When it comes to mobile in retail, choosing the strategies that deliver meaningful business results and that harness consumer behavior (rather than trying to change it) can prove challenging.
So it was refreshing to hear two statements made recently at the RAMP Summit that, to me, summed up and helped chart a clear path for retailers. In reference to mobile for retailers, David Baldwin from Value Pay Services (Subway) said, “It’s about your brand in their hand.” And Walmart’s Jamie Henry reminded everyone of the essence of success in retail (mobile or otherwise) when he said, “It’s about the customer relationship.”
Combined, these two very simple statements can guide retailers to leverage the transformative power of mobile to maximum advantage. But I think it’s important to consider that not all in-the-hand, brand-consumer relationships are equal. Nor is any complete or, in my opinion, valuable by itself in the long term.
In speaking with retailers and restaurants I find that conversations tend to fall into three categories: Offers, Payments, or Loyalty. Usually the discussion is limited to only one of these. Sometimes it’s about two of the three. Rarely, even at the highest levels of the company, is the discussion about all three. And even then, each is treated separately and often handled by different departments. From what I can see, the real advantage comes when Offers, Payments and Loyalty are viewed as parts of a unified whole greater than its sum. Let me explain why…
Loyalty: The One-Sided Relationship Using the allure of points or other rewards has influenced many consumers’ spending choices, as intended. But consumers often find themselves with accrued spending power, or rewards earned, that either they have forgotten about, or that – in the case of points – is not enough to get the items they most desire. Often the redemption process is poorly communicated, clunky, or requires using a standalone application so that consumers cannot easily or immediately reap the benefits of their “loyalty”.
For example, California Pizza Kitchen has an eponymous mobile app for finding locations and placing orders, and a separate mobile app, called CPK Pizza Dough, for finding locations, tracking rewards, and being notified of new menu items and other special announcements. While the loyalty app is well executed, that functionality should be part of the restaurant’s main app and not require separate download by guests.
In short, loyalty-only relationships can too easily end up all-earn-and-no-burn. That’s good for the retailer or program sponsor (in the short term), but is it good for the consumer? Loyalty needs to benefit both retailer and consumer to keep the consumer’s loyalty for the long term.
There are numerous start-ups with interesting value propositions helping retailers and program sponsors to better serve consumers through their rewards programs, and many are taking approaches worth noting, including Plink and iBotta. However, retailers and restaurants should be aware of the extent to which working with a third party may relegate ownership of the customer relationship, experience, or data.
But whether on its own island, in a silo, or even in the coolest app, loyalty by itself forms weak bonds that are easily ignored when the next attractive offer comes along.
Offers: The Co-Dependent Relationship In a recent research study by Digital Research Inc., more than 60% of consumers that had installed a retailer’s mobile app cited access to coupons, offers, or sales as the primary reason for doing so. We all know that coupons and offers are a very powerful influence on consumer buying behavior, whether to drive trial, acquisition, or re-activation, or to reward loyalty and seed spending.
Used discriminately and judiciously, offers are an important part of any brand’s relationship mix (yes, even luxury brands that do not, or at least claim to not, discount).
But there are several retailers who have conditioned consumers to wait until they receive coupons before they will shop. So the retailer depends on the rush of consumers brought in by the discounts, and consumers depend on receiving the discount in order to visit the retailer.
If thirty years of self-help books and daytime talk shows have taught us anything, it’s that co-dependent relationships are neither healthy nor sustainable.
Payments: The Casual Acquaintance Since our heritage and focus is gift cards, most of our conversations naturally start with payments. By their nature, payment-based relationships are mostly just transactional events. Consumers want to make an emotional connection with a brand, even fall in love, but without that certain spark, hook, or thrill of anything more, your relationship may never get beyond the first or second date. While you may experience more frequency than that, it’s often because of convenience, proximity, or a specific incentive but not due to a real commitment.
Payment alone – even with cool and virtually ubiquitous apps like Apple Passbook (which is a catalyst to broader mobile payment adoption) – is the least sticky driver of long-term, mutually beneficial relationships.
Transformation Through Convergence: Branded Currency With the traditionally disparate worlds of payments, offers, and loyalty becoming increasingly digital, the lines among them are blurring. Mobile – specifically, because it puts the brand in the consumer’s hand – provides the natural place for these different types of Branded Currency to come together.
And when they do, they not only maintain their individual value and influence on consumer behavior, they become part of a whole whose aggregate value is much greater than the sum of its parts. More valuable to consumers in terms of spending power and a driver of loyalty, and more valuable to retailers in terms of establishing and enjoying deeper, stronger, equally beneficial, and more sustainable relationships.
More to come on the convergence of Branded Currency and the many implications and opportunities for retailers…