THE 10 COMMANDMENTSOF MOBILE LOYALTY

© 2015 MOBGEN B.V. All rights reserved. May not be copied or distributed without permission.

How to use the mobile channel to establish and deepen valuable relationships with consumers

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© 2015 MOBGEN B.V. All rights reserved. May not be copied or distributed without permission.

INTRODUCTION

THE MOBILE PHONE IS THE MOST IMPORTANT GATEWAY INTO THE LIFE OF THE MODERN CONSUMER

At the start of 2015, the number of mobile telephone subscriptions worldwide

totalled 7.2 billion. A figure which annually increases by 5 percent [1]. During the

year’s first quarter, more than a third of the world’s eCommerce purchases

were made via the mobile channel [2]. In the same period, the IOS and Android

apps stores were offering more than 2.5 billion apps between them. Consumers

now spend more time using these apps than they do on their desktop or mobile

web [3].

In a world where brands have to fight increasingly hard for consumer attention, it is

essential to remain within reach throughout the entire customer journey. Now that

the vast majority of consumers are mobile, brands have no choice but to follow

suit. Claiming a space via the mobile channel is therefore a key challenge for eve-

ry marketer. This battle is already in full force. And the arena is multi-faceted and

intense, just like the relationship between consumers and their mobile phones.

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The mobile phone influences things such as how consumers gather

information, move around and orientate, make purchases, plan holidays

and conduct relationships. You could say it’s the logical extension for

immediately satisfying a great many daily needs. For brands who understand

how they can integrate themselves here, a rich array of opportunities for

establishing and intensifying consumer relationships lies open. However,

effectively capitalising on these opportunities isn’t simple.

A great many downloaded apps are forgotten about after a short period of

use, or simply not even downloaded in the first place [4]. The big question

this raises is: which conditions do brands’ apps need to satisfy in order to

establish lasting and selfstrengthening relationships with customers? To provide

a thorough answer, MOBGEN analysed 35 successful apps from large retailers,

banks, airlines and hotel chains.

Selection for analysis was based on significant qualities such as the app being

downloaded a large number of times, having high ratings for things such as

user interface and user experience, and the achievement of commercial

success. The careful analyses of the selected apps together with a large

amount of relevant research led to us being able to define 10 key conditions

for optimal contact with the modern consumer. MOBGEN calls these ‘The 10

Commandments of Mobile Loyalty’.

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THE 10 COMMANDMENTS OF MOBILE LOYALTY

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1ENTICE THE USER THROUGH THEIR PERSONAL PROFILE

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The personal profile is the logical gathering place for all of an app user’s most

important personal information. For example, their name, age, address or location

and a host of other personal preferences which may be relevant to their relationship

with the brand. This information is a prerequisite for getting to know the consumer

better, and for establishing a good position from which to offer relevant personalised

services and content.

To coax a user into sharing their information, the first login experience needs to

be as accessible and simple as possible. This can be facilitated by things such as

social login [5]. The user’s personal profile can eventually be built up by asking

more detailed questions at a later stage. For an optimal result, the brand should

always explain how the users’ information will be used to deliver them added

value. More information about the power of personalised offers via the mobile

channel follows later.

Users’ willingness to share more information can be further increased through enabling a

high level of control and choice about what’s shared. Various research shows that

consumers feel more at ease when they know they are able to change or remove

details at any time. Also that they appreciate being allowed to decide how and

for what purpose their information is used. For example, whether or not to enable

location-based offers. Just about all the apps MOBGEN researched offered users

a wide choice of options.

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2OFFER THE USER PERSONALLY RELEVANT CONTENT

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A large proportion of downloaded apps are only ever used once or twice. An

obvious reason for this is that users find insufficient added value in these apps.

One of the most effective ways to demonstrate added value is to offer personally

relevant content. [6]. The apps examined in MOBGEN’s research were found, in

particular, to be making use of exclusive mobile first content with optimised

visuals and video displays. This content serves a major role in informing users and

arousing their curiosity.

Successful content apps from Urban Outfitters and Victoria’s Secret Pink provide

good examples of this approach. The latter generates as much as 70 percent

of the famous lingerie brand’s digital traffic in the millennial customer segment.

Users are offered based on their personal preference, content such as daily new

backstage videos from Victoria’s Secret’s acclaimed fashion shows and other

events. ‘Meanwhile, Urban Outfitters’ app provides its users with things such as a

profile-based continual stream of fashion news and tips. Images of models dressed

in the brand’s clothes are presented via Instagram’s integrated photo service. More

information about the use of social media in this context follows later.

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3CARE FOR USERS BY OFFERING SERVICES WITH RELEVANT ADDED VALUE

Mobile phones can provide an optimal connection between brand and consumer

at any place and time. The services which enable consumers to use their

phones at any given moment are therefore an important factor [7].

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For creative brands, this presents a whole world of opportunities for offering relevant

added value. In this aspect, a proportion of the researched apps provided a

directly relevant relationship with the product, for example with the ability to scan

products or services, to arrange personalisation, or to order.

Other apps offer users relevant related information and possibilities such as

maintenance tips or advice on smarter and more efficient ways to use their products.

Of course, detailed knowledge of the consumer’s needs and wishes are of

enormous value here. Successful brands engage specialised User Experience

(UX) and User Interface (UI) teams who precisely understand how to place

themselves in the consumer’s world. This knowledge results in focussed services

which make users’ lives easier and more pleasurable.

Two apps which really set themselves apart in this manner are those by Starwood

Hotels and Walgreens. To simplify the check in process and cut waiting time at the

front desk, the hotel chain’s app enables guests to check in and open the door to

their room. Meanwhile, the pharmacy Walgreens’ app helps users by reminding

them to take their medicine at the time it’s due. And when they have almost run

out, the user can simply scan the package and collect a new supply at the shop.

Possibly also with discounts from app-delivered coupons and other advertisements.

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INTEGRATE THE LOYALTY PROGRAMME

Every business person is familiar with the rule of thumb that 20 percent of the

customer base accounts for 80 percent of the income. Research shows that

retaining 5 percent more customers can lead to a 25 to 125 percent increase in

business, and that the cost of doing this is generally lower than that of attracting

new clients [8]. Loyalty programmes therefore remain as popular as ever. What’s

changed is that more and more brands are electing to integrate their plastic

loyalty programs in their apps.

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Customer needs are once again a leading factor here. An increasing number of

consumers need digital access to their loyalty programmes. What’s more, they’re

happier with that than the plastic alternative. They’re also more likely to take part:

the 2015 average of 14 programmes compares to 10 in the previous year [9]. A major

reason is the increased convenience. A user will typically have their mobile loyalty

programme with them at all times, in contrast to the often forgotten plastic card.

Intrinsic mobile telephone functionalities such as the screen, camera and barcode

and QR code readers offer a great choice of additional usage possibilities.

A good example of an app which makes optimal use of these aspects is

the Shell Motorist App. The loyalty card that’s integrated in the app in the

Netherlands can be displayed on the screen as a QR code. With help from the

set-up-to-preference visual cards, the user can view simple and well-organised

information about recent purchases, points balance or other relevant details.

Additionally, it can be personalised providing time and location-dependent

offers. For example, an offer for a favourite sandwich, at the exact moment the

customer drives in to the petrol station.

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OFFER USERS DISCOUNTS AND PROMOTION CODES AT THE RIGHT TIME AND LOCATION

A major additional benefit of mobile loyalty programmes is the ability to send

push notifications. Particularly if this is relevantly seized upon with regard to the

user’s time and location-dependent needs, their engagement through this method

can significantly increase. One of the most effective applications of use is the sending

of promotion and discount codes. Additionally, distribution of such codes via the

mobile app can be much more efficiently targeted.

Mobile technology offers a whole range of extra opportunities in this area. For

example, the fact that pretty much every phone includes GPS functionality makes it

possible to specifically target users who are in a shop’s immediate vicinity. Or iBeacon

technology, with which customers inside a shop can receive tips and offers at exactly

the right moment, for instance as they’re standing next to a particular shelf.

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Additionally, this makes it possible to record which shelves a customer has paused

by for longer, and which products eventually ended up in their shopping basket.

These new possibilities result in very effective communication. Research has

shown the activation rate of mobile offers in international campaigns to be 25 to

35 percent higher than similar ones done via email [10]. When run in parallel

with direct-marketing messages, this percentage can rise to an increase of 90

percent. Similar percentages inevitably lead to the conclusion that the mobile

channel is outstandingly suitable for rewarding loyalty customers with targeted

offers or other premium benefits.

The ability to share relevant in-store information with customers has been put to

use in a very effective way by Macy’s. The department store chain installed iBeacon

technology in its shops, through which customers are offered various types of

content that adds value to their visit. So they receive relevant discount codes as

they pass through the different departments, which can act as an extra trigger for

purchasing products they have already shown an interest in. During the American

‘Black Friday’ sale in 2014, customers received offers and gifts which they could

redeem via a QR code. The campaign was extremely successful.

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ENSURE A FAST AND SIMPLE POSSIBILITY TO REDEEMING POINTS

Fast, simple, and conveniently-organised redemption of loyalty points is a major

motivating factor for many customers’ participation in programmes [11].

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Brands can effectively complete the ‘loyalty loop’ by integrating this essential step

in the app, for example by enabling direct access to webshops or redemption

of personalised offers. This considerably improves the customer’s user experience,

and increases their motivation for maintaining and intensifying their relationship with

the brand.

An outstanding example of a brand which understands this well is Starbucks. Back

in 2009, the coffee chain introduced a loyalty programme and ability to pay which

works by scanning a barcode displayed on a mobile telephone screen. According

to Starbucks, around 13 million of their customers (Q4 2014) have got the app on

their phone, and this is used for 16 percent of the 47 million weekly transactions. This

success is partly due to the fact that the accumulation and spending of points

(‘stars’) is made really simple.

As each purchase is paid for via the app, Starbucks adds the earned stars directly

to the customer’s digital account. This is immediately visible on the homescreen.

At the same time, users can see how many points they still need to get a reward,

or to reach the loyalty programme’s next level (e.g. Welcome, Green or Gold).

When their total reaches a certain level, the customer receives a separate notification

to tell them things such as they’ve earned enough points get free food or drinks.

To cash in the reward, all they have to do is get the barista to scan the app-generated

barcode.

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OFFER A SIMPLE MOBILE PAYMENT SOLUTION

The mobile telephone is the new wallet. These days just about all new smart-

phones are equipped with the necessary technology as standard, and its use is

expanding rapidly. Compared to payment by PIN, mobile phone payments are on

average 7 seconds faster. Compared to cash, 16 seconds faster. This impacts time,

effort, and turnover. An increasing number of brands have therefore taken the

logical step of integrating a payment function in their app.

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This method also enables them to take control of an important part of the custo-

mer experience, and the essential transaction data which comes out of it. Data

through which the brand can more closely link the customer’s purchasing

behaviour to their loyalty card. With this knowledge, communications with

customers via the app can further be personalised, for example, with targeted

offers for the most relevant products at the right moment. Additionally, research

has shown that the ability to pay via the mobile channel strengthens customers’

motivation to use discount coupons, and vice versa [12].

The previously mentioned example concerning Starbucks demonstrates how

important and relevant the incorporation of mobile payment in a branded app

can be. As already stated, around 13 million of the American coffee chain’s

customers are already using their app, which accounts for 16 percent of their 47 million

weekly transactions. According to well-substantiated estimates by Business

Insider, the chain generated around 1.5 billion dollars turnover in 2014 via the mobile

app. And the number of mobile transactions is doubling every 2 years.

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DISTRIBUTE YOUR CAMPAIGNS VIA THE APP

The effectiveness of large scale email campaigns is on the decline. This is one of

the major reasons brands are increasingly turning to the mobile channel for

distribution.

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Mobile apps present numerous and multi-faceted opportunities to do this in creative

and personalised ways. Research at Coca-Cola, Walmart, MasterCard and AT&T

shows that greater emphasis on the mobile channel leads to a significant rise in

total campaign ROI, without having to increase the overall budget [13].

Subway is one of the brands that has successfully utilised their app’s opportunity

to distribute targeted, creative and personalised campaigns. Our own research on

the restaurant chain showed that only 1 percent of discount coupons distributed

to customers via email were redeemed. The take-up on discount codes distributed

via Subway’s app was nine times as high. A total of 9 percent of all clients who

received a discount code via their app stated they’d used it to redeem offers at

the till.

Victoria’s Secret (previously mentioned) distributes almost all its campaigns via

their own app. For example, this was how the lingerie brand launched its Scavenger

Hunt campaign at the start of 2014. In this, each week users were challenged to

scan a new photo which the brand had switched out on its website, in shops and

on university campuses. Users who succeeded in scanning all the photos were

rewarded with small gifts and exclusive content. The promotion increased the

brand’s total monthly sales by no less than 2 percent [14].

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INTEGRATE THE USER’SSOCIAL MEDIA

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Social media is an essential part of many consumers’ (digital) lives. For this reason,

apps which succeed in making a connection between their own purpose and the

user’s social media activities are a step ahead when it comes to increasing

their brand engagement [15]. There are plenty of appealing options for realising

this. Various clothing brands included in the MOBGEN app research did so by

sharing pictures of garments and collections via Facebook, Instagram and Pinterest.

A major benefit is the ability to add the likes generated through this method to the

users’ profile information. This gives the brand the opportunity to compile a more

accurate picture of the user. Through this, subsequent communication can be

more tightly aligned with their needs and interests. Additionally, social login

makes the app considerably easier to use due to the increased convenience.

Some apps also offer users the opportunity to view and order clothes they like

directly via social media. Urban Outfitters’ app is an outstanding example of this. Via

Instagram’s integrated photo service, the app shows selected images of models

and consumers wearing the brand’s clothes. Users can purchase the items

shown in these pictures by clicking on the relevant part of the in-app integrated

webshop.

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ENABLE IN-APP SHOPPING

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The number of purchases made via the mobile channel is rising rapidly [16].

Consumers want to be free to make changes at any given time right up till the

moment of purchase, and expect brands to facilitate this with flexibility and ease.

A mobile eCommerce platform which offers seamless 24/7 shopping no longer

represents added value, but is an essential condition for optimal customer contact.

Integration of this platform into apps is therefore an effective and logical solution.

Brands which understand this well include Target, Amazon and Starbucks. Retail

chain Target’s app allows users to scan product packaging to make the purchase

online or save for a later time. If they shop online they can choose whether to have

the purchases delivered or made available for collection at the store. Meanwhile,

the Amazon Price Check app enables its users to get online price comparisons and

read reviews of photographed or scanned products, before ordering them instantly

from Amazon.

Starbucks is presently working on a service which makes it possible to place mobile

orders for coffee based on your current location. Thanks to the detailed insights they

have into purchasing times, locations, and products, the coffee chain is in a position

to give customers extremely relevant offers. “Dear customer, it’s almost four o’clock.

There’s a Starbucks 300 meters from you where you can collect your daily latte!

Or would you prefer us to bring it to you?”

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CONCLUSION

The mobile app is a very effective channel for keeping consumers up-to-date with

information, entertainment, news, social content, product information, discounts,

and other campaign communication. The intrinsic functionality contained in today’s

mobile phones means time and location relevance can be incorporated in these

communications. Analysis of (customer) data generated through the mobile

channel also makes it possible to create a closer rapport with their personal

preferences and requirements.

The Commandments of Mobile Loyalty form a powerful guideline for making optimal

use of these possibilities. It’s not absolutely necessary to apply every one of the

Commandments to every individual case. But combining various Commandments

to generate worthwhile synergy through the deepening of customer relationships

is a must. Brands which do this well can complete the entire customer journey from

beginning to end through their mobile application, and with that strongly enrich the

ever-important customer experience.

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MOBGEN is an abbreviation of Mobile Generation. The optimal combination

of technology, strategy and creativity within the mobile channel has been our

main driving force since we first started out in 2009. All the experts, technology

and knowledge we’ve amassed since then are brought together with this

specific goal. In the rapidly changing mobile landscape, at every turn we come

up with innovative new answers to the central question: How do you optimally

use the mobile channel to establish and deepen valuable relationships with

consumers? MOBGEN is happy to help your business find the best possible

answer to this question.

The establishing and intensifying of customer relationships via the mobile

channel has its own dynamic in every field. To best capitalise on these unique

dynamics, MOBGEN will be producing a series of industry-specific whitepapers

for retailers, banks, airlines and hotel chains. The first of these, which will be for

retail, is due to be published in August.

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A clear mobile strategy and business case is always an essential starting point.

It’s also crucial that the app performs optimally under all conditions, and that the

right tools are used to deploy and maintain it successfully worldwide.

MOBGEN is specialised in the optimum combination of technology, strategy

and creativity in the mobile channel. Everything we do revolves around a central

question: How can you best use the mobile channel to create and deepen a

valuable relationship with consumers?

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MOBGEN can help your company formulate the best possible answer.

Contact us:

MOBGEN AMSTERDAM +31 206 260 923

Ron Vrijmoet +31 650 462 637

Michiel Ebeling +31 621 275 923

Jordy Bossen +31 652 676 063

MOBGEN LONDON

Sam Contractor +44 785 440 5005

info@mobgen.com / mobgen.com

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REFERENCE LIST

[1] Ericsson Mobility Report (june 2015)

[2] Criteo State of Mobile Commerce Report, (Q1 2015)

[3] Comscore US Mobile App Report, (August 2014)

[4] Nielsen research (july 2015)

[5] LoginRadius: Social Login and Sharing Trends 2014 (May 2014)

[6] Oracle, Millenials and mobility: How businesses can tap into the app generation (May 2015)

[7] Forrester: CMO’s: Own Mobile to Own Customers, (May 2015)

[8] Maritz Loyalty Report (2013)

[9] Bond Brand Loyalty, 2015 Loyalty Report

[10], MOBGEN, Mobile Loyalty Research ( 2015)

[11] Bond Brand Loyalty, 2015 Loyalty Report

[12] Accenture Payment Services research (2013)

[13] MMA Cross Marketing Effectiveness Research (June 2015)

[14] App Annie & Internet Retailer Index ( Q1 2014)

[15] Salesforce, Mobile Behavior Report, 2014

[16] Criteo State of Mobile Commerce Report, Q1 2015

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