundamental to any brand’s success, and Loyalty Schemes have a clear and significant role to play. But like every other marketing tool, they need to evolve; particularly when people’s expectations are changing so fast. By re-inventing their programmes around mobile-first principles, and by unlocking the channel’s unique ability to empower customers, there is significant opportunity for brands to maximise differentiation, cut-through and response. 

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