• April 15, 2011
  • By Koa Beck, Editorial Assistant, CRM magazine

Can Mobile Apps Save Customer Loyalty Programs?

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Nearly half (49 percent) of all loyalty program members  never or rarely take advantage of the attendant privileges while shopping online, and 78 percent said easy access to loyalty memberships would make them more inclined to use those privileges online, according to new research from ACI Worldwide.

Many Americans simply don’t have the wallet space to efficiently use rewards cards, says Rob Seward, senior industry marketing manager at ACI. He suggests retailers consider consolidating loyalty programs onto a single device.

The study’s numbers supported Seward’s comments, revealing that 52 percent of American consumers would prefer a single card that could hold all their memberships, as opposed to a mobile application. One-third of study participants said they would prefer to have a consolidated key chain, while 17 percent advocated a mobile app that could access all their customer retail loyalty programs.

“Given the growth in loyalty cards and the number of accounts and programs that members need to track, I certainly see the need for a consolidation of tracking and management of programs through a single application or device,” says Suresh Vittal, vice president and practice leader at Forrester.

“However, to do this through an actual physical vehicle is much harder to pull off, since it requires the ‘sell-side’ (i.e., programs) to settle on a broad-based coalition strategy. This hasn’t worked in the past in the U.S. market, though both Europe and Canada have successful cases like Nectar.”

Nectar is a partnership of several European suppliers, including the supermarket chain Sainsbury’s, American Express, and BP gas stations.

Seward agrees, observing that “in other countries, particularly the U.K. and South Africa, coalition programs are very well established. With American consumers demanding consolidated loyalty and rewards programs, U.S. retailers need to move in this direction.”

Vittal points out that companies like Starbucks and Sephora have already identified the pressing need to engage with customers through an intersection of mobility and online account access and have run with it. In February 2010, Starbucks announced a mobile app that allows customers to charge purchases to a credit card linked to the app. Similarly, Sephora has launched the Sephora To Go app, making shopping for makeup via the iPhone fast and simple with account access, views of past purchases, and tutorials.

“The simple approach is to create a ‘buy-side’ application that is anchored on a mobile device,” Vittal says. “New players like CardMobili do exactly this through mobile devices.”

Editorial Assistant Koa Beck can be reached at kbeck@destinationcrm.com.

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