Loyalty cards are changing into loyalty apps.

Loyalty cards are great at linking together the different visits that a shopper makes to a store so that the retailer can build up a better picture of what the shopper is interested in buying. But its like studying the shopper’s life through a key hole – its only about what they do in the store. And they are only in the store for a short time every few days.

Retailers do lots of clever analytics to link up loyalty data with different products, other customers and bought-in data but at the end of the day loyalty cards are a very limited window on a customer’s life. Loyalty data is great for segmenting what is communicated (topic of interest, offers, suggestions, calls to action) and how its communicated (communications media, tone, format, even the colour scheme).

But it is still segmentation – not true personalisation, i.e. it seldom analyses down to a segment-of-one. Loyalty analytics does not give an individualised service. It segments top-down, from the market level down to smaller and smaller segments, so it is inherently standardised rather than bespoke.

This fits the nneds of a centralised marketing function and a centralised marketing function does certain things very well – like planning strategy, whole-business decisions, economies of scale, branding, imagining the future and dealing with the slower business rhythms, like the seasons.

Okay, segmented communications and offers enable a much better fit with different customer types than ‘one size fits all’. But any top-down approach is bad at things like local knowledge, individual customer care, minute-by-minute decisions, customer emergencies, personalised advice, on-the-spot help and solving special problems. And top-down approaches are never very good at what a customer might perceive as sensitivity, agility, emotional support or empathy.

Smart phones + the cloud + apps = personalised + real-time + local

However, more and more of us are buying smart phones and using them to shop. These powerful mobile computers, with the support of a massive cloud-based infrastructure, now allow us to take the web with us wherever we go – 24 hours a day. And a common way to use this technology is an app, which has three game changing characteristics for the Customer Loyalty programmes.

Apps are personalised – the phone identifies the user, it tends to be one phone, or at least one app download per user (because apps commonly store histories of use that are useful for the user, like past searches, play lists or wish lists). Also, the user decides to download an app to a phone, i.e. its pull, not push. So apps are personal in an emotional sense which makes them a powerful tool for understanding each customer in a deeper way.

Apps are real-time – people take their phones with them all the time. People usually do not turn them off when they go to sleep. So two-way interactions with customer via an app can be when the customer actually needs them. Instead of slow responses to monthly direct mail shots they can be fast cycles of answers to prompts that quickly get to the heart of what’s needed right now. They can even use marketing automation like a sort of iterative version of FAQs.

Apps are local – apps know where they are all the time. This is critical for suggesting services that depends on location – which is a lot of services.

So apps are a medium for finding out ‘who’, ‘when’ and ‘where’ a customer is on a potentially continuous basis. Which is a much more powerful way of linking up successive touch points between your firm and its customers than a plastic card – and also a platform for delivering a rich collection of value add services.

Loyalty cards are changing into loyalty apps because their tighter co-creation loop produces greater benefits to both the firms and their customers: more accurate and timely understanding of customer’s needs, for firms, and services that fit the customers better.

Apps enable bottom-up loyalty programmes.

At the moment most apps are just catalogues, they are not the personal guides or ‘life sat -navs’ that they could be. They do not act as personal real-time guides that help customers through repeat cycles of the customer buying process.

But they could do – if they were designed around PIGs – then customers would be loyal because of a brand’s indispensability rather than because a retailer bribes them with money-off loyalty points. PIGs help to model what each different customer is interested in right now.

This would be a bottom-up approach to customer loyalty and CRM. Retailers, and B2B firms, could use apps as their main platform for both CRM and capturing loyalty data. These apps could help each and every customer’s journey; generate loyalty from deep experience and complete indispensability; access infinitely more data; create new modes of product offer and customer service innovation – and appeal to customers that are attracted to mobile technology, like males and young people.

Best of all a bottom-up approach starts with a single customer so it can act as the glue that integrates multi-channel and multi-device strategies.

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