The future of retail loyalty

NO MORE CARDS: Directors at paradigm Group, Nolan Daniel (left) and Shadab Rahil (right) say that future loyalty programmes will be mobile-based applications.

NO MORE CARDS: Directors at paradigm Group, Nolan Daniel (left) and Shadab Rahil (right) say that future loyalty programmes will be mobile-based applications. Photo: Provided

Say goodbye to loyalty cards because mobile applications are set to replace traditional loyalty programmes.

Businesses can set up loyalty programmes on mobile applications in the same way as cards, offering cash rewards, coupons or discounts. This offers convenience to consumers who won’t have to carry cards anymore, says Nolan Daniel, director at Paradigm Group.

Consumers get more benefits in that customised marketing and relevant information is sent to them through notifications and messages from organisations. This also benefits businesses in building customer relations with real-time consumer engagement, says Daniel. Card loyalty programmes often send promotional materials to consumers’ addresses, which end in the dustbin, adds Shadab Rahil, director at Paradigm Group. Additionally mobile applications save businesses the cost of producing and distributing cards and promotional material, says Rahil.

There is also a more secure component to mobile applications in that points earned are linked to the consumer’s number. Your phone might get stolen, but no one can steal your cellphone number which means points won’t be lost, says Rahil. Consumers can also block loyalty programmes online and respond in real time, says Daniel.

Businesses can also collect data on consumers, like their buying patterns. “You [businesses] can really decide how much data you want to use… You can get specific information on individuals or you can get information on the user base as a whole,” says Daniel.

Depending on the capabilities of the business’s IT systems, it is possible to use geo-tracking to engage with consumers in real time. This way, consumers can be notified of discounts and other special offers at nearby stores. Consumers’ movements in stores can also be tracked to identify areas where they spend a lot of time and deduce what they like, explains Daniel.

It could take three to four years to have a big penetration of mobile loyalty and payment solutions in South Africa as smartphones become more available.

Two types of tracking technology can be used. Geo-fencing can track consumers within 20km of a store. Bluetooth low energy is used in stores, tracking consumers from 50cm to 50m, says Daniel. Consumers are informed of tracking technology in the terms and conditions of mobile applications. They have a choice to opt out and simply use their phones to earn reward points, he says.

If communication tools are not used correctly, consumers could become irritated with spam messages and notifications and opt out, warns Rahil. Marketing intelligence is needed to tap into the use of mobile loyalty programmes. “You need to be relevant and offer them useful information that will save them extra money and be beneficial to them,” he advises.

A lot of businesses have been finalising and testing these mobile applications. It is not likely that cards will disappear in the near future. South African markets are “heavily banked” and consumers use cards. Getting consumers to migrate to mobile-based solutions could be slower, says Rahil. It could take three to four years to have a big penetration of mobile loyalty and payment solutions in South Africa as smartphones become more available. The opposite is true for the rest of Africa, where mobile solutions are prevalent, he says.

This article was featured in Finweek magazine.

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