Can Mobile Technology Fix What’s Broken in Loyalty Programs?

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After two years of daily interactions with local merchants at Perka, we’ve learned that most of them have a love-hate relationship with loyalty marketing.  Most are interested in cultivating customer intimacy, but find themselves too busy managing cash flow and other daily business demands.  And since managing reward systems — historically comprised of analog punch cards and coupons — is clumsy at best and delivers a vague return on investment, many store managers have quit loyalty programs entirely.  Can you blame them?

The good news is, there are better options today due to a fast evolution of the loyalty marketing landscape over the past 18 months.  New mobile and in-store technology allows merchants to utilize relatively low-cost devices, such as an iPhone or an iPad, to take advantage of data-driven programs that do more than simply count down the punches until a customer’s next free sandwich. Here are two ways in which mobile tech has improved loyalty programs for small merchants:

Improved functionality and adaptability
Why have a static loyalty program when your business is anything but static?  Mobile technology allows merchants to create dynamic loyalty programs that can change or be customized to meet specific business needs.  Merchants can even respond to slow periods or excess inventory on the fly by sending instant perks to registered loyalty members.  And since purchases are tracked electronically through the loyalty system, it’s easy to assess the success of a loyalty program.

In addition, some of the most advanced mobile loyalty systems have features that can:

  • Communicate with customers and send them offers to their mobile phones — even when they are not in the shop
  • Broadcast rewarded perks on customer Facebook and Twitter feeds
  • Enable shop owners to analyze customer order trends and purchasing habits — over days, weeks and months

Mobile technology also helps merchants seamlessly merge business processes.  For example, many tablet POS platforms offer loyalty integration, which provides the ability to manage cash and loyalty within the same system.

An easy way to cultivate customer intimacy
In addition to increasing customer visits, mobile loyalty systems can help store staff learn the names of engaged customers, and some can even recognize customers when they walk in the door (via mobile devices).

The way advanced systems work between customers and store staff can be quite simple: customers check in to an establishment using an app on their smartphones.  The cashier is then alerted that the customer is in the store and can view her profile, which includes first name, picture and purchasing preferences.  As a result, clerks can call customers by name and can provide a more personalized store experience.

Mobile technology helps merchants leverage the power of loyalty to cultivate customer intimacy, which is key to retaining customers and motivates them to spread the word to their friends.  The Center for Retail Management at Northwestern University has reported that up to 15% of a business’s most loyal customers account for 55-70% of the company’s total sales.

Loyalty marketing has historically been a customer-centered program that offers little reward (and often more headache) to local businesses.  But thanks to new mobile technology, loyalty marketing can evolve to deliver a tangible increase in revenue and provide valuable business analytics while still rewarding customers for their patronage.

Alan Chung is CEO of Perka, a smart loyalty program that helps small merchants and their regular customers support one another. The company’s unique system gives customers the satisfaction of being recognized with increasing tiers of “perks,” and in turn provides real, meaningful intelligence to merchants.  Perka is based in Portland, Oregon, and New York City.