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Why mobile is the next frontier for loyalty programs

By Mohammed Ghalayini, CEO Ovahi Inc.

Customer behaviours have evolved at a pace that matches the speed and frequency of smartphone model releases.  The majority of Canadians own smartphones and have become addicted to these devices

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. A study conducted by Google found that about 35 per cent of Canadians became so reliant on mobile connectivity that they’d give up TV before having to part with their smartphone

With a few swipes, taps, and pinches at a smartphone screen, a user can: instantly compare prices, read reviews from websites such as Yelp and Epinions, or engage in a growing trend called showrooming (examining merchandise in a traditional brick and mortar retail store without purchasing, and instead looking up better prices on their smartphones and ultimately purchasing online). According to a GroupM Next and Catalyst survey, in Canada, if the difference between the in-store and online price is more than $15, a majority of customers say they would leave.

Unsurprisingly, these new and evolving behaviours are presenting threats to marketers who are increasingly struggling to stay top of mind and capture a larger share of the customer’s wallet.

A long-standing weapon within a marketer’s arsenal is the loyalty program. By design, loyalty programs aim to encourage repeat business and increase brand affinity. Leading retailers and brands are reinventing the loyalty program model to adapt to today’s smartphone and social media -fuelled reality. Companies like Starbucks, Victoria’s Secret, and Sephora have all invested heavily in mobile-enabled loyalty apps. They have seen some great successes: more than 10% of Starbucks’ revenue comes from mobile purchases, and Sephora saw more than 400,000 mobile loyalty passes being created within the first 90 days of launch.

Despite the strong consumer and technology trends and the clear examples of success in mobile, loyalty marketers are lagging. As an indicator, less than half of North American companies have mobile websites and a much lower number have invested in mobile marketing platforms. On the other hand, according to Forrester reports, 44% of consumers are interested in joining programs that offer mobile coupons, and 50% of loyalty program members want mobile gifts and reward certificates. Loyalty marketers must take note and rethink their strategies.

At a basic level, mobile loyalty apps offer consumers convenient ways to lookup points and access deals, and they give retailers and brands a cost-effective way to collect customer data.

But leading companies will follow a mobile application approach to create a much larger spectrum of appeal between company and customer, and as a result can create a very unique bond. A crowded app space vying for users’ attention has upped the game quite significantly. The same Google study found that the average Canadian smartphone user had 30 apps installed on their device and had used an average of 12 in the past month.

A successful app must provide the customer with an enhanced experience by being visually appealing, useful, and contextual:

Visually appealing

Smartphone screen sizes and high processing powers created many options to visually engage with customers. Products and services can be displayed in new and beautiful ways, and key information can be portrayed effectively to evoke action.


For loyalty apps to achieved positive results, they must be useful. A user always performs a mental calculation on the value of an app in relation to the convenience it provides. If the value isn’t clear, the app will not be used consistently, if at all.


Mobile technologies are enabling much more relevant interactions with users based on the large amount of data that can be collected: location, on-screen navigation, search commands, preferences/profiles, social media integration and more. With this data, a much more personalized experience may be provided, think location-specific deals for example.

Secrets to success

For a loyalty app to be successful, it must be treated as a strategic priority within the company.  Publishing a rushed and poorly designed app can do much more harm than good, a mobile app is a customer-facing platform after all and negative word-of-mouth can spread like wildfire in social media.

Marketers should consider the following critical success factors as they develop their loyalty mobile app strategies:

  • Set Objectives: a loyalty mobile app should have clearly identified customer and business benefits and goals that direct its development.
  • Relevancy and an Experience that Matters: An app shouldn’t be burdensome on the customer. The best apps enhance the customer experience by improving existing Loyalty apps are positioned well for this since they add convenience, excitement and ultimately savings.
  • Effective Rewards: The scope of offering rewards beyond just points and dollar savings is much larger with smartphones. Gamification has grown as a way to engage and reward customers and might be suitable within a Loyalty app if designed correctly.
  • Start Small: Most successful loyalty apps began with a small set of features. More complexity can be added in the form of updates and iterations that also keep the customer engaged.
  • Data Collection and Analysis: One of the most important benefits to a company is the collection and use of valuable data. Smartphones offer many new data streams that must be used to track app effectiveness and build rich customer profiles. This data becomes invaluable when tailoring deals and informing marketing campaigns.
  • Collection of Feedback: User-preferences and app standards are quickly evolving. Mobile loyalty program success will rely on collecting and reacting swiftly to customer feedback. Again, smartphones offer innovative ways to track and collect customer feedback.

The lack of clear industry standards, internal company inertia, and privacy perceptions might present the biggest challenges in initiating a successful mobile loyalty app. The opportunity is too valuable to miss for most retailers and brands and will only become a viable reality if top leadership buys-in.

Ovahi is a Toronto-based mobile loyalty platform provider. Its Club Ovahi platform serves the small-size retail and food & beverage segment. Ovahi also provides hosted end-to-end white-label solutions for large clients that engage customers in new ways to achieve business results.

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