The fu­ture of re­tail loy­alty

Finweek English Edition - - IN BRIEF - BY LAMEEZ OMARJEE

Say good­bye to loy­alty cards be­cause mo­bile ap­pli­ca­tions are set to re­place tra­di­tional loy­alty pro­grammes. Busi­nesses c a n s et up l oya l t y pro­grammes on mo­bile ap­pli­ca­tions in the same way as cards, of­fer­ing cash re­wards, coupons or dis­counts. This of­fers con­ve­nience to con­sumers who won’t have to carry cards any­more, says Nolan Daniel, di­rec­tor at Par­a­digm Group.

Con­sumers get more benef i t s i n t hat cus­tomised mar­ket­ing and rel­e­vant in­for­ma­tion is sent to them through no­tif ica­tions and mes­sages from or­gan­i­sa­tions. This also ben­e­fits busi­nesses in build­ing cus­tomer re­la­tions with real-time con­sumer en­gage­ment, says Daniel. Card loy­alty pro­grammes of­ten send pro­mo­tional ma­te­ri­als to con­sumers’ ad­dresses, which of­ten just end up in the dust­bin, adds Shadab Rahil, di­rec­tor of Par­a­digm Group. Ad­di­tion­ally mo­bile ap­pli­ca­tions save busi­nesses the cost of pro­duc­ing and dis­tribut­ing cards and pro­mo­tional ma­te­rial, says Rahil.

There is also a more se­cure com­po­nent to mo­bile ap­pli­ca­tions in that points earned are linked to the con­sumer’s num­ber. Your phone might get stolen, but no one can steal your cell­phone num­ber, which means points won’t be lost, says Rahil. Con­sumers can block loy­alty pro­grammes online and re­spond in real time, adds Daniel.

Busi­nesses can also col­lect data on con­sumers, such as their buy­ing pat­terns. “You [busi­nesses] can re­ally de­cide how much data you want to use… You can get spe­cific in­for­ma­tion on in­di­vid­u­als or you can get in­for­ma­tion on the user base as a whole,” says Daniel.

Depend­ing on the ca­pa­bil­i­ties of the busi­ness’s IT sys­tems, it is pos­si­ble to use geo-track­ing to en­gage with con­sumers in real time. This way, con­sumers can be no­ti­fied of dis­counts and other spe­cial of­fers at nearby stores. Their move­ments in stores can be tracked to iden­tify ar­eas where they spend a lot of time and de­duce what they like, ex­plains Daniel.

Two types of track­ing tech­nol­ogy can be used. Geo-fenc­ing can track con­sumers within 20km of a store. Blue­tooth low energy is used in stores, track­ing con­sumers from 50cm to 50 me­tres away, says Daniel. Con­sumers are in­formed of track­ing tech­nol­ogy in the terms and con­di­tions of mo­bile ap­pli­ca­tions. They have a choice to opt out and sim­ply use their phones to earn re­ward points, he says.

If com­mu­ni­ca­tion tools are not used cor­rectly, con­sumers could be­come i r r itated with spam mes­sages and no­ti­fi­ca­tions and opt out, warns Rahil. Mar­ket­ing i ntel l i gence i s needed to tap into the use of mo­bile loy­alty pro­grammes. “You need to be rel­e­vant and of­fer them use­ful in­for­ma­tion that will save them ex­tra money and be ben­e­fi­cial to them,” he ad­vises.

A lot of busi­nesses have been fi­nal­is­ing and test­ing these mo­bile ap­pli­ca­tions. It is not likely that cards will dis­ap­pear in the near fu­ture. South African mar­kets are “heav­ily banked” and con­sumers use cards. Get­ting con­sumers to mi­grate to mo­bile-based so­lu­tions could be slower, says Rahil. It could take three to four years to have a size­able pen­e­tra­tion of mo­bile loy­alty and pay­ment so­lu­tions in South Africa as smart­phones be­come more avail­able. The op­po­site is true for the rest of Africa, where mo­bile so­lu­tions are preva­lent, he says.

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