We’re almost into the third decade of the third millennium AD. While our distant ancestors may once have kept track of their loyalty points using shells or particularly attractive pebbles, these days everyone seems to have an app.

“Most loyalty programmes are looking to enhance the digital transformation of their programmes,” says Steve Burnstone, CEO of customer strategy consultancy Eighty20. “On the one end, a smartphone app can be a simple way to register and receive a digital card to be used at point of sale, or the app can be a channel to enable further engagement through gamification, redemption, and a host of value added features including vouchering, payments, locating your nearest store and so forth.”

Burnstone notes that although digital is the new normal and should thus be a part of any loyalty programme’s future roadmap, in South Africa physical cards actually remain the easiest way to get customers to engage with traditional brick-and-mortar stores. “If you are in the store and the sales agent offers you a card and free membership to receive a certain percentage back, then it is an easy acquisition. Once a customer has a card and membership, it’s a lot easier to migrate them to a digital card or app. However, plastic can be expensive – especially if it needs a chip and pin – and difficult to distribute to all stores.”

Location is everything

Geolocation and location-sensitive notifications are increasingly being used by brands to engage with customers in real time at key moments. “Most large property companies are looking at how the free Wi-Fi services in their malls can be used to create a loyalty relationship with customers that includes location-based targeting for tenants,” explains Burnstone. “Furthermore, beacon technology allows brands to pinpoint where a customer is at any given moment, and then send them push notifications with coupons, promotions or other targeted offers.”

Burnstone gives the example of a clothing retailer store that may send a promotion to a consumer near their location or while the individual is visiting a competitor. “A US study conducted by beacon platform Swirl found that 73 per cent of shoppers who received a beacon-triggered message on their smartphone said it increased their likelihood of making a purchase during a store visit, while 61 percent said the message would prompt them to visit the store more often.”

Burnstone notes, however, that while there is value in informing a customer of nearby promotions, “there is greater value in understanding customer behaviour and using geolocation together with other information to offer relevant and timely offers or promotions to customers”.

Gamification grows

Gamification involves introducing game-like elements into non-game contexts to stimulate specific customer behaviours. “Gamification as a behavioural science is increasingly being used by programmes to increase engagement and provide enjoyment back to customers,” says Steve Burnstone of Eighty20, noting that apps are well positioned to enable this. “Discovery Vitality is a favourite example of this, with its Vitality Active Rewards and weekly goals, but Vodacom Shake Every Day is another example of using basic elements of gamification to drive daily engagement. Banks are also increasingly using elements of gamification to make banking more interesting and rewarding – just look at Standard Bank UCount’s recent launch of Goals and Gains on its app.”

Convergence point

From the customer perspective, there is a need for consolidation of programmes, but I don’t think brands and programme owners are necessarily ready to give up the control of their brands or rewards currency which is necessary to provide that kind of service,” says Burnstone. He says some start-ups have tried to get this model working among the big brands, but that while they understand the value, they’ll only participate if others do too. “You need a few key programme owners to get involved to create critical mass for others then to join, or you will need a platform disruptor like an Amazon or Apple entering this space and forcing a response from programmes.”

Should this take off, Burnstone says there are two immediate possibilities. “You could have a basic aggregator app with limited functionality that shows how much you’ve earned, enabling points exchange or redemption with a click through to the owner website to interact further. On the other hand, a set of strategic alliances between programmes or a coalition could create something with much richer integration and an enhanced value proposition for the customer.”

Burnstone says the most likely aggregation space is in payments and banking. He gives the example of mobile payment, customer loyalty and rewards platform Zapper, which has included a number of SME merchants that have loyalty programmes on the Zapper app. When you use Zapper, you automatically get a reward, providing a frictionless experience for the consumer.

View Pages 16 – 17 of the recent Sunday Times Loyalty and Rewards 2020 Article