COMMENTARY: Three Key Considerations When Offering App-Based Loyalty Programs

Traditional card-based loyalty programs, like those offered at local grocery stores, car washes, and restaurants, can drive consumer loyalty simply because many people are already familiar with them. But if brands want to improve the depth of the consumer experience, evolving to a digital-based loyalty program can provide consumers with a more seamless transition between a merchant’s online and brick-and-mortar locations.

Going digital, however, does not remove all of the challenges that a loyalty program might face. A recent study by Bond Brand Loyalty found that the surveyed consumers belonged to an average of 13.4 loyalty programs, but were active in only 6.7, which makes it easy for programs to get lost or forgotten in a sea of reward cards and apps.

To stand out from the crowd, forward-thinking brands are getting innovative and meeting consumers’ demands for added value and personalization through an app-powered experience. While there are several factors to consider when evaluating your loyalty program or looking to upgrade or add a digital component, these three best practices are a good starting point:

1. Utilize digital data to gain deeper consumer insights and provide customer-driven personalization

Consumers today demand personalized, targeted rewards and offers, and an effective digital-loyalty program meets those demands by offering consumers choices. When making those personalized selections, consumers provide marketers with a wealth of insights.

For example, CVS’s ExtraCare app and loyalty program allows the company to mine purchase and demographic data and pair it with internal research, like surveys, to deliver consumers with personalized offers and marketing communications. The data is even used to target and engage specific customer segments within ExtraCare, notifying them of relevant deals when they enter the store. The program’s app also allows shoppers to manage prescriptions, scroll through targeted offers, redeem ExtraBucks, and even pay directly through the app.

2. Offer reward flexibility

To satisfy a diverse audience, an effective digital loyalty program must offer customers a choice in rewards. Consumers have different reward preferences in terms of form (physical or digital), denomination, delivery method (electronic or mail), etc. It’s important to keep in mind that these preferences can also change. A study from Ifeelgoods found that, among the consumers it surveyed, reward-based promotions have been shown to outperform discount-based promotions by over 42%, but that might not always be the case. Loyalty programs should offer enough variation to evolve with program participants.

The United MileagePlus X mobile app is a good example of app-based innovation and reward flexibility. Far from the typical card-based programs that simply track customers’ purchases and allow them to be redeemed for merchandise, the app has been gaining traction among consumers for its unique concept. Instead of using a credit card for purchases, consumers can use the app to buy gift cards for everyday purchases at participating retailers and get rewarded with United Airlines miles. Participants then have the option to not only redeem for flights with their accrued miles, but redeem for gift cards and other rewards as well.

3. Keep it simple

With today’s rapid improvements in technology, there is no reason why a digital loyalty program should be anything other than seamless and user-friendly. If you are ultimately not able to deliver what your digital loyalty- program is promising, you are not only damaging the program’s credibility, but potentially the whole brand’s as well.

Next-level loyalty programs are becoming about more than just points. A loyalty program offering an app-based experience can provide consumers with the value-adds and personalization they demand. Combine that with the ability to allow shoppers to redeem rewards on-the-go, and app-based programs can drive loyalty and keep members engaged in a world where consumers are constantly flooded with reward and program options.

—David Jones is general manager, digital & incentive divisions at Blackhawk Network, Pleasanton, Calif.