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

Mobile and
Loyalty Programs

The Hyper Digital Age: Accelerating
customer bonds with Mobile at the centre

Copyright © 2013 BrandEmotivity

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
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.

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

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 Age


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.


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.”


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.


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.


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.


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.


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 don't 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.

Don't 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.


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.com


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

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