POV: Developing a loyalty program app strategy

Overview
Mobile has rapidly emerged as a significant channel for loyalty programs to engage with their members.  Americans have rapidly integrated smartphones into their daily lives, with over 77% of Americans now owning one (source: Mobile Fact Sheer.  Pew Research Center, February 5, 2018).  But while Americans might love their smartphones, they don’t necessarily have the same affection or commitment to mobile apps.  In fact, according to Localytics data on app usage, since 2012, the percentage of users that have abandoned an app after just one use has ranged from 21 – 25%.   So while being able to interact with customers on the move has become increasingly important, app development has still not significantly reduced attrition.  While every brand should have a mobile strategy, not every brand needs an app.  Understanding the benefits and costs of an app will enable marketers to best determine the appropriate mobile engagement strategy for their loyalty program.

Determining if an app is appropriate
While the right app with the right loyalty program can be a powerful combination, not all programs can justify the development and added ongoing expenses.  Rushing into developing an app or releasing one that is subpar can actually do more harm than good.  Negative reviews and scores can be brutal to a brand’s mobile reputation.  According to the App Attrition Index 2017, 80% of consumers deleted an app because they did not perform correctly and 53% have deleted an app after just one attempt due to problems with performance.
Before embarking on developing an app, several key elements must be considered:

  1. Brand power – Does the brand have sufficient presence and impact to justify a member making the effort to download and continue to allot digital real estate to maintaining?  What is the competition doing?  Are other brands utilizing an app?
  2. What problem(s) will the app solve – How is the app tying into your overall efforts to manage and improve a member’s journey?  While videos and content can be exciting, are they necessary for promoting the loyalty program and/or brand?  Will the app significantly improve the member’s ability to engage with the brand and program – think of how mobile apps now allow banking customers to deposit checks digitally or how Starbucks enables ordering ahead?
  3. Taking the time to get it right – App development can cost hundreds of thousands of dollars.  Therefore they justify making investments in member research and UX testing.  By not rushing or making assumptions, a loyalty program can not only identify app features but also answer significant strategic questions such as what devices the members are using, are there already apps in the market serving a similar need, do members even want or need the proposed app.
  4. Ongoing investment – Is the business willing to continually invest in updates, improvements and design?  Apps must continue to evolve and improve in addition to ongoing maintenance and increasing performance. 
 
Apps provide unique and highly customized engagement opportunities
If you do decide to develop an app, be sure to leverage its unique marketing opportunities to advance the consumer dialog from one-to-one marketing to one-to-moment.   This can be especially effective with developing on-going engagement with loyalty program members.  Some of the key marketing capabilities that apps provide include:
  • Push notifications and messaging – Easy to use and deploy, push notifications can both complement existing communications and provide unique, immediate dialogue.  Customers can easily opt in or out which means those opting in tend to have higher engagement levels with the app and its content.  Valuable analytic tracking systems provide greater customer insights such as interaction time, devices and usage which can be fed back into the messaging strategy to continue refining.  The travel industry has greatly leveraged the use of notifications to help alert travelers of important information.  Hilton uses notifications to inform members they can check in, select their room and even receive a digital key (if available at that property).
  • Greater personalization – Content within the app and within the messaging can be tailored based on interest, location, usage and more.  Loyalty members can easily access their account information and the app can also leverage this.  Information such as rewards point balances can be used as persistent content throughout the app and within the messaging strategy.
  • Streamline the checkout process – A challenge for loyalty programs can be increasing the time a member takes to check out.  Whether enrolling in the program or having to lookup a member number, retailers cringe at the idea of delaying the checkout process, especially at peak shopping periods or when there’s already a line.  Program enrollment can be quickly and easily handled via an app.  This can help reduce or even eliminate collecting member ID content at the register but still allow for tracking of member activity.  At checkout, the retailer can simply scan at POS and pull in the member data for the transaction.  7-11 Rewards requires all members to scan their app at checkout in order to capture member id and earn points.  The customer simply opens their app and scan.
  • Utilizing mobile device features – Whether a tablet or a phone, the mobile device itself allows for new forms of engagement which an app can help leverage.  Scanning an item using the camera feature or uploading a photo, GPS, using the phone to actually scan and pay, click to call or check-in are just some of the options available.  Express launched the “trend snap” in their app which allows members to personalize their shopping experience by using the phone’s camera to take a picture of an item of clothing they like (in a magazine, on the street) and have the app search for a similar item within Express’ inventory.
  • Access to social content – 9 out of 10 social media users access their chosen platforms via mobile devices (source: Special Reports – Digital in 2018:World’s Internet Users Pas the 4 Billion Mark.  We Are Social, January 30, 2018).  Apps can easily connect to social platforms allowing members to share content and information.  In addition, user generated content can be encouraged, enabling an entirely new option for marketing content.
  • Video marketing – Mobile devices have been a key contributor to the explosion in video content and marketing.  Videos bring a brand to life and allows for a wide range of marketing opportunities.  From how-to content to miniseries to user developed videos, video marketing can add authenticity and trust.  GameStop uses video marketing to bring the excitement to their PowerUp Reward members.  Heavy coverage of events such as conferences, video game releases, interviews with key personalities and industry news allows members to be in the know.  They also leverage this content throughout their social marketing and engagement. 
In conclusion, while mobile engagement is critical to loyalty marketing with today’s members, programs should not simply “jump on the bandwagon” with developing an app.  Having an underperforming or poorly-rated app can have significant negative ramifications on a loyalty program’s image.  Programs should identify the added value apps provide their members and use that as the focus for development.  If an app is an appropriate opportunity, it can greatly enhance the program’s ability to provide a truly customized, ongoing engagement with the members and drive incremental transactions.

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