Mobile Loyalty: The Good, The Bad & The Ugly
August 11, 2016
The mobile loyalty space has been one charged with fierce competition — fueled by the increasing use of technology in our daily lives. During the late 2000s and early 2010s, we saw the advent of Belly, LevelUp, Groupon and a host of other smaller companies with similar objectives.
What’s the APPeal?
Mobile loyalty apps tend to promise one basic premise: reward your customers and they will come back and spend more money, more frequently. From a technology standpoint, creating a system to reward customers for their purchases ranges from easy to much more complicated. Technically, if you are willing to be slightly intrusive to the restaurant, it is easy enough to record sales and credit the customer with some form of reward for their patronage that can be redeemed later. Woblet achieved this through in-restaurant tablets that could either wirelessly sync with a users’ phone or scan a purchase made through a QR code generated by the phone or physical card.
Why would a restaurant want to do this? The appeal to a customer is intrinsic: you spend money and receive delightful rewards for doing something you were already going to do if you engage with the rewards program. For a restaurant, the benefits of a loyalty program need to outweigh the inherent cost of running such a program. This means you need to, as a mobile loyalty solution, provide demonstrable value to the company.
From here, I am going take us through the good, the bad and the ugly of mobile loyalty apps. I’m going to go in reverse order for the sake of tackling this problem in the most honest way I can.
Proving your loyalty program is bringing in more customers who are spending more money, more frequently is an exercise in futility. If a restaurant is well run, organized and provides good value, how do you show you are not merely cannibalizing the restaurant’s own hard-won customers? I’ve yet to uncover a technique or methodology that can prove these results. Conversely, if a restaurant or business is terrible, hemorrhaging money or otherwise mismanaged, how do you justify spending money they likely don’t have on attracting more customers? Again, seeking to provide this answer is also an exercise in futility. Here’s why.
What I found during my time making loyalty apps is that the real world consequence of this problem is actually stress. As a loyalty solution, we spent countless hours on overhead and the management of our clients. We created countless graphs justifying our existence and invested hours and hours of development trying to mollify our most successful clients. Instead of focusing on building a quantifiable loyalty program for our clients and honing in on the best practices in rewards, we worked towards proving our value, which resulted in counter-productivity.
On a very basic level, there is a structural challenge to running a loyalty program for a business. How do you record the information about a transaction? The most intuitive, easy solution is to record the sale through the use of a software system that can identify and track your customers. With Woblet, the idea was having a QR code scanner that scanned an identifier for each customer printed onto a QR code on a card or generated in the app. The transaction is recorded by a cashier entering the amount paid by the customer. Then, the system credits the user with their sale with rewards which can be pulled up at the scanner in store by scanning the QR code.
So what’s bad about this? Everything is bad about this, and I say it from experience. This method requires cashiers to be in charge of informing the user about the program and educating them on the benefits, and it increases the workload for employees upon making a sale. They need to effectively ring the person up twice, and end to end, there are multiple points of failure beyond the control of the loyalty program. The system we made required internet in the restaurant that could be reliably extended via WiFi to the tablets used at the Point of Sale. It required some monitoring to make sure that restaurant staff didn’t provide fake sales to the system to “reward” their friends and family. In the end, we created a system that was both a pain in the ass to use and required a lot of tedious management in order to prove our worth.
So after explaining all the negatives I experienced, there were still a lot of positives. Loyalty programs have been used since the dawn of business in one form or another. Whether or not that is represented by the manager of your local coffee place giving you a free coffee on occasion for being a good customer or the frenzied boom and bust of programs like Groupon promising to bring loads of new customers to your business (successfully) and keeping them coming back (unsuccessfully). Loyalty will exist as long as people are selling goods to one another.
But what about mobile loyalty? The solution to avoiding the pitfalls I experienced is to make a program that delivers value outside the scope of mobile loyalty in a seamless fashion.
Life lessons for the mobile loyalty space
- Build a solution that integrates with pre-existing technologies used by a business.This will help mitigate the issues of being a giant burden to the business and needing to train people in the effective use of a mobile loyalty solution. Integrating with their existing POS system can help you track customers without having to train employees on program use. If you can push sales through the business’ pre-existing pipeline, you can manage the sale entirely on the mobile end of the solution (eg. purchasing food in app, making your sale in app) while utilizing their pre-existing pipeline (ie. printing a ticket in the kitchen).
- Deliver a useful product outside of the loyalty space.This may seem counterintuitive, but in context, this is the most valuable takeaway I have to offer. You can crunch the numbers and do analytics for a restaurant through your loyalty service, but you are just going to be getting into The Ugly of that process. Providing mobile ordering, checkout, inventory management, staff management or tools around these spaces with not only help make the experience seamless and simple, but it will be easier to track the use of rewards and how they can be used to drive business and ultimately increase revenue.Mobile loyalty programs have the potential to provide so much value and many of them do. By avoiding the pitfalls I outlined, you’ll be sure to have a more successful experience and program. If you don’t provide more than a punch card that can be handed to someone as they walk out the door, you don’t provide anything that anyone should be paying you for. My suggestion? Do better, do more.
Published August 11, 2016