Why is a brand loyalty program so important? We know it’s far easier to get repeat business from existing customers – but brands still spend up to 80 percent of their marketing budgets acquiring new customers. Customer retention is where the dollars are – 27 percent of customers that make one purchase in-store will likely return. That number jumps to 54 percent if they buy from you two or three times! Bottom line success depends on keeping these repeat customers engaged and growing them into loyal brand fans.

CVS’s ExtraCare has me for life. I will go out of my way to shop at my Boulevard CVS – mostly because I have coupons stored on my mobile app for those items I buy most, and I earn more points every time I walk through their doors. A loyalty program like ExtraCare is one of the most frequently tapped tactics used by brands to meet customer engagement and revenue goals. For good reason, too – loyal customers are more valuable over their lifetime. 10x more in fact!

Over time, loyalty programs have evolved. No longer do we carry cards in our wallets – or at least most of us don’t, and our purchasing habits have changed thanks to the prevalence of online and mobile shopping. Now, “Seventy-one percent of shoppers are more likely to use their loyalty cards if they could access their cards and rewards from their mobile phone,” according to Code Broker. What makes the brand loyalty program so sticky with its customers is the ability to create a seamless experience inside the number one thing all customers have: a mobile phone.

Building a successful mobile loyalty program

Mobile has changed the game for loyalty, creating more ROI than ever before. Research shows “customers who actively engage with brands and their loyalty programs make 90 percent more frequent purchases, spend 60 percent more in each transaction and are five times more likely to choose the brand in the future.” Kohl’s knows this. Members of the company’s mobile loyalty program are spending $80 more per transaction than those who are not.

There’s an even stronger case for engaging younger consumers. Ninety-six percent of millennials use restaurant loyalty programs and expect to use mobile to manage those interactions. This is great news for brands since mobile drives loyalty more than any other platform. Why is that? Because mobile loyalty programs meet the needs of its members in the moments where they benefit the most.

Mobile fully leverages location data, consumer preferences, app usage, attributes, purchase history like frequency, spend and recency, and more. With rich, user-specific data that enables a deeper understanding of customer behavior, marketers can better drive higher-value customers back to the brand.

“Marketers who create a full mobile experience for their consumers – with apps, optimized mobile sites, mobile loyalty programs, employing targeting like location, allowing sales on mobile devices, etc., are really experiencing the power of mobile along the purchase funnel.” – Sheryl Dajia, chief strategy officer at the Mobile Marketing Association

Getting a free sandwich or coffee is great, but getting something that seems hand-picked for me is so much better. We look for brands who know us. How are they doing it?

• Artificial Intelligence.  Where mobile loyalty programs get fun is in areas like artificial intelligence (AI). Using complex algorithms to centralize massive amounts of data across all customer touch points, AI can detect patterns and predictive responses that help marketers cue up relevant content to a brand’s most loyal fans. Spotify uses AI to understand more than 50 million paid subscribers’ preferences and then tailors the entire product around its users. They’ve seen serious growth each year due to the personal, hand-curated experiences they deliver.

• Hand-picked offers. There is no one-size-fits-all way someone engages with your brand and 75 percent of consumers say relevancy matters when it comes to reward offers. That’s probably why Target’s Cartwheel has seen more than 22 million downloads! By creating custom discounts for users, they’ve seen $3 billion in annual sales from the mobile loyalty program.

• Value beyond loyalty.  Provide features that make it easier to purchase from or engage with your brand. Consider Amazon Prime. What started as free shipping for members has evolved into special member deal days, free access to millions of book and movie titles and more. The phenomenally successful subscription program netted Amazon more than $6.4 billion in 2016 alone!

• Easy-to-collect rewards that never expire.  Avoid implementing complicated reward redemption processes that can ruin consumer perception of your brand. Give customers many options for redemption such as a fixed discount or free shipping, store credit, or even a member-only specialty product or service. By keeping reward points alive, more customers will take advantage of your offers over time. For instance, Delta SkyMiles never expire, allowing customers who don’t travel as often to keep their miles. But Delta recently changed its program to offer frequent travelers more redemption opportunities, resulting in a 14 percent increase in redemptions year-over-year.

• Solve member pain points. No one does loyalty better than Starbucks. About 27 percent of U.S. company-operated transactions pass through its mobile app and that didn’t happen by accident. With one of the strongest loyalty programs in the industry, Starbucks enjoys a rabid fan following. The company discovered most of its customers who purchased Starbuck’s gift cards went on to use the cards themselves, wanting easier payment methods that simplified and enhanced their in-store experiences. With this insight, Starbucks leveraged their existing mobile loyalty program to add in mobile order and payment, making it easier for patrons to enjoy their Starbucks experience.

“Starbucks is engaging more deeply – and more frequently – and expanding its base of loyal customers faster and more consistently today than ever before. – Howard Schultz, Starbucks chairman and CEO

Tackling the development of a mobile loyalty rewards program

Building a loyalty program is a big undertaking, but it shouldn’t be a burden on your business or your employees. Your existing marketing technology stack should offer several integrations such as point-of-sale, scheduling systems and CRM, that make tracking loyalty membership, purchase history and contact information easy.

Before beginning development, make sure you understand what your customers want. Loyalty marketing expert Howard Schneider says, “Savvy and strategic companies are now looking beyond these rewards programs to delight, create and retain loyal customers. They are looking to solve customers’ problems and soothe pain points.”

Take time to conduct user interviews, focus groups, competitive research and third-party integration research. Look at your web analytics and sales metrics to see what drives the most conversions. Evaluate previous marketing campaigns to see what worked. You want to make sure the program will bring meaningful results to both your customers and your business.

Related: Developing a Mobile App Roadmap

If you build on top of existing systems, you can manage sales entirely on the mobile app (eg. purchasing food in-app, scheduling service appointments) while using your existing backend systems (eg. printing a ticket in the kitchen) to manage operations.

“Mobile will ultimately be the way you provision most of your services. The way I like to put it is, the answer should always be mobile first. You should always put your best team [o]n your mobile app,” says Eric Schmidt, Executive Chairman for Alphabet, Inc.

Conclusion

Mobile loyalty programs help improve the customer experience better than any other channel by making redemption easy and instantaneous for the user. They provide deep insight into customer behavior that marketers can leverage to better understand what customers want, how to bring value to their lives and how to capture their brand loyalty for life.

Amazon CEO Jeff Bezos said, “It’s our job every day to make every important aspect of the customer experience a little bit better.” Anything marketers, product owners or brand managers can do to improve customers’ experiences increases the chance that those customers choose our products and services over our competitors’.