Rethinking Loyalty


By Samuel Greengard

These days, loyalty programs are a dime a dozen. As a result, a growing number of businesses are turning to information technology to amp up these programs and create greater value.

Probably the best example is Starbucks, which automatically tracks purchases and displays stars (points) through its iPhone and Android payment app. In reality, paying with the Starbucks smartphone app isn't any easier or faster than pulling out a debit or credit card and allowing the cashier to swipe it.

The value derives from the way the entire process takes place. You don't need a separate card to receive your points. The payment system is the system.

Safeway also has moved toward a closed-loop system with its smartphone app. You can load coupons and deals onto the card, and they're automatically applied at checkout. This form of transactional marketing is sometimes referred to as a "complete feedback loop" because it provides a holistic view of a customer—and a person's behaviors. It puts analytics to work in a real-world way.

Unfortunately, too many organizations have assembled only part of the puzzle. A prime example is Lowe's Home Improvement. It offers an innovative MyLowe's program that lists all online and in-store purchases through a Website. However, the retailer continues to send out discount cards and coupons through snail mail instead of creating an electronic coupon or code that can be added to a MyLowe's account and automatically applied at checkout.

Another culprit is Best Buy. It has made major strides with its loyalty program: Its mobile app provides an excellent overview of points, purchases and offers. Best Buy also has created a system that coverts paper coupons to e-coupons through text messaging. But there's still an overall lack of integration. For example, I can't click on an e-mail or scan a QR code from a paper coupon and have the offer loaded to my iPhone app.

Retailers are making progress. But the fact remains that the average U.S. household has signed up for 14.1 loyalty programs but participates in only 6.2 of them. In order to maximize bottom-line results, merchants must better integrate offers, rewards and shopping tools to create a simpler and better experience.

Loyalty doesn't just happen; it’s earned.