Yankee Group: Consumers want mobile loyalty programs

Written By: Sheryl Kingstone

Mobile loyalty programs are resetting the parameters of marketing and commerce creating more opportunities for customer engagement. As of this month, we find:

  • 60 percent of consumers now own a smartphone
  • 64 percent want to be connected all the time
  • 40 percent use some form of mobile shopping or SMS coupons on their phone

Mobile is also revolutionizing consumers’ overall experiences with businesses. Yet, many companies are failing to take advantage of the mobile opportunity. Mobile loyalty programs offer a strong return on mobility (ROM), especially as the opportunities to create engaging mobile experiences with consumers explode. Mobile marketing should not be confused with mobile loyalty. Delivering mobile coupons to consumers via SMS is a form of mobile marketing that has been around for many years. QR codes and bar codes that just emulate customers’ physical loyalty code provide no real-time interactivity with a loyalty program. Check-ins are also NOT loyalty programs (should a store owner reward based on checking-in or actually purchasing a product?).


Demand generation for customer acquisition and mobile loyalty for customer retention can no longer be viewed as separate functions. For example, while some restaurants have create full-fledged mobile experiences that encompass reservations and ordering, but do not offer cardless loyalty programs. At the same time, retailers and brands are creating mobile apps for price checking, in-store and online shopping, mobile coupons and even mobile payments, but seem to draw the line at a rewards program. Airlines have mobile apps for booking flights and checking status, but limited mobile integration with their traditional loyalty programs.

What is the key to leveraging mobility for customer acquisition and retention? Mobilize the customer journey to create loyalty-driven interactions. According to the June Consumer Data, consumers want their loyalty programs. 47 percent of consumers wish more stores offered mobile apps to collect and redeem loyalty points, 46 percent would strongly recommend the company to their family and friends if it had a mobile loyalty program that offered personalized rewards, 47 percent would chose to shop at a store that offered a mobile loyalty program over another store.

Mobile loyalty programs that reward customers based on tying their rich customer profiles provided by a loyalty program to actual transaction data provide the best foundation for a strong ROM. Knowing how much a customer spent doesn’t offer the same insight as precisely knowing what they bought (as well as when and where). Basing rewards on real-world transactions ensures the rewards are calibrated appropriately.

As mobility takes hold, mobile loyalty programs will be the very foundation of competitiveness in the coming years. Now’s the time to get the process started. Mobilizing loyalty programs will bolster those journeys by embracing:

  • Mobile coupons and offers will improve with not just location but better context. Geofencing and proximity marketing enable real-time interactions but context is where the rubber hits the road. Creating rich customer profiles that drive loyalty campaigns enables an unparalleled depth and breadth of customer segmentation that can be used for improved customer engagement strategies based on the individual preferences and patterns of each customer. The future is all about combining precision-location with customer context to suggest the right offer to the right person at the right time.
  • Focus on the journey not the department or technology. SMS coupons, NFC, QR codes and check-ins are all just pieces of a mobile strategy that may or may not provide a strong return on mobility. Blanketing customers with SMS campaigns is not a meaningful engagement strategy, especially since such blanketing sometimes alienates customers, causing them to opt out of future marketing communications. Deploy a rich branded app experience that embraces the mobile experience along with continually rewarding frequent customers across the lifecycle from marketing through transaction is the right approach to creating a mobile loyalty program.

At the moment, not enough companies are focusing their mobile efforts only loyalty. While digital wallets and payments solutions continue to mature, mobile-focused loyalty and rewards programs are the real value-adds of customer engagement. By mobilizing all steps along the customer journey and bringing them under the umbrella of a dedicated program, companies will find it easier to build relationships and get customers coming back.