ENGAGEMENT & ANALYTICS | Mobile is the key to reaching loyalty marketing’s pinnacle – customer advocacy
Images: james headshot.jpgBy James Christensen
The meteoric rise of smart phone usage by consumers has expanded the reach of brands and their efforts to engage customers. At the same time, Loyalty programs that started with simplistic methodologies such as point accumulations have evolved to become a powerful tool for brands to drive customer engagement. In a world where connectivity is the foundation for how we make decisions, loyalty initiatives can now dictate the purchase, rather than simply record it. In a mobile world, marketers can now operate in real time; both before, during and after a transaction. Through mobile, loyalty will transcend its early goal of frequency and retention and reach its absolute pinnacle; customer advocacy.
In the beginning, loyalty captured an action, analyzed it, and attempted to use that information to influence future behavior. Points were accumulated, new offers were sent after the fact, both in an attempt to reward a customer for their loyalty. The communication between the brand and the consumer was loyalty marketing’s greatest weakness, as points statements were generally well after the fact. The effectiveness of these efforts improved as internet penetration rates increased, allowing customers access to web portals. The last great hurdle for loyalty was timing, the ability to connect in real time and engage the customer before, during and after the purchase. Many POS systems started to allow for real time “earn and burn” of points, further engaging the customers and putting loyalty top of mind. Emerging mobile technology has and will continue to allow brands to maximize retention efforts like never before.
Card-linked offers, mobile wallets, location-based marketing, eCoupons, and many other emerging technologies are now available to loyalty marketers and each one will create new ways for loyalty programs to engage customers. However, the key technology that will tie all of these offers together is mobile. Brands jump to a new level as customers can give a constant flow of information about where they are, what they are doing and what they want. Engagement happens in the customer’s life when they actually want and need it. A great of example of this is Foursquare, which is used by a customer to identify themselves when they get to a specific location, which in turn allows the brand to send a time-sensitive offer. An even better location-based technology facilitated by mobile is Apple’s iBeacon, which once turned on doesn’t require the user to do anything; the brand simply detects it and acts accordingly based the customer. Time is the most coveted asset of all, and loyalty marketers have always known that for every extra action a customer is required to take, the percentage of people who will follow-through goes down. We are now witnessing, for the first time, a seamless integration between loyalty marketing and customer behavior. As the mobile technology evolves and adds greater value to the customer experience, the standard metrics for loyalty marketing will reach their absolute potential. Customer retention, purchase frequency and monetary value per client will all increase simultaneously with higher customer engagement. When this happens, we predict that the effectiveness of loyalty marketing will increase at a rate never seen before, reaching its peak in regards to retention, and open up new frontiers. Our prediction: the new frontier for loyalty marketing will be customer acquisition via existing customer advocacy.
Customer referrals are a by-product of satisfaction with a product or service. Consumers recommend things, either proactively or by request when they genuinely believe the same value will be realized by the person they are advocating to. When we stop and analyze some of the new technology being introduced, you can already see that advocacy is happening spontaneously. When we announce on Foursquare our arrival at a store, or a recently purchased Groupon offer, our most trusted relationships see these brand interactions. In that moment, the consumer has received real value from loyalty marketing and the recency of the interaction dictates that they are most likely to communicate their satisfaction to those closest to them. Using real-time technology, a consumer having just made a purchase can receive an offer that can be shared with friends, where both parties will be rewarded if the friend makes a purchase. Not only does this encourage repeat purchases, you have now capitalized on the loyalty of a customer to attract new customers in a way which can be tracked. In this scenario, loyalty marketing has now transcended retention and become the driver for customer acquisition; all through mobile technology.
Much like loyalty, Customer advocacy has always existed. Years ago, Loyalty “programs” harnessed existing customer loyalty using database and transactional technology. Today, especially with the growth of social tools many brands are focused on harnessing “word of month” or advocacy. Having your best and most loyal customers motivated proactively to be advocates is the pinnacle of Loyalty. Mobile technology will enhance loyalty marketing programs in many ways but the ability to communicate in real time, in both directions, will allow loyalty program members and brands to engage in in-depth conversations. If those interactions involve spreading the brands message through advocacy of the loyalty members, it may make existing loyalty programs the most powerful and cost effective tool for new customer acquisition and growth.
James Christensen is the CEO of RewardStream, a loyalty and referral marketing software provider. James is a well-known figure in loyalty, with a background ranging from credit cards and banking to gift cards and loyalty. A pioneer in gift card technology and real time loyalty programs and is an expert in referral marketing. He has worked with numerous brands such as, Nike, Levi Strauss, Radio Shack, Choice Hotels, Eddie Bauer, AT&T, Virgin, RBC, and TSYS.