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An Appetite for Loyalty

As customer loyalty becomes increasingly important, capturing it becomes more difficult.

An appetite for loyalty

When it comes to growing a brand, retailers often confuse rewarding customers with loftier ambitions, believing that a free cappuccino not only generates short-term goodwill but also long-term brand loyalty. In truth, building brand loyalty is far more complex than this. To do anything with real substance requires going far beyond a basic rewards app.

The promise of a digital loyalty system has proved a huge lure for retailers. The idea that they can find out who is buying from them and how often they visit, up-sell and cross sell to customers, reward those who are loyal and gently prompt those who are neglecting their stores – all this is of course incredibly attractive to retailers. An app can potentially provide a direct line to hungry customers as they sit in their offices pondering what's for lunch.

SMART STATISTICS
This direct line is crucial here in the UK, a world leader when it comes to mobile adoption and advertising. Forecasts made by eMarketer indicate that by 2014, two out of three mobile phone users and over half of the UK population will use smartphones. Importantly, early adopters tended to be male, but this year 58% of smartphone users are female. Half of all current owners, regardless of gender, have made purchases via their device.

At their core, basic loyalty apps such as OneGratis, Front Flip and Belly are an attempt to use QR code technology to replicate a traditional, human interaction. They exist to replace the crumpled and neglected coffee shop cards that sit in our pockets with a system that turns stamps into scans.

SPEED IS EVERYTHING
Systems like this allow for a very limited amount of customisation. As a retailer, you'll be able to set up a basic page and your app will include a built-in store location map that will allow your customers to link quickly through to your stores. So far, so good, except that high street food retailing is all about speed of service. Anything that is not integrated with the EPOS or holds up a queue is a potential problem – whether it's scanning QR codes or redeeming points on an app.

In truth, there's nothing about this basic loyalty process that is any more convenient than just taking a card out of our wallets. After time, the act of scanning a QR code potentially becomes as dull as awaiting a stamp. In terms of building a relationship between retailer and customer, off-the-shelf options tend to be just that, and do little more for brand loyalty than a stamped card.

If you're a retailer contemplating an app and you have neither the vision nor the resources to produce a bespoke app, sticking to a nicely designed old fashioned loyalty card is probably your best option. It's personal, easy to manage and is a formula easily understood by both customers and shop staff.

THE KEY TO SMART MARKETING IS ALIGNING THE GOALS OF THE RETAILER WITH THOSE OF THE CUSTOMER AND SHOWING YOUR TARGET MARKET THERE'S SOMETHING TO BE GAINED.

TRUE BRAND LOYALTY
The key to smart marketing is aligning the goals of the retailer with those of the customer and showing your target market there's something to be gained. In a culture of easy access to coupons, codes and freebies, retailers must dangle more compelling offers than the boring 'get your tenth coffee free'. The fact that these technologies refer to their loyalty schemes as 'reward cards' seems a little antiquated.

For retailers who can afford it, the next step up is to create an app that builds true brand loyalty, integrating practical aspects such as store locators and m-commerce and introducing more emotional drivers like promotions, social media and reward schemes. The highly lauded Starbucks App ticks all these boxes and is often cited as a benchmark for digital loyalty apps. But the reason their app works isn't just down to the content or the technology within the app; it relies on their business model.

TILL INTEGRATION
The Starbucks experience is fairly generic – what works in one store can translate with relative ease to over 20,000 stores in 62 countries. Once integrated with one of their tills, it will most likely work for 80% of their shops around the world. Make it work with a few more types of till and suddenly you're integrated with 100% of stores. Put in these terms, investing in a fully integrated loyalty and payment app seems like an attractive opportunity.

The Starbucks App highlights the main stumbling block facing those trying to create a bespoke experience – size matters. The cost of developing a cross-platform app quickly becomes prohibitive, and for an independent operator with five to 10 stores and various till systems it soon becomes problematic.

The future belongs to the apps that go beyond just loyalty and become genuine brand assets.

SMART DATA
The great lure for businesses has always been the access to immediate and qualitative data that a digital solution offers. The large upfront investment becomes worth it in the long-term as they can access customer behaviours and tailor their offer accordingly. Tesco's Clubcard, Boots Advantage and Sainsbury's Nectar card all demonstrate the public's willingness to engage in loyalty schemes if they are simple to use and show tangible benefits.

Of course, the data that is mined from these reward schemes is invaluable to the way large retailers now do business. To gain any insight requires dedicated analysts who are skilled at picking through the data for significant trends. This is another potential pitfall to developing a bespoke app – to truly benefit from it you need to be able to use the data you collect, otherwise all the functionality you build in becomes an obsolete add-on.

The future belongs to the apps that go beyond just loyalty and become genuine brand assets. The ambition for any such app should be to create an experience that is immersive and totally 'on brand'. It requires careful consideration of what you as a retailer expect to gain, and how you want customers to benefit.

It means considering every aspect of the user experience, from content strategy to final execution and integration with other media channels. Few brands have the focus or commitment to deliver such a thing. One that comes close is Sushi Shop, a beautiful mobile app that allows customers to browse menus, purchase food, access promotions and locate stores. What elevates their app is the sheer quality of execution – the bespoke photography makes the menu come alive on screen. All aspects of the interface have been carefully considered.

Ocado, the UK's only online supermarket, hasn't built stunning photography into its app, but an easy-to-use interface and personalised settings means that a third of all its orders from customers now take place through mobile. The smooth, uncomplicated mobile experience Ocado offers has helped to cement their reputation as a hassle-free alternative to shopping in a bricks-and-mortar local supermarket.

STAY LOYAL TO WHAT WORKS
New ground is being broken at a furious rate in the mobile commerce sector and only time will tell what impact big players like the Apple Passbook and PayPal's new payment app will have for both big and small businesses. The entire concept of mobile loyalty will have to stay flexible, while the dust settles and consumers decide which mobile payment apps to adopt.

As a retailer, whatever you do to engage your target market, do it well and make your own customer experience the starting point. Investing in anything less than a digital brand experience won't gain you any traction in a sector increasingly populated with sub-par apps. Think carefully before you tear up your paper loyalty cards and be confident that you have the resources and commitment to ensure your digital replacement is a genuine improvement.

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