Why should your loyalty programme be integrated with a mobile app? How can businesses concentrate more on what customers want from their loyalty programmes? Which methods do the biggest retailers utilise for their loyalty programmes?
You undoubtedly heard (or perhaps even felt) the agitated cries of customers who were upset that Starbucks and American Airlines altered their reward programmes. Perhaps the sudden announcement that McDonald’s wants a piece of the loyalty programme pie as well caught you off guard.
What is going on outside?
At first glance, it would appear that these companies are tinkering with their systems, which generates more controversy than satisfied clientele. However, don’t overlook one crucial point: the goal of all of these firms’ initiatives is to satisfy their customers because doing so will help them generate more long-term sales.
And how precisely do they accomplish it? I want to emphasise why their recent moves were actually the right ones before you criticise them based on any unfavourable social media buzz. Additionally, by studying their examples, you can learn how to improve your own loyalty programme.
- Starbucks’ experience teaches us that a smart mobile app encourages regular participation in loyalty programmes.
According to TechCrunch, 85% of customers spend the most of their time in mobile apps, which is something big retailers are aware of. (I’ve just started keeping track of the minutes, even hours, that I spend using my favourite applications, which range from Evernote to Instagram.)
So far, how have the titans responded to this trend?
According to Business Insider, mobile orders account for 20% of Starbucks’ overall US sales. How did they arrive at these figures? Because it provided these three incredible advantages, Starbucks has always based its Rewards Program around its own mobile app:
Mobile loyalty card: In addition to using their regular plastic cards, loyalty members can also accrue stars by using the Starbucks mobile app to make transactions. This makes it much easier for the business to monitor member purchasing patterns.
Customers can add funds to their Starbucks loyalty app’s digital wallet for next purchases. Because of this, Starbucks reportedly has more cash on hand than certain banks! Customers have added $1.2 billion to their Starbucks cards (both the physical cards and the app) since January 1st. and the year is barely halfway through!
Order and pay in advance services: The ideal client experience! You may simply order food and drinks whenever you want through the Starbucks mobile app, pay for them, and pick them up at the nearby location! No more wasting time by standing in line. It seems sense that this feature is essential to Starbucks’ success given that the company stated pay-ahead transactions account for 10% of all transactions.
- McDonald’s the copycat: “Mass personalisation” increases frequency of purchases
In their loyalty programmes, Starbucks has 12 million members and Dunkin Donuts has 4 million. Then along comes McDonald’s, which is keen to emulate its most formidable rivals. It makes sense that they launched a loyalty programme centred on their mobile app, which was first made available last year and has since received 10 million downloads. (Hmm, I can smell Starbucks in the air.)
What is the company’s strategy for its brand-new loyalty programme?
They first intend to accomplish three primary objectives with it:
Using monitored preferences and purchase history, businesses can forge stronger bonds with their customers.
With targeted offers given straight through the mobile app, you may reactivate clients who are losing interest.
Encourage regular visits to boost traffic and revenue.
How will it operate in practise?
We’ll have to wait to find out because the programme won’t commence until later this year or at the start of 2017. However, one thing is certain. If a consumer hasn’t been in a given amount of time, McDonald’s will be able to ping them with customised offers based on their preferred burgers or beverages. What a fantastic strategy to entice repeat business!
And it appears like McDonald’s is thinking about paying customers who make a certain amount of purchases through their loyalty programme, much like Starbucks did in the past. But if they’re wise, they’ll take Starbucks’ most rece
- Not all purchases at Starbucks and American Airlines are created equal.
In a loyalty programme, you can give customers points, stars, diamonds, or anything else you like after they make a purchase. That is the usual practise.
Now for the major “BUT,” though! Determining your program’s reward mechanism—or, more specifically, how consumers are rewarded—is essential. Two common standards can be used to reward them:
How much money they spend or how many purchases they make.
In actuality, two well-known brands recently switched from “A” to “B” as their reward system. Let’s investigate why!
American Airlines was first.
Their rewards system was really straightforward: based on the number of miles you actually flew with them, you were awarded reward points (miles). This fits within category “A.”
However, they overlooked one very crucial aspect of this idea: regardless of how much each consumer bought on their individual aircraft tickets, they could both earn the same number of miles. Because of this, they altered their strategy at the start of the year, and now
After that, go to Starbucks Rewards. Customers used to get stars with each purchase until their recent adjustments. In addition to selecting the “A” mechanism, their programme had the following three issues:
Huge holes: You may recall that you used to receive a free drink after making 12 purchases. There was, however, a cute little workaround for this. You may purchase each coffee separately rather than purchasing 4 coffees at once, earning you 4 stars right away. But what about all the other customers who, while ordering many drinks, only wanted to make one payment?
Poor customer experience: As a result of this cunning ploy, customers were forced to wait in line for longer and longer periods of time as an increasing number of customers completed repeated purchases to obtain the maximum number of stars. That wasn’t exactly equitable for the other people.
Quickly redeeming: After earning 12 stars, Starbucks handed even the most expensive products out to consumers who may have been buying the cheapest coffee from them all along because of the aforementioned factors.
Business-wise, it is easy to see why Starbucks updated its reward programme this year. Customers now receive two stars for every dollar spent. Stars are considerably easier to earn, but a lot more stars must be gathered to receive your reward. The organisation may also use it to reward their most valuable clients while also getting rid of all the issues their previous loyalty programme had.
- Amazon Prime: The next-generation approach to client satisfaction
According to critics, one aspect of today’s loyalty programmes is lacking: they don’t genuinely offer their clients REAL VALUE. I’d want to now demonstrate to these critics how successfully Amazon Prime has maintained the satisfaction of its devoted customers.
In addition to the exclusive offers they’ve continued to provide, like thousands of free movies and songs and free 2-day shipping, they are also opening an online supermarket in the UK for their loyal customers. (It has been accessible in the US since 2007).
What makes this adjustment so advantageous?
Prime members have access to AmazonFresh for an additional monthly charge of £6.99, which enables them to:
Online ordering makes it convenient to order fresh produce, groceries, and other items. For a fair price, 130,000 products are delivered quickly.
Purchase unique cuisine from regional vendors.
See? The secret to Amazon’s innovation is their ability to flawlessly cater to their customers’ demands and give them the easiest, fastest, and most enjoyable experience possible. In this instance, they simplified the laborious process of weekly shopping into a few clicks!
- Uber: Using a reward programme to advertise a premium service
The Uber situation is a bit peculiar. They never really meant to create a rewards programme because their customer retention rate is organically strong.
However, did you know that they actually ran a covert VIP programme for many years?
After 100 rides, the VIP membership becomes available, however instead of the customary rewards for loyalty, such discounts, the VIP programme promises better cars and exclusive events for users. But to be honest, not all regular Uber users were happy with it. To put it simply, while they could be rewarded with better cars, doing so also meant higher charges and longer wait times.
Conclusion
You’ve seen that companies like Starbucks, American Airlines, McDonald’s, Amazon Prime, and even Uber want to meet the requirements of its customers in a variety of ways, including:
providing them with incredibly upscale services
contacting them using a mobile device
By valuing each customer according to their spending, it is possible to provide high-value consumers with better reward opportunities.
Which of these examples do you like best? Which strategies are your favourites? What programmes do you believe won’t be successful for these brands over the long term?
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