Learning to love the ‘mobile wallet’

Loyalty marketing has gone multichannel with mobile the key means of reaching customers, and mobile wallets set to be the next big thing.

Nectar

For decades, the word ‘loyalty’ in marketing has naturally been followed by the word ‘card’, and there are many brands still making this traditional form of customer relationship management (CRM) work. Costa Coffee Club has won successive Marketing Week Engage awards for CRM that primarily fuses plastic cards with personalised email.

But today the proliferation of media channels means brands have more options for making their loyalty schemes available to consumers in the places that are most convenient for them.

At loyalty brand Nectar, marketing director James Frost says: “We have seen the user base of our Nectar mobile app grow by 70 per cent in the past year, 40 per cent of the statements we send out are electronic and we believe loyalty is going to be critical to companies that want to win the mobile wallet war.”

He says the brand’s aim is to create an experience for the customer whereby “they can live out the Nectar journey end to end on a mobile device”. The main features involved in achieving this include paperless coupons and location-based targeting.

In the case of the former, a coupon is sent via the Nectar mobile app and the customer is prompted to accept it; having done so they will automatically have it applied to the purchase the next time they use their Nectar membership when shopping. Nectar’s location-based communications, meanwhile, work by reminding consumers of live offers in nearby stores that are Nectar partners.

In both cases the customer benefits from being freed from the constraints of a physical voucher, while Nectar benefits from being able to use personalised ‘push’ marketing that, in theory at least, is seen as helpful by the recipient.

Similarly, Game’s new director of insight and loyalty Fred Prego recently told Marketing Week (MW 13 June) that the video game retailer’s app is now fundamental to its reward programme, for example offering a store locator function and the recently launched ‘accolades’ initiative. Accolades are awarded for carrying out actions such as trading in a game for the first time.

But that’s not all the app does. Prego adds: “Not only does it add tools for the customer, it also helps us gain an insight into each customer and how they are using the app, through which we are listening, monitoring and talking to them, and launching new functionalities they need and have been asking us for.”

Mobile devices are now crucial to loyalty, according to Mark Stevenson, managing director of mobile network O2’s Priority loyalty scheme. He calls them “the remote control to our customers’ lives, which allows us to have two-way conversations encouraging engagement and building loyalty with an ongoing interaction”.

O2
Mobiel devices are essential to O2’s Priority loyalty scheme

As with Nectar, one of the O2 Priority scheme’s main selling points is location-specific offers, or Priority Moments, which the brand has developed with strategic agency Cherry London. They include exclusive deals on retail vouchers, cinema tickets and music gigs.

Stevenson explains: “We knew when we launched Priority Moments it was ‘go big or go home’ – O2 had to offer its customers something they couldn’t get anywhere else. At the heart of Priority Moments is location-based technology and valuable customer insights, as well as the sequencing of relevant experiences and rewards, which enable us to reach and excite over 23 million customers, wherever they may be.”

Mobile, then, is clearly the key way many brands’ loyalty programmes are evolving. But it is not the only one. The full list of channels that O2 Priority uses to communicate is long and varied, according to Stevenson. As well as mobile communication via the app, instant messaging and text messages, Priority also connects with consumers through email, 460 high street retail stores, contact centres with around 3,500 staff and brand experiences such as O2 ‘angels’, who give out free lunches from Upper Crust kiosks at train stations.

What’s more, brands are now realising that people will inevitably take to social media to comment on their experiences of giving companies their custom and that being able to respond helpfully can increase loyalty.

Health retailer Holland & Barrett, as part of its current brand campaign with agency RKCR/Y&R,  recently began offering consumers 20 per cent off purchases if staff on social media are unable to give them a satisfactory answer to an enquiry. Similarly, Game is enthusiastically adopting social media at a local level, using individual store Twitter accounts linked to its loyalty app to promote events.

Hotel group Accor, which owns the Sofitel, Novotel and Ibis brands, uses Facebook as its main social media channel. Guests can use it to check in at a hotel and then earn additional loyalty points, or to ‘tag’ hotels in their Facebook updates and recommend them to their friends. Accor senior vice-president for loyalty Isabelle Birem adds that customers can also use social media to contact the company’s multi-language customer care teams.

“It is important for a loyalty scheme to be available across multiple channels and we must follow that trend but, more than anything, we must allow the customer to choose the channel they want to use,” she says.

But even with the extra convenience loyalty programmes can now provide, as consumers become members of more and more schemes they increasingly need ways to prioritise the ones that are most valuable to them. Points.com and PointsHound are both examples of websites that have been set up to help with this problem, which is becoming more apparent as competition for consumers’ attention grows (see box, below).

Hotel
PointsHound negotiates with loyalty programmes and companies selling hotel rooms to offer deals

According to founder Chris Boyd, hotel booking site PointsHound negotiates both with loyalty programmes and companies selling hotel room inventory to offer deals; but it is the ability to earn more loyalty points than usual on their favoured scheme that is PointsHound’s main attraction.

Boyd explains: “The selling rate is going to be the same you see on any other online travel agent because we compete based on the points offer we’re passing through.” 

If the site has negotiated a deep discount on a room price it will still mark this up to the general market rate and instead pass the discount on to consumers in the form of loyalty points.

Points.com has been around since 2000, but PointsHound was only launched at the end of 2012 and is seeing faster than expected growth in its home US market and internationally, Boyd claims.

The most crucial change in the evolution of loyalty marketing has barely begun to take effect, though. Again it relates to mobile, and more specifically the growth of mobile payment services. ‘Mobile wallets’ developed by banks and credit card providers, as well as internet players such as Google and PayPal, are shifting the point-of-sale from the checkout to the mobile screen while offering that space as a new point of engagement for brands and their loyalty schemes.

As Nectar’s Frost notes, “If you make a mobile wallet just an easier way to pay, that’s fine and some people will want it, but we believe bringing loyalty and offers into a mobile wallet will accelerate the journey. A slick experience would be: as you pay, loyalty points are awarded and offers for your next shop appear in your wallet.”

The journey is just starting, but mobile is almost certainly its next destination. 

Staying in charge

As loyalty programmes spread more widely across new media channels, convenience increases but so does the competition for attention from other schemes doing the same.

With this in mind sites such as Points.com and PointsHound have sprung up to help consumers keep on top of the points they are collecting. Points.com lets people exchange points from different schemes and redeem them for rewards such as vouchers. PointsHound allows consumers to book exclusive hotel deals while specifying which loyalty scheme to use.

Points.com chief executive Rob MacLean says that as the average number of memberships per household has increased, the level of engagement with each has dropped. Citing 2013 data by the Colloquy Loyalty Census, he says UK loyalty members fail to use around £351m in points annually, while in the US a third of all points issued are unredeemed.

MacLean calls Points.com a ‘loyalty wallet’, designed to help consumers manage the “cluttered and somewhat confusing environment” the market has become. PointsHound has a different approach to doing the same thing says founder Chris Boyd.

“We search hotel inventory sources for live price availability. What’s different about us is that we also offer a generous amount of frequent flyer miles for booking a hotel through us. Today, we are live with 10 loyalty programmes – mostly airline and travel, but we are starting to partner with non-travel  programmes, Best Buy being the first.”

Boyd claims that the brands that run loyalty schemes see the value in partnering with platforms like PointsHound and Points.com – even though they circumvent the brand owner to some extent – because it enables them to sell more of their points currency.

Not all brands agree. Hotel group Accor’s senior vice-president of loyalty Isabelle Birem says when a brand allows its points to be traded, “the spirit of loyalty fades as you don’t keep your customers within your ecosystem”.

Sponsored viewpoint

Red Letter Days

Bill Alexander
Managing director 
Red Letter Days

Multichannel engagement is absolutely critical to loyalty, but the channels that you pick are quite different if you’re a company looking to create loyalty among employees, compared with a brand rewarding customers.

For employees, we find social media, mobile and the web usually don’t work. The best way of engaging with staff is something physical that gets the manager in front of a member of staff, or through email if they’re across a wide number of locations. In person is the most powerful way, because recognition and engagement can be as simple as a thank you in front of peers.

The consumer side is totally different. We did a campaign with Galaxy chocolate at the start of 2012 where the purchaser had to go to a site, enter a code and be told if they’d won something. In that case, it’s about making sure that it’s instant. Whether it’s on a mobile device or a computer, when they enter their code and win a prize it is presented to them straight away and they can book it.

It’s about ease of use. Consumers don’t want to have to jump through hoops to get their rewards; they want to interact via any device they choose,
and then social media comes in to back up the campaign and generate awareness. Technology is far more suited today to a customer loyalty campaign than an employee one.

Most companies know the best way to go. What we find when we’re talking to them is that they will latch on to a particular case study and say: “That’s what we need.” Galaxy, for example, knew exactly what it wanted to do. It runs these campaigns on a regular basis and what it was after was something without any manual intervention – whether the reward was cinema tickets, shopping vouchers or a trip to Paris, it all needed to be done electronically. Galaxy knew it wanted to talk to consumers through mobile, tablets and PCs and it knew it needed to deliver rewards quickly.

Conversely, Eurostar did a campaign to reward staff loyalty, which had to cross Brussels, Lyon, Paris and London, where its staff are all based. It wanted the campaign to be very high-end, so we went out and found hotels and restaurants in all these cities, and packaged them up with brochures and certificates in a box. It had to feel like a concierge service so that when the employee redeemed it, we would look after them and give them a personal service, to ensure they got the hotel stay they wanted.

In terms of feedback, we will email everyone who buys a Red Letter Days experience the next day. We just ask them two questions, then get them to explain their reasons. That then helps for future campaigns. The journey doesn’t end with the person receiving the reward: you need to ask what they did with it and how they felt about it afterwards. You need to be able to see that the money you have invested has produced a return. Every case is different, but you have to be able to use every single channel and illustrate what works and what doesn’t.

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