Everyone likes to get a discount. And every merchant wants customers in their store. No wonder, then, the success of deal-oriented apps in the mobile sector, as perhaps best popularized by Groupon.
But, as with any trend that begins to mature, the simple bargain between the merchants and customers that use these apps has begun to wear thin, with too much clutter to wade through for buyers and too much competition for sellers. Sure, newer techniques like time-sensitive group deals can spike business during that Friday night special, but what can the companies providing such deals – especially smaller, locally oriented businesses – do to keep these customers coming back?
Peter Krasilovsky of BIA/Kelsey, echoes this concern, citing their research that indicates how “The increase in audience fragmentation presents challenges for advertisers looking to connect with local consumers.” As it turns out, programs that encourage customer loyalty provide a key solution.
Targeting a local audience, with the added reach and convenience of a mobile app, allows businesses to create a longer-term relationship with customers. As they cultivate the relationship, businesses can grow a loyal following by providing both monetary and non-monetary rewards. Via the interactive communication enhanced by an app, customers can receive updates, last-minute deals, and insight into the business.
“Merchants need to get beyond simple discounting and focus on the long-term value of the customer relationship,” says Gerry Goldstein of Yoohoot, a maker of solutions that enable local businesses to connect with nearby customers.
“Loyalty programs enable merchants to develop marketing programs that have long-term sustainable value while providing rich data about visit frequency and spend,” Goldstein continues. “Loyalty provides insight about consumers that allows merchants to better target their buyers, thus delivering a more sophisticated and satisfying experience for all.”
With potential benefits for everyone – and, as long as assurances of security and privacy are evident – customers are more inclined to provide information to local businesses that in return provide them with unique rewards that they value. The better both employees and customers know the system, the more effective such promotions can become.
So far, app designers have employed a variety of techniques – social networking, game mechanics, daily deals, and the like – to motivate repeat purchasing. For example, mobile app makers like Foursquare and Gowalla have done an excellent job providing baseline incentives for their users, by placing a large focus on game mechanics and social networking.
Users of these apps are effectively encouraged to share their location through check-ins – essentially using either app as a loyalty card punch, by publicly displaying their loyalty (weak or strong) to merchants. Yet, app users can be fickle. And while social networking and daily deals apps certainly won’t disappear, it’s clear that they are honing their updated designs and calls to action around the best ways to target and reward buyers.
As the benefits of rewards systems are recognized, loyalty is certain to become much more prominent in app functionality and design. After all, repeat business is among the most sought after goals by any company.