Apps trump cards

by / Monday, 06 July 2015 / Published in loyalty

AppsRETAILERS are well aware of the benefits of loyalty cards. They have become a rich source of information about how consumers shop. But as with most established sectors, this makes them ripe for digital innovation, and even disruption. Today, restaurants, hotels, airlines, retail stores, banks and cellphone network operators use loyalty programmes to reward clients, employees and business partners with discounts, free vouchers and services like roadside and legal assistance. Or they award points that can be redeemed for goods and services. Loyalty programmes can improve customer retention, even though their benefits apply more to companies than to consumers. The shift to mobile platforms for the management of loyalty programmes is one of the biggest trends in the sector. Another is the use of big data analysis to better understand customers and their shopping trends, and so improve customer service and business, says Shadab Rahil, MD of Paradigm Group. There are about 100 loyalty programmes in SA, and as many as 10m people belong to one or more of these, according to a study by Value+Nettwork, released last year. The study revealed that members of the average SA household belong to 10 loyalty programmes and customer clubs, compared with 18 or more in developed markets. With rapidly developing technology, could it be possible to have one platform that will integrate a number of different — and even competing — loyalty programmes? It is “technically” possible, says Paradigm MD Nolan Daniel. But because loyalty programmes are seen as a significant investment by retailers to improve their relationships with consumers, most would not be willing to share their branding or customer data with competitors through a shared app. Paradigm has launched a mobile loyalty platform which lets retailers begin to move their loyalty programmes from a card-based system to a mobile app. It will save retailers the cost of producing and distributing physical cards and also improves a company’s direct communications with consumers. Users would benefit by having fewer physical cards in their wallets and would be able to access all their loyalty programmes on a single mobile device, says Rahil. Some retailers have started sending vouchers to consumers via SMS, making it convenient for clients to redeem their accumulated points. Deon Olivier, founder and CEO of OnePoint, says consumers are overloaded with loyalty programmes and are becoming reluctant to take on more because of the complexity and hassle associated with getting to grips with what they promise. OnePoint, owned by Value+ Nettwork, has developed a platform which consolidates an individual’s membership of loyalty programmes, customer clubs and gift cards into an easy-to-use, Web-based platform. The platform has yet to be commercially launched. OnePoint’s app provides a more hassle-free interaction for users. Registered OnePoint members will be able to redeem loyalty points and other related vouchers, swap points between programmes, join additional programmes and clubs, claim missing points, manage lost cards and update contact details for all their loyalty programme and club relationships. Mobile technology and technologies such as geofencing and microlocation — which show where a user is — will change the way loyalty programmes deliver benefits to retailers and customers. With geofencing technology, retailers can notify customers of a special taking place in a store even if they are up to 20km away. Daniel says near-field communications — technology that is used to make mobile payments — could also be tied in to loyalty programmes in future. Fast-developing technology makes it possible to really shorten the distance in the relationship between companies and their consumers. These developments demonstrate that even if cards are replaced by apps, loyalty programmes are here to stay. Electronic payment group PayU says loyalty payments are holding steady ground when it comes to chosen methods of purchasing items over the Internet. PayU CEO Mustapha Zaouini says consumers now earn and spend their loyalty points at a consistent rate. Zaouini believes that well-designed loyalty reward programmes will open up avenues through which consumers can spend their points and introduce them to new retailers, markets and solutions that previously would have not been on their radar.

Reference From: Financial Mail