The first loyalty programs emerged in the 1950s and relied on the principle of collecting stamps. This extremely simple system is still used, especially in cafés. With each order, we receive a stamp and get closer to the prize – usually a discount or a free product. Can such a mechanism also be used in a mobile application? What makes a loyalty application effective? In this article, I’ll answer these questions. Enjoy reading!
Stopping the Customer…
From an economic point of view, getting new customers is much less profitable than maintaining relationships with the existing ones – the costs of the latter are approximately 5 times higher. According to experts, loyalty programs do not generate significant sales increase, but work perfectly well as a way of attaching the consumer to the brand and creating a strong emotional bond. Therefore, companies have been willing to invest in them for many years. Contemporary consumers, accustomed to the latest technologies and convenience offered by the smartphone, expect brands to keep up with trends and innovation.
How Many Plastic Discount Cards Do You Have in Your Wallet?
Let’s get back to our café. We’ve made a purchase and happily hide the card in the wallet, enjoying the prospect of a saved penny and a free latte in a couple of weeks – and then we forget about it. At some point, our wallet starts to swell from countless discount cards that we rarely or never use. After some time, we just throw them away as unnecessary ballast. Sounds familiar, huh?
According to the 2017 CodeBroker survey, carrying discount cards frustrates most consumers, and 43% find it the greatest disadvantage of participating in loyalty programs. The 2016 Vibes report announces that 73% of smartphone users are interested in switching their paper cards to mobile solutions.
So What Makes a Loyalty Application Effective?
Simplicity is the key. An effective app is one that is easy to use and intuitive. After all, nothing is as discouraging in the use of an application as an excessive level of its complexity: the inability to find a button, too long a menu, or too many nesting levels.
According to a 2017 statistical survey, one of the main reasons for abandoning loyalty programs was the lack of interest in available prizes. In order to be able to effectively motivate customers, we need to know their needs, expectations and interests. Modern mobile applications provide many solutions that allow for effective user profiling and, thanks to the acquired knowledge, personalization of offers.
Gamification is the use of computer game mechanisms in areas not related to games. It is used to provide the user with motivating entertainment. It can be helpful to introduce the idea of competition into the application by creating scoring, rankings, badges and challenges. An eye-catching progress bar animation or illustrations do not provide the user with measurable financial benefits, but they spice up the user experience. Even if our application has nothing to do with a mobile game, it is worth trying gamification mechanisms.
The difficulty of earning points leading to the reward is the second major reason for abandoning loyalty programs. If the users fail to see their actions rewarded in the application quickly enough, they may feel bored or deceived. Regular smartphone users have this need to get everything here and now. Instant gratification in the form of small but frequent rewards will work more stimulating than the vision of a big reward in the long run. The registration and login process itself is also important. It should be simplified as much as possible – each step prolonging this action (e.g. the need to click on the confirmation link in your email box or credit card registration) may discourage our impatient Mr. Smith from continuing the registration process.
ToneZone 4Free – Example of a Loyalty Program for a Gym Network
ToneZone 4Free is a mobile loyalty application for customers of the ToneZone multiplex. After registration, the user gets access to discounts on products and services of the gym partners, including hairdressing salons, beauty salons, bookstores and others.
The application is based on the rewarding principle, offering extra benefits (with external partners) as long as we remain a customer of ToneZone. Users see exactly what amount they have saved by making standard purchases. The objective of the “game” is to use the discounts many times as to return the price of the pass to the gym.
The app is simple, clear and easy to use. It does not require additional steps beyond installation and registration. The user has an accurate overview of the benefits of using the app. And that’s what it’s all about.