Are smartphone apps the new way of rewarding loyalty?

Loyalty schemes have been around for years. Defined as reward and redeeming rules for a loyalty program, in the UK we’ve seen large businesses from major airlines to food retailers set up successful schemes to keep their customers coming back.

Now it’s time for everyone else to get in on the action. Small and medium-sized businesses can now offer their own loyalty schemes by offering rewards through smartphone apps. And guess what – it’s easier than you thought to start getting positive results.

Some people reckon that card-based loyalty schemes, pioneered by supermarket giants like Sainsbury’s Nectar and Tesco’s Clubcard, have run their course. The retail food shopping world has moved on from the dominance of huge megastores. Today, by and large, we prefer to shop in local, independent stores or take advantage of free home deliveries from the supermarket websites to get our big weekly shop. Online grocery sales surpassed the £11bn mark in 2017, up from £9bn the year before. So that’s forced retailers to think a little differently about how to keep their customers coming back.

The new loyalty game

For the past 30 years, air miles schemes run by major airlines have been very successful. Originally launched in the UK in 1986, the first campaign – which ran with the slogan ‘Stop Dreaming, Start Collecting‘ – gathered over three million customers in its first six months. The desire to collect points or miles helped us forget about going to another provider for a better price, as the prospect of earning a ‘free’ flight by collecting air miles seemed like enough of a good deal. Even when price competition came from the ‘no-frills’ airlines like Ryanair and EasyJet, established carriers were still able to keep many of their customers happy with air miles and free meals.

But times have changed. Consumers are now looking for online rewards to be more innovative and personalized. They don’t want to have to go to the store to present their membership card to prove their loyalty. Somehow, all businesses need to find a way to ‘reward’ customers every time they interact, every time they return.

So who has been successful at the new loyalty game?

Coffee and TV – the new loyalty players

Let’s take Starbucks. The company, named after the chief mate in Herman Melville’s whale-chasing novel Moby Dick, has taken control of their reward programme by the use of a mobile phone app. This app not only allows customers to build rewards but can also be used to place and pay for orders, as well as access streamed music.

Another huge success story in the rewards world has been Amazon Prime. Not content with simply being the world biggest marketplace, Amazon struck gold once again with its enhanced loyalty scheme that rewards customers with free shipping, streaming music, movies and access to their TV channel. This meant that in order to recoup the cost of their membership to the scheme, their customers would use Amazon more often – and they would buy more to make more savings. And it’s worked, with more than 80 million Prime customers in the US – representing 64% of the population.

Appy days: the best loyalty apps

Of course, not every company has a global presence like Starbucks or Amazon, but newer businesses have been joining in the loyalty game, too. They’ve been doing this by developing customizable apps they can use to reward customers on the go – customers with their mobile in their hand who, either physically in their shop, or remotely via the app, interact with their service. So what mobile apps are available for businesses to access and generate rewards for their customers? It turns out that there are plenty – and here are two of the biggest:

• Shopkick: One of the most popular shopping apps out there is Shopkick, which offers points to customers who go into physical stores to scan and purchase items. These points can be redeemed for gift cards, allowing customers to get the most from their shopping across the US. Used by both major retailers and small, independent stores, more than 6 million people have signed up to the app.
• Belly: Another of the big loyalty apps, Belly has over 6,000 merchants and, like Shopkick, it’s an in-store app that requires the user to place their loyalty card or app QR code over a digital tablet camera to announce their arrival in store and entitlement to rewards. The rewards work by offering freebies to users who have to come back to the store to redeem their points for items.

Online gambling rewards

Another good example of a company offering great rewards, and in an area where you might not expect to see it, is with the online gambling operator Wink Bingo.

The explosion in online gambling has been huge in the past 20 years. Online gambling now accounts for the largest single source of gambling revenue in the UK – £4.5 billion in 2015-16 compared to only £3.4 billion spent with the National Lottery, according to the Gambling Commission. Online gambling is big business, and Wink Bingo has built a service that understands enables customers to place any time, anyplace – whether that’s from the comfort of their own homes, or on the move. Offering a downloadable app means that users can access their favorite games wherever they are – so they no longer have to queue in the rain for the bingo venue to open, or wait for their PC to fire up.

Their next step was to create a rewards programme that included a shopping voucher scheme, and their own ‘Wink’s Shop’ where the rewards gained through playing the games can be redeemed. Wink Rewards can be spent at stores, restaurants or in a range of entertainment venues.

If you want to retain customers in today’s tough business environment, then you’ll have to wake up to the new technology. Customers spend money with their smartphones these days, and if you’re not capturing their every interaction with your business, then you’re not in a position to truly engage with customers and effectively target them with rewards.