The biggest dilemma facing innovators isn’t whether what they’re doing will cannibalize what makes them money today but rather getting enough people to try their innovations so that they become mainstream and can make money tomorrow.
Getting people to embrace the new — and make it a habit — is very, very hard to do.
University of College London researchers conclude that it takes 66 days, on average, for a consumer to do that “something new” each and every single one of those 66 days to totally break away from the old and never turn back.
Which brings us to mobile, payments and the in-store mobile payments experience.
It was all supposed to have just happened by now — or, depending on who you talk to, even a couple of years ago. After all, consumers all run around with smartphones. They use them consistently to help them decide what to buy and even where to shop. They’re staring at them while standing in line to pay in those stores.
Yet, even the slickest of mobile payments technologies hasn’t been able to break the consumer’s addiction to using plastic cards, despite mobile being a richer, more contextual and even much safer way to pay.
Technology alone isn’t enough to motivate consumers to break that habit. And, at least so far, even linking that cool technology to retailer-specific loyalty programs hasn’t made much of a dent either.
What could is an incentive to get those mobile-toting consumers over that 66-day hump to become a mobile-paying consumer in every single one of the brick-and-mortar merchants they shop.
A really good incentive, too — one that doesn’t introduce friction into their buying experience.
That’s the problem that Samsung set out to crack with the Samsung Rewards program launched a week ago.
Cue The Samsung Rewards Multiplier
Nana Murugesan, VP and GM of services and new business at Samsung Electronics America, told Karen Webster that the goal of Samsung Rewards was pretty simple: Give consumers a reason to use their Samsung Pay wallet every single time they step into a merchant location to buy something.
That reason: Give them rewards.
But instead of persuading the merchant to rejigger their points program or rewards platform to accommodate another new “Pay” player’s ambition to get consumers on board their platform, it’s Samsung — and not the merchant — that’s doling out the rewards points. Rewards points that are on top of whatever other rewards those consumers receive from the underlying payment method they’re using to complete those transactions.
A consumer who uses a card that gives her points or 2 percent cash back will still get that cash back plus Samsung points for every dollar spent. A consumer who uses a debit card gets points for those purchases now, too — rewards that, thanks to Durbin, have been as scarce as hen’s teeth for consumers.
“We want to incent consumers to use the wallet when they are shopping, wherever they are shopping,” Murugesan told Webster. “We’ve made this about Samsung Rewards because we want to make Samsung Pay part of the broader Samsung ecosystem, while rewarding consumers for using their digital wallet to buy things.”
The decision to create a rewards program, he noted, was a no-brainer: It’s what consumers value, especially the highly prized millennial demographic.
The decision to create this rewards accelerator, also obvious, he said — give the consumer a reason to make Samsung Pay a habit and make it as frictionless as possible for the consumer and the merchant to participate.
“We want to create new value for our consumers and the merchants they shop,” Murugesan said.
Make It Simple, Samsung
Samsung Rewards checks two important boxes: acceptance and incentive for continued usage.
Step one: Acceptance.
Consumers can pick a merchant, any merchant — almost literally.
The acquisition by Samsung of LoopPay and its MST technology means that the Samsung Pay wallet works at more than 93 percent of the merchant locations that accept the plastic card that consumers are in the habit of using.
That turns out to be a pretty important first step to getting consumers into the habit of pulling out their phone instead of their plastic card when they go to pay. Since it’s used in virtually all of the places they like to shop and not only in the places that have upgraded POS terminals, the uncertainty over where mobile payments can and can’t be used has been eliminated.
“A year since our launch, we are seeing many more Samsung Pay transactions going over MST rather than NFC — at a rate of 70 percent to 30 percent,” Murugesan told Webster. Samsung’s data suggests that Samsung Pay users are shopping at a variety of stores, from enterprise merchants to SMBs and from merchants with upgraded terminals to those without them.
Step Two: Incent to use — and use again.
Then, using whatever payment method a consumer has registered to her Samsung Pay wallet, the consumer rewards turbocharging begins.
Consumers get 10 points per purchase, and the more that consumers use their Samsung Pay wallets to pay at merchants, the more points they rack up. When consumers reach the silver level (a mere five purchases), consumers can watch their points double — at the gold level, they triple. At the end of each month, all rewards are carried forward, but consumers have the rewards multiplier clock set back and have to earn their gold and silver levels from scratch each month.
When it comes time to redeem points, Murugesan noted, customers have a few options. They can redeem their points for products and vouchers in the online Samsung store, they can get gift cards from Samsung’s merchant gift card mall or they can get good, old-fashioned cash back via a Citibank Visa gift card.
And for those rewards enthusiasts who also feel that Lady Luck is on their side, there’s an option to “Try Your Luck” that allows users to leverage their points to win bigger rewards, like a getaway weekend.
“We think this will be a great incentive and differentiate us,” Murugesan said.
What Makes Samsung Rewards Really Rewarding
Rewarding the consumer is an important step, and all agree a necessary one if changing consumer behavior is the name of the game. But there are also a few other subtleties inherent in Samsung Rewards that could end up packing a more powerful ecosystem punch as the program evolves.
Today, merchants do nothing to benefit from this program. Since Samsung Pay works with existing POS terminals, merchants gain the benefit of foot traffic in their stores and sales just by being an establishment that consumers like to shop and can use Samsung Pay to pay.
Issuers do nothing to benefit from this program. Cards registered to the Samsung Wallet that consumers like and use will continue to be liked and used. The rewards turbocharging for using those payments methods comes thanks to Samsung.
Tomorrow could tell a different story.
Issuers, merchants and networks — seeing the benefits of consumers using more of their cards and visiting their stores more often as they strive to reach their silver and gold tiers — might want to do a little turbocharging of their own to gain preference.
Consumers might eventually find themselves triple-dipping or more: receiving rewards from the payment types they use today, Samsung Rewards just for using Samsung Pay and issuer and/or merchant and/or network-initiated rewards designed to capture even more of that consumer’s loyalty and spend.
This sets up a virtuous circle that makes consumers sticky and merchants, issuers and networks want to be part of a program that could do something that has alluded most mobile payments plays to date — drive adoption of mobile payments in-store.
Samsung acknowledges that there is more cooking back in the Samsung kitchen — leveraging its unique features so that merchants can tailor rewards or options to convert shoppers to buyers, even when they are standing inside their store. And more strategies to get more phones in the hands of more consumers so there are more Samsung Pay wallets in the hands of consumers to be used at any merchant they like to shop.
But Samsung’s biggest focus is changing the narrative around mobile payments adoption by simultaneously removing the merchant friction of acceptance and integration to a whole new loyalty program, while adding a consumer incentive to make it worth their while to remember to use their Samsung Pay wallet wherever they like to shop.
Let the 66-day march to mobile adoption begin.