Mobile and Loyalty Programs - The Hyper Digital Age: Accelerating customer bonds with Mobile at the centre

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Thanks to the fast-paced growth of connected devices such as smartphones and tablets, brands have never before had so much data available to define an individual customer's feelings, needs and emotions. By capturing this behavioural data, brands can build useful intelligence. For loyalty programs, the opportunity is in making truly contextually relevant approaches, driving real value to customers.

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Mobile and Loyalty Programs - The Hyper Digital Age: Accelerating customer bonds with Mobile at the centre

  1. 1.   Mobile and Loyalty Programs The Hyper Digital Age: Accelerating customer bonds with Mobile at the centreCopyright © 2013 BrandEmotivity  
  2. 2.   Introduction Mobile phones and tablets are the only truly personal devices - always present, always connected. As the hub of an increasing number of connected devices (everything from wearable activity trackers to cars to cows), they are the key driving force towards a world of complete connectivity. These connected devices continuously generate a stream of data – at the heart of which sits mobile phones and tablets. Never before have companies had so much data available to define an individual customers feelings, needs and emotions. By capturing this behavioural data, brands can build useful intelligence. For loyalty programs, the opportunity is in making truly contextually relevant approaches, driving real value to customers. The Hyper Digital Age What allows us to understand consumers’ context is that today’s smartphones are much more complex in terms of technology than only a few years ago. Most smartphones sold today are fitted with several sophisticated sensors (e.g. GPS, gyroscope, accelerometer). They measure everything from location and movement, to acceleration, speed and angles – constantly generating data. Essentially, they can be used to figure out what context consumers are in, and then send the data up to the cloud. Furthermore, numbers from Cisco’s report on the “Internet of Things” show that connected devices grow exponentially. This growth is largely driven by sales in smartphones and tablets, but also by trends such as wearable technology/activity trackers and connected cars. In 2005, there were around 500 million connected devices globally, or 0.08 per person. Today there are approximately 13 billion devices, or almost 2 per person. By 2020, Cisco predicts there will be 50 billion connected devices. With an estimated total population of 7.6 billion, that equates to more than 6 devices per person. By combining these increasingly sophisticated phones and tablets with the strong growth of other connected devices, we can begin to understand the amount of data this is generating. According to Ericsson’s Traffic & Market Report 2012, mobile data traffic is expected to grow from 1,100 monthly Petabytes (1 million gigabytes) to 8,100 monthly Petabytes in the next five years. We call it the Hyper Digital Age – where Data, Innovation and Connected Services make brands win.Accelerating customer bonds with Mobile at the centre 2 of 11 Copyright © 2013 BrandEmotivity
  3. 3.   The problem today As the hyper digital age inevitably evolves, brands must understand the importance of mobile and mobile data. Numbers show that so far, many are failing to do so. 1. Less than half of respondents in the Acxiom Loyalty 360 survey in the U.S. from March 2012 have a mobile strategy in place for their loyalty program. Only 33% are planning to use this channel in the near future. An additional 11% are not planning to focus on mobile at all. 2. Brands are also failing to harvest their share of data from the increasingly vast stream of valuable data. Experian’s Global Data Quality Research report from 2012 surveyed 300 U.K. organisations, and found that 40% of U.K. companies and 38% of U.S companies currently fail to collect any mobile data at all. 3. Those brands that do collect data are not capitalising on the opportunity. Today, brands collect data from their customer’s loyalty cards with the aim of understanding their identity, habits and behaviour. The problem is that brands are not utilising this data to understand consumer’s contextual behaviour. The result is brands that simply “goes mobile” by moving their loyalty cards into a loyalty app. The Hyper Digital Age allows for a different approach to loyalty marketing The graph below shows how pervasive data from connected devices will substantially change loyalty programs. Today, brands collect data on their loyalty program members from various channels (POS, web, social media, mobile), but the type of data essentially remains the same. Naturally, it is difficult for brands to analyse and leverage the data in an innovative way. Data Data ta Da Loyalty Data cards Da ta Data Data Today Hyper Digital AgeAccelerating customer bonds with Mobile at the centre 3 of 11 Copyright © 2013 BrandEmotivity
  4. 4.   So how can brands leverage mobile and pervasive data to most effectively engage customers at the right times and places? By understanding the context. Only with mobile can brands deliver truly relevant experiences based on the real-time context of each individual customer. By applying sophisticated analytics to a breadth of data sources, brands are able to build complex behavioural and demographic profiles of loyal customers to ensure the right message goes to the right person at the time it matters most. Accelerating the three pillars of loyalty There are three main pillars on which brands can build their loyalty program - each pillar representing a way of bonding with the customers.   The financial pillar gives a value-based benefit for continuing loyalty. The structural pillar offers an improved service, and the emotional pillar creates brand affinity through brand behaviour, communication and relationships.   Those programs that combine all three bonds are most powerful and better able to cement emotional loyalty with customers. So with a mobile centric approach, how can brands gain an understanding of context and accelerate their loyalty programs across the three pillars? The Financial Pillar There are clear signs of customers wanting to access coupons and vouchers on their mobile devices. Juniper Research recently stated in a report that more than 500m people across the world will use mobile coupons in 2013, an increase of 30%. The popularity of mobile vouchers is also evidenced by the growth of Apple’s new Passbook app. Online ticketing business, Eventbrite, said that over 20,000 tickets had been sold through Passbook in the first week. According to senior VP Julie Bornstein in Sephora, the French cosmetics brand, more than 75,000 of their loyalty program members set up a card in Passbook in the first five days. Mobile loyalty ecosystem What if we could eliminate loyalty cards altogether, and provide customers with a complete mobile solution? Brands that are integrating mobile into their loyalty programs today are already doing this by simply moving the conventional loyalty card into a smartphone application. Developing a loyalty app, however, is only half the job. It is important also, that the mobile data can be consolidated with data from other channels, to get an understanding of consumers’ contextual behaviour.Accelerating customer bonds with Mobile at the centre 4 of 11 Copyright © 2013 BrandEmotivity
  5. 5.   Grocery retailer Tesco in the U.K. has successfully integrated mobile into their loyalty program, helping them to complete the picture of their loyal customers. They’ve created a mobile-centric ecosystem that revolves around their CRM programme, which enables them to collect behavioural data from the three main channels - mobile, in-store and online. Tesco can then analyse an extensive set of data on each Tesco Clubcard member across all the channels. By leveraging these analytics, Tesco can accelerate the transactional aspect of their loyalty program. Even though in the early stages, Apple Passbook is another mobile platform that lets brands experiment with mobile and data to accelerate the transactional aspect of their loyalty programs. The key concept behind Apple Passbook is that brands can address many of the current problems of mobile vouchering and payments to provide a better, frictionless experience for their customers. With the information consolidated in a single app, it creates an opportunity for brands to understand consumer’s contextual behaviour. For example, if a customer has a ticket from Eventbrite for an outdoor concert, brands can use Passbook to send event reminders, along with relevant offers: “The forecast says rain tonight, don’t forget your wellies! Need a new pair? We’re offering 10% off for anyone going to the gig.”Accelerating customer bonds with Mobile at the centre 5 of 11 Copyright © 2013 BrandEmotivity
  6. 6.   Ultra relevant offers at the right time and place A recent survey by YouGov together with Wi-Fi supplier Wicom confirmed the importance of vouchers for shoppers in the U.K. According to the survey, more than 50% of shoppers in the age group 18-34 would be more likely to make a purchase right then and there if the store sent them a discount voucher to their phone when they entered the store. Clearly, such an approach is only possible using mobile. However, when combined with ubiquitous customer knowledge and an understanding of context, it opens up a range of possibilities for brands to engage with their loyal customers. What if we knew where a customer is coming from, where he’s going, what his preferences are, together with his purchase history? Combined with other contextual information such as weather, location and time, brands can tailor offers they already know has a high redeem rate with customers that are in-store, to become ultra-relevant. Here’s a hypothetical example of how this could work: Consider a loyal customer walking into a store – let’s call him John. We know from his purchase history that he recently bought his first DSLR camera. We also know that he just came from a competitor, which we know is running a campaign on regular 50mm lenses. What only we know, however, is that John is going on a safari to the Serengeti in a couple of months. What he really needs is a lens with good zoom, and so we can tailor the offer accordingly: “Buy a 300mm zoom lens and get a 16GB memory card for free. The perfect lens for wildlife photography!” The Structural Pillar Timely communication With mobile, brands can easily provide their customers with updated information. This has many uses, for example in the travel industry where customers always need the latest information on arrivals, departures and delays. Customers flying with British Airways can opt in to a SMS service to receive alerts to their phone if a flight they are due to catch is delayed or cancelled, meaning less wasted time spent at the airport. However, this can be taken a step further. For example, a retailer that sends text messages to their customers when their items are ready for pick-up can tailor the alerts/reminders to individual customers based on contextual information. Location-based communication is already common, but it does not take the context into consideration. For example, a business professional would appreciate getting the reminder in the morning on the way to work, as opposed to 3.30 in the afternoon, which would be suitable for a student.Accelerating customer bonds with Mobile at the centre 6 of 11 Copyright © 2013 BrandEmotivity
  7. 7.   Listen, respond and change in real-time The shift towards an era with pervasive, omnipotent knowledge of customer behaviour provides brands with the means to more accurately respond to changes. We are already seeing examples of brands that are continuously optimising their approach. Online retailer Amazon’s strategy is to a large extent rooted in continuous evolution, which is why they focus so much on behavioural targeting and recommendations algorithms. American car-sharing company Zipcar is a great example of a company whose approach is completely focused on mobile and data. In July 2012, at the time CMO Rob Weisberg said: “People talk about Big Data, but for us, data us the business.” Today, Zipcar’s mobile application allows consumers to find, reserve, unlock, and end car reservations. However, it’s easy to imagine how they can leverage mobile to further improve their customer service. Already, Zipcar uses GPS data to predict if a customer might be late in returning their car, so that they can prepare for the next person who’s waiting for the car. In the near future, the Zipcar app might feature an assistant that will allow drivers to check the fuel level of a car prior to booking it (which is already available for owners of the electric car Nissan Leaf). Today, Zipcar members use RFID tags for identification. Smartphone technology can enable customers to be recognized by their devices, for example using NFC – another way mobile can work to improve the service. Ubiquitous customer knowledge can allow brands to excel in their customer care in other ways as well. What if brands knew the context even before customers contact the brand? Retailers are developing new kinds of algorithmic customer support that will answer their questions differently depending on their context. Cloud-computing company Rackspace, for example, is developing ways to figure out that the customer isn’t happy before he even picks up the phone. The Emotional Pillar Social amplification Through brand behaviours, communication and relationships, we can create emotional loyalty within a particular customer community. According to Nielsen and NM Incite’s report State of the Media: The Social Media Report 2012, consumers in the U.S. now spend 30% of their total time online visiting social networks on mobile. Mobile and social is tightly interlinked, and offers a powerful combination for loyalty marketers. Dutch Airline KLM launched in November 2010 a campaign that aimed to connect with customers on an emotional level by understanding the individual customer’s contexts. KLM realised its passengers were fighting boredom while waiting in the airport, which sparked the idea – to surprise them with something personal.Accelerating customer bonds with Mobile at the centre 7 of 11 Copyright © 2013 BrandEmotivity
  8. 8.   They targeted people who had used their phones or tablets to check in to their KLM flight via Foursquare. KLM then leveraged data from their social profiles (e.g. name, photograph etc.) to understand what the customers were about, and prepared personalised surprises for them. By combining the social media information with the corresponding flight customers were due to take, KLM staff was able to hunt them down and deliver the gifts. This example shows how mobile can use social to emotionally connect with customers. A mobile check-in forms the basis of the campaign, with social working as an enabler, providing valuable data about the customers. In addition, social works to amplify and extend the reach of the campaign. Advantages of the different approach The main advantage of the hyper digital approach is a true understanding of consumer’s context. Brands can ultimately go from loyalty points transactions to brand ideal, and cement stronger, emotional relationships with their customers. Reduced friction In the transactional aspect of the loyalty program, a mobile-centric approach can reduce friction by allowing for more frequent use. Customers are able to collect more points, which helps brands build stronger customer relationships.   Higher redeem rates Mobile’s ability to deliver ultra-relevant and timely messages to specific customers makes for a more efficient communication system. The result is significantly higher redeem rates on offers and vouchers. Truly helpful brands With more efficient and relevant communication, brands are able to be truly helpful to their loyal customer base. Customers who feel their brand really knows them typically cement stronger relationships with the brand.Accelerating customer bonds with Mobile at the centre 8 of 11 Copyright © 2013 BrandEmotivity
  9. 9.   Amplification and recognition In addition to an amplified message via social platforms, customers can also use mobile/social to get social recognition, which can help build brand aspiration. Challenges in getting there Handling the data Undoubtedly the biggest challenge that organizations face is data handling and consolidation. A sophisticated loyalty program brings together vast amounts of data from POS, social media, mobile, and web. Initiatives that have historically been disparate and independent are suddenly required to work together. Catering for customers of all kinds As with all innovative solutions, consumer adoption is a challenge. For loyalty marketers, however, the real challenge is in catering for the different types of consumers and their adoption of technology. The Innovators, those tech-savvy customers with hundreds of apps on their smartphones and tablets, will have higher expectations (and generate much more data) than the Laggards, who might not even know what a smartphone is. Brands must differentiate and adapt both the data collection and the action approach, to ensure all customers are catered for with the same loyalty mechanisms. Upgrading the retail infrastructure can be costly In order to provide customers with a positive experience, they should be able to use and access the mobile solution whenever and wherever, meaning that brands must implement appropriate systems in-store that allows for scanning via two- dimensional barcode scanners. Although common place, such scanners are far from ubiquitous. Arguably this could hamper uptake if the user experience is broken.Accelerating customer bonds with Mobile at the centre 9 of 11 Copyright © 2013 BrandEmotivity
  10. 10.   What should you do next? Go beyond the mobile app With regards to rewarding loyal customers financially, the aim is typically to reduce friction in the interaction between customer and brand. But dont just move the loyalty card to a mobile app. Focus on collecting data from connected devices, and ensure that it is consolidated with data from other channels. Understanding the context is key. Start today With minimal set up cost, Apple Passbook offer brands a great way to get started with mobile loyalty solutions. Brands can leverage time and location-specific information to provide consumers with relevant offers, and there are also many different ways it can be used to enhance or deliver service. Examples include event reminders for ticket companies and push notifications reminding consumers to use their Passbook card when they enter the store. Capture the data Collect data! Even at the test and learn stage it is important to understand ‘the how’, ‘the when’ and ‘the where’, for example in relation to usage of Passbook passes. Once established, build the loyalty program around the data. This helps to bring a more complete customer picture, and tailor future communications to consumer preference. Dont forget social The vast amount of unstructured data in the social environment enables brands to create new links with their customers – perfect for connecting on an emotional level, as demonstrated by KLM.Accelerating customer bonds with Mobile at the centre 10 of 11 Copyright © 2013 BrandEmotivity
  11. 11.   About BrandEmotivity We are a mobile generation company, in a connected global world. Digital is ever more key to customer engagement, and mobile services and utilities are at the centre of brands value propositions. We help agencies and brands making sense of it all, thinking, acting and winning on the mobile battlefront. We are passionate about mobile and brands, and this passion is shared between our collaborators, partners and clients. Most importantly, we have fun doing what we do. For more information, visit www.brandemotivity.com Christian Linnestad Consultant – UK BrandEmotivity christian.linnestad@brandemotivity.comAccelerating customer bonds with Mobile at the centre 11 of 11 Copyright © 2013 BrandEmotivity

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