Smartphones making loyalty cards obsolete
Technology altering process
The days of the “buy-10-get-one-free” loyalty punch card are as numbered as the paper punch itself.
Mom-and-pop restaurants, convenience stores and pet groomers are joining national programs that equip them with an iPad at the register where a customer either swipes a loyalty card or waves a smartphone to record the purchase and any reward. National programs such as Belly, SpotOn, Perkville and FiveStars use cloud and mobile technology to enable retailers to offer programs that reward the customer faster and with more creativity than a punch card.
“Within five to 10 years, we’ll move away from punch cards and key fobs and even apps and go to smartphones,” said Rik Reppe, director of PricewaterhouseCoopers’ customer experience practice in Minneapolis.
The Belly program is free for customers. Businesses pay $79 to $149 a month for the service, but they don’t have to run the program themselves.
Anita Birmingham of Minneapolis uses her Belly card by waving her smartphone in front of an iPad to get a free cup of coffee every two weeks. “It’s a good savings,” she said. “I like being able to use my smartphone instead of looking for a card.”
Hal Stinchfield, founder and CEO of Promotional
Marketing Insights
Many consumers collect reward cards like playing cards, thumbing through more than a dozen in their wallet or purse. The average consumer has 18 cards but only uses eight actively, according to the market research firm Colloquy in Cincinnati.
The number of loyalty memberships in the U.S. has more than doubled from 973 million in 2000 to 2.09 billion in 2011, according to Colloquy. But signing up for a loyalty program doesn’t mean consumers are actively using it.
Consumers want to be rewarded faster, said Hal Stinchfield, founder and CEO of Promotional Marketing Insights in Orono, Minn. “If I eat out at a place maybe once every two weeks, you can’t make me wait six months before I get a reward. That’s ridiculous.”
Many consumers are perfectly content with accrue, accrue, accrue, but millennials and those behind them are intensely loyal for shorter periods of time. If they’re not rewarded quickly, they lose interest.
Gone are the days when a 23-year- old who f lew once a year would accumulate enough frequentflier miles for a free trip when she was 38.
“The rewards have to be realistically attainable,” Reppe said. “Now airlines are giving customers smaller rewards such as a free drink, free movie, or priority seating instead of making them wait 15 years for a free ride.”
Stinchfield said that newer smartphone technology won’t help a stingy program. And not everyone thinks the smartphone will be embraced as the new loyalty device. It has the potential to know a lot more about its users than an online card, causing some consumers to fear being overmarketed.
Paula Berge of Woodbury, Minn., said her smartphone pinged when she was in a Walgreens recently because she’s a Walgreens Balance Rewards member. She wasn’t impressed by the text. “It was the same deal they had on a sign in the store. I was hoping for something I didn’t already know about,” she said.
Michalek said Caribou is taking steps to be careful about nonreward e-mails or texts so customers don’t feel bombarded. “We let guests pick their level of engagement.”