How Smartphones & Social Media are Changing Loyalty Programs

From time to time we take the opportunity to publish viewpoints from outside the Access offices. Today we offer thoughts on mobile loyalty from John Gower of NerdWallet. If you're an expert in topics related to loyalty programs and are interested in contributing content to our blog, send an email to brandon.carter@accessdevelopment.com.

The meteoric rise of smartphones and social media is changing the business landscape, and loyalty programs are quickly adapting in order to keep customers interested. Although you will still find places use a paper punch card to track purchases and offer a free cup of coffee after a certain amount, the days of this type of loyalty program are numbered. Loyalty programs no longer have to be about a reward for a purchase incentive, but rewards for participation.

Smart phone apps and social media integration come in many different forms, and how businesses adopt new trends varies from company to company, but there are some common practices that all are implementing in order to engage the consumer.

Social media sites like Facebook and Twitter have become the new megaphone for companies. Instead of just marketing products on these sites, businesses are using them to create a closer relationship with the consumer. Loyalty isn’t just about buying a product, but having someone who will champion your product over competing brands. Through social networking sites, companies can create incentives where people are rewarded for sharing a post, liking something, becoming a fan, retweeting and various other methods. New programs like these put an emphasis on interaction, rather than a one to one ratio of purchasing to rewarding. Furthermore, consumers feel they have a personal stake in a company’s success.

Although, sharing a post for the chance to win a gift card may sound like a contest, it incentivizes loyalty within the consumer, and in turn that consumer recommends the same loyalty to their friends. The United States Small Business Administration highly recommends this tactic, stating: “look for services that offer social media integration – making it easy for customers to share your awesomeness with their friends and even earn points for likes, shares and online reviews.” When a company gives the impression that it cares about its customers, customers will respond positively and actively. Social media networks are only one piece of the puzzle, and smartphones are now making loyalty programs even more convenient and accessible than ever.

Beyond the fact that most smartphones have apps for social media sites, there are many apps and programs that specifically deal with loyalty programs and promote deals to consumers. Furthermore, these loyalty programs can be tailored to fit a person’s individual needs. Instead of generic rewards that anyone can receive, customers can feel like they’re being rewarded on their own merit. This is especially true with apps that can become activated when a person is in a certain location, and has displayed an interest in a certain store or product. Notifications can be sent to their phone letting them know, that since they bought something in the past, and they’re close by now, they can come back in the store and be rewarded with a special discount. Another store could prompt them to check in their location on a social media site, and receive discounts on items they tag or mention. A recent Forbes article sheds light on the growing trend of smartphone usage, and loyalty programs: “smartphone adoption is approximately 45% of all adults – up 10% since May 2011. Facebook reached on billion active users in October 2012. And gamification in the mobile space is proving to be a success in changing behavior.” In this context gamification means using game strategies and thinking, i.e. share to get rewarded, in order to promote engagement.

The further that loyalty programs integrate with the new technologies and social spheres the further they will drive consumers to participate. By restructuring their conception of loyalty programs, businesses will be more successful in gaining repeat customers. The landscape of loyalty programs is changing, and by making rewards more active and fun, companies can create relationships with consumers in a new, potentially more personal, way.

John Gower is a writer for NerdWallet, a personal finance website dedicated to helping business owners save money with financial tips on everything from social media marketing to credit union CD rates.

Sources:

SBA: http://www.sba.gov/community/blogs/7-tips-starting-successful-customer-loyalty-program

Forbes: http://www.forbes.com/sites/kellyclay/2012/12/15/will-2013-be-the-year-of-loyalty-programs/