Just Rewards

Mobile loyalty has successfully broken through as a tactic for US small businesses to grow sales, writes Mike Lazzaro, SVP of business strategy at Perka. Rather than rewarding bargain hunters with daily deals, business owners are choosing to reward loyal customers in exchange for repeat visits. According to a 2008 University of Chicago study, customers buy 20 per cent more product and accelerate purchase frequency by 20 per cent when motivated by a reward. And a 2013 study by Loyalogy tells us that customers are more willing to refer other customers when a business has a loyalty program. The bottom line is that mobile loyalty experiences help drive sales by engaging customers through technology that’s literally attached to the customer’s hip.

But can mobile spending translate into ROI success for national brands? It’s still early but current trends indicate that the CPG (Consumer Packaged Goods) industry may be ready for mobile loyalty. Let’s consider some of the issues that a mobile loyalty program cab help address.

Eyeballs are gravitating to mobile – yet advertisers have lagged behind
According to a study by Kleiner Perkins Caufield & Byers, Americans spend 10 per cent of their time on a mobile device. Yet marketers currently allocate only an average of 1 per cent of their marketing budgets to mobile. This will no doubt increase over time, as smartphone penetration continues to climb. The obvious loser here is print, where marketers continue to spend at a level that far exceeds time currently spent on the medium.

Options for mobile marketing are very limited
The reason why advertisers haven’t redirected more spending towards mobile is obvious: mobile display ads have yet to gain traction as a viable option for consistent ROI. Balking at the tiny canvas mobile screens offer them, creatives mostly produce half-hearted renditions of online creative.

Branded mobile games and interactive apps represent more innovative uses of the format. But as neither drives purchases directly, it’s difficult for brand managers to justify a large allocation to them.

Mobile coupons yield only short-term successes
What about digital and mobile coupons? It’s true: national brands rely on both for trials, and to build reach. But while mobile coupons drive short-term sales, they generally don’t support long-term strategies. According to a recent survey by NCR, 80 per cent of US grocery shoppers want more digital mobile coupons, but I feel that they may be simply asking for more seamless online shopping experiences.

So why should national brands take the plunge into mobile loyalty now? Because mobile loyalty solves all the quandaries described above in a single stroke. Consider the following:

Mobile loyalty experiences are, by definition, designed to promote sales – awarding perks based on repeat purchase behaviour. Mobile loyalty drives short-term, highly trackable sales while supporting a brand’s longer-term mobile objectives.

Mobile loyalty doesn’t just deepen your day-to-day relationship with customers. It also forges a direct marketing link to the consumer. When a brand launches a new product, a mobile loyalty program can send specials for it directly to loyal customers’ phones. Mobile loyalty creates a proven pipeline to introduce new products to customers already loyal to your brand.

Direct connections with loyal customers can be useful to national brands in other ways. For instance, brands can elicit feedback on new product launches via their mobile loyalty link, further deepening customer relationships, while refining products to meet their needs.

It’s time for national brands to put themselves into the consumer’s pockets – literally. Mobile loyalty provides customers an engaging experience while providing brands with measurable short-term benefits and long term ROI.

Mike Lazzaro is the SVP of Business Strategy at Perka