Commentary

Loyal To A Second Pass: How Apple's Passbook Could Remake Holiday Cheer

For a company known more for improving existing technology versus wholly reinventing it, Apple’s Passbook app fits well into that narrative. One of iOS 6’s lesser-known add-ons, Passbook might well win the e-wallet and mobile loyalty battle -- even beating Google, considered an early leader. But the true test of Passbook’s potential isn’t against Google Wallet or Paypal, but with consumers, pro-Passbook companies, and the upcoming holiday season.

Passbook is an Apple iOS 6 software-embedded application that allows users to collect and organize a growing number of virtual gift cards, coupons, passes, tickets and loyalty memberships without physical loyalty cards. All that first-time users have to do is load and store their individual program membership data into the Passbook platform.

Users can manage multiple accounts, track their points’ accumulation and receive location-specific notifications offering even more timely and relevant rewards. Passbook users can shop and pay via a mobile transaction or they can buy in-store, scanning on-screen barcodes. Rather than risking a near-field communications (NFC) venture -- which many industry watchers thought would be standard on the new iPhone 5 -- Apple’s traditional barcode approach makes Passbook accessible to consumers' and retailers' existing mindsets and technological comfort zones, not to mention real-world compatibility.

Retailers Loyal to the “Digital Holiday Cheer”

While it’s easy to pass off Passbook as another company’s attempt to break into the mobile wallet and loyalty sphere, doing so fails to appreciate Apple’s potential. Introduced with iOS 6 in September, it’s likely the pre-holiday timing helped consumers become fully app-aware. What started with only a few supporters -- many of them airlines -- now counts 14 companies including American Airlines, Starbucks, Target and Walgreens.

Recent data also shows that iOS 6 adoption rates -- 61% in the U.S. and Canada one month after launch -- are some of the fastest for a mobile operating system. Combined with the fact that some 56% of Americans now own smartphones, Passbook might just have the potential to reach critical mass appeal.

Confirmation of that appeal could come in a matter of weeks as the holiday season gets underway. Retailers know that in many cases, up to 40% of their annual revenue comes in the shopping torrent between Thanksgiving and New Year's, and Cyber Monday raked in an estimated $1.25 billion in revenue in 2011 -- a fact that big-box retailers like Target are keenly aware of and hope to increase by linking their brand to the Passbook platform.

Experiencing More With Less

Passbook allows retailers to connect with their consumers and build brand loyalty through real-time offers and communications, without the message bombardment of earlier means (read: coupons). At the point-of-sale, Passbook helps retailers reduce customer wait time and improve productivity while minimizing lost sales. However, maturity for Passbook means that more companies need to join. If allowed to mature, the organization and management of individual loyalty programs will become more customer-centric within the Passbook environment -- and ideally, those in the retail, entertainment, hospitality and air travel industries will capitalize on the ways their verticals have been brought together. Passbook would also benefit from enhanced loyalty reward crossover, breaking down the sometimes-siloed environments in which those verticals exist.

Not only can rewards be potentially shared between verticals, but personal shopper data and analytics gathered from each consumer loyalty program can be managed and shared in a more efficient manner. These insights will allow retailers to track and measure consumer behaviors while enhancing the customer experience. Overall, retailers will be positioned to effectively acquire, engage and reward consumers across multiple touchpoints and through multiple channels -- Web, email, SMS, social media, and mobile.

So will this holiday season be the one where retailers fully embrace Passbook, and with it tenets of the omni-channel loyalty approach -- an approach that requires “an enterprise level initiative” or “ground up” approach completely integrated loyalty program, inseparable from the parent brand?

It’s hard to say. As I said in the opening of this piece, Apple has a long history of improving what’s already in existence. It was Xerox, not Apple, that designed the first graphical user interface for home computing. Digital media and MP3s were around years before iTunes. And as evidenced by Google Wallet, PayPal and newcomer Belly, the loyalty and e-wallet arena are competitor-rich.

But this is exactly the kind of an environment in which one company in particular thrives. Apple.

So if you’ve passed on Passbook, give it a second look. Your wallet may just thank you. 

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