Mobile Loyalty Programs Create New Levels of Customer Engagement, Part 2

Filed in Mobile Engagement, Mobile Marketing by on August 25, 2016 0 Comments

In this post, part two to a post published earlier this month, I address some more common questions that I’ve been receiving about some of the biggest opportunities and challenges related to mobile loyalty programs. In my work with customers, I’ve become increasingly involved in developing mobile loyalty programs, and my responses offer some lessons I’ve learned about this exciting and fast-moving area of mobile. In part two here, I cover some of the challenges involved in mobile loyalty programs and spotlight some examples of brands that are using mobile loyalty programs successfully.


What are some of the biggest challenges in creating a mobile loyalty program?
Oversaturation. If a brand can get a consumer to engage in a loyalty program through an app, it can deliver a rich, compelling user experience. But that can be a big “if.” The slew of apps available today has resulted in a sea of retail, social media, news, game and entertainment icons battling for real estate on a consumer’s home screen.

Moreover, consider the typical consumption process for a mobile app. First, a brand must raise awareness about its app and entice a consumer to go through a discovery phase and learn more about the app. If the app piques a consumer’s interest, then the consumer has to go to the appropriate app store, find the app and install it. Next, the consumer must accept the user agreement, create a username and password, and select notification preferences. This is definitely not an easy, low-friction process. On top of all this there’s the question of how to engage customers before the app is installed or how to re-engage with users after they stop using the app. Finally, the disappointing truth about apps is that nearly one in four people stop using them after only one use, according to the firm Localytics.

And for a consumer who does use the app, how can a brand determine the best channels to engage that consumer? Email, text messaging, push notification, or social media, for example? Furthermore, for deeper engagement, how can a brand convince a consumer of the value of agreeing to share their usage data so the brand can personalize rewards and offers? These challenges can pose serious obstacles to a mobile loyalty program, and they are ones that brands must carefully devise strategies for.

What are examples of brands that are successful in using mobile to build brand loyalty?
Starbucks has one of the best mobile loyalty programs in terms of retention, growth and technology innovation. Starbucks first popularized using barcode scanners in its stores to track its customers’ visits and purchases with plastic cards, and then with smartphones. And its mobile payments platform was adopted well before mainstream advances in mobile payments, like Apple Pay or Square.

A recent upgrade to its app is the integration of the Mobile Order & Pay system with the Starbucks Rewards program, which is significant because members previously couldn’t redeem rewards when placing mobile orders. What’s more, the upgrade enables the app to show what’s “Now Playing” in the local store the customer is visiting and allows the customer to save songs heard in-store to Spotify. This improvement builds on a long collaboration that Starbucks has had with the popular music streaming service to improve its app experience.

Even more impressive is the program’s success. In the first quarter of this year, Starbucks had 12 million members in the U.S., and 24 percent of U.S. transactions occurred through the mobile app, according to MarketWatch. Moreover, an impressive $1.2 billion in customer funds had been loaded on plastic and mobile Starbucks cards, according to data from S&P Global Market Intelligence that was analyzed by the Wall Street Journal, a figure that is almost double the $621 million Starbucks had in 2014, according to Bloomberg and Fortune.

Another example of a brand that I think is successfully integrating mobile loyalty and one that I’m close to is Syniverse’s mobile engagement solution for Western Union. Syniverse has been helping enable Western Union to strengthen its customer loyalty program by using mobile to help drive more robust engagement with points redemption. Our solution provides Western Union with the capability to send reward redemption offers for opted-in customers to fulfill by simply replying to a text message. It also allows those customers to check their point balances and to redeem eligible rewards by simply texting a dedicated code. Prior to implementing this solution, Western Union program members needed to call a customer service specialist or go online to redeem their points. By providing balance notifications directly to a customer’s mobile device through text messages, and sending reply-to-redeem notifications, customers can now take advantage of a more seamless and hassle-free point redemption system that allows them to avoid making a call or going online to exchange their loyalty points.

What does the near-term outlook look like for mobile loyalty programs?
Based on the latest research and the increased pace I’ve seen in my work, mobile loyalty programs are set to soar in the next few years. According to a study published by Juniper Research in May, more than 3 billion loyalty cards are predicted to work as mobile-only or be integrated into mobile apps by 2020, which is more than double the 1.4 billion mobile-capable cards in use in 2015. In particular, the research argued that the improved targeting and personalization made possible by digital coupons is leading to greater activity rates, which addresses a shortcoming of many current mobile loyalty programs in which a lack of relevant offers has resulted in a downturn in usage.

Personally, I think we’re on the verge of a new age of mobile loyalty programs and are just beginning to make full use of all their capabilities. In addition to the integration of mobile loyalty programs with mobile payment systems, a number of other areas offer exciting possibilities for driving mobile loyalty use. These include, just to name a few, integration with social media channels, use of games and contests, and collection of individual customers’ data (with their consent) to provide much more personalized offerings.

Professor Oleg Urminsky of the University of Chicago summed this up eloquently when he commented recently that a strategy built on a mobile app to reward loyalty uniquely offers “a loyalty platform rather than just an isolated loyalty program.” I’m looking forward to seeing how we improve mobile loyalty programs in the future.




About the Author ()

Lisa Paccione is responsible for leading the sales of Syniverse’s full portfolio of mobile marketing, engagement and identity solutions for enterprises across the Americas market. Previously, as Vice President, Sales, Global Sales Development, she managed global sales of Syniverse’s roaming, messaging and real-time intelligence solutions for the enterprise market. Lisa has more than 20 years of experience in technology sales and served in a number of senior sales positions prior to joining Syniverse in 2009. Previously, for over six years, she led sales at VeriSign in positions that included Director of Sales, Strategic Account Director and Director of Enterprise Sales for Messaging and Mobile Media. Earlier, she was Regional Vice President of Sales for a startup named exault (later acquired by VeriSign), and prior to that served in account manager positions at Netrex Secure Solutions (later acquired by IBM) and Ameritech (now AT&T). Lisa holds a Bachelor of Science in business administration and management from Providence College.

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