• by Hugo Hanselmann , May 7, 2013

Loyalty programs are undeniably an effective way of attracting, retaining, and turning consumers into a company’s ‘model customer’. Proof of this powerful concept has never been more prevalent.  Some consumers fly a cross-country round-trip in a day to receive those extra miles and qualify for ‘super-special-ribbon’ status before their deadlines to do so expire. More than a few people reading this could be nodding their heads now.

There are currently over 2.1 billion different loyalty programs in the United States alone. Of these 2.1 billion, each household is enrolled in an average of 18 loyalty programs. Surprisingly enough, it doesn’t seem to be the actual rewards offered that prompts a consumer to sign up. According to an ACI Worldwide study, 81% of consumers are unsure of the benefits offered by the reward programs they are enrolled in. And worse, 44% of the respondents reported having a negative experience with a loyalty program that they were enrolled in.

In addition to the fact that benefits are being offered, what does a loyalty program needs to offer to entice consumers? Is it the gloss that your local sub shop used on their punch card? Is it the exclusive access to content? Looking at credit cards, programs for top tier consumers are often branded as “Black” or “Platinum” to show exclusivity. Or is it the ability to effectively communicate with consumers via a loyalty program? According to a Colloquy Talk study, only 31% of Americans find loyalty program communications “extremely effective” and a mere 17% would describe them as “very influential”.

Based on this data, marketers need to rethink the way of engaging with participants of their loyalty program to better influence their purchasing decisions. But there is a silver lining: Mobile.

Mobile phone subscriptions are set to overtake the world population in 2013. There will be more mobile devices than people.  Here is a closer look at why mobile marketers can hit a home run with mobile loyalty programs starting this year:

Mobile is the consumer’s new home turf. As marketers, we always look at the channels that consumers use the most.  And that channel is going to be mobile. Gone are the days where the primary reason to own a phone was to be able to talk to people. It has become a personal news and entertainment hub.

The 2013 Digital Publishing Report by Adobe shows that the number one activity consumers do on a smartphone is check their emails, beating making calls by 1%. Consumer prefer to receive communication efforts over text; an estimated 8.6 trillion text messages are sent worldwide every year, averaging out to roughly 1,433 texts per mobile phone subscription per year. The Adobe report also states that 58% of the respondents typically use their smartphone for updating Facebook. Increasingly consumers use apps, not mobile sites, to get information quickly. A report from Flurry Analytics shows that the average mobile user spends 94 minutes per day engaging with apps on their phones.

Every day, we get in more data about the use of social and mobile channels. Numbers change, but the trend is: usage goes up - rapidly. This means for marketers, loyalty program must meet modern consumers on their home turf, the mobile playing field.

Mobile provides excellent feedback. Mobile programs also allow getting better and faster feedback from consumers. Being designed as a two-way communication between brands and program participants, the effectiveness of mobile loyalty programs can be evaluated quickly. Like the app ratings on iTunes, consumers can instantly message a brand when they see an aspect of the program that they don’t like. Brands are able to respond and adapt program elements, and alert program participants about changes.

Mobile loyalty programs will be a game-changer.  And now is the time to make this change happen. According to an Accenture study, only 1 in 4 consumers feel “very loyal” to brands they interact with. Although certain reasons for this trend, such as increased global competition, low switching costs, and easy access to competing brands via the internet, are out of a brand’s control, that doesn’t mean something can’t be done.

Creating a mobile loyalty program is a step in the right direction. By meeting consumers’ on their digital home turf, marketers can hit a home run.