Mobile Helps Brand Loyalty Programs Work Harder and Smarter

Technology, and the digital transformation of the economy overall, have reshaped the concept of customer loyalty.

Add to that the integration of payments innovation, and the loyalty program ecosystem of today is nearly unrecognizable compared to years past.

“The phone has been the cohesive unit that pulls all [this technical innovation] together,” Len Covello, chief technology officer at Engage People, told PYMNTS. “We’ve been hearing the term omnichannel for probably 10-plus years, but we’ve gotten there with the device itself and integrating payments into one-click checkouts and more.”

The smartphone has become the central device that people use to interact socially, at home, on the go and even in stores.

And with ongoing advancements in mobile device technology and payments innovation, loyalty programs have the potential to become even more effective in driving customer retention and reinforcing personal relationships while building lifetime value.

The integration of payments into the smartphone has also played a significant role in enhancing loyalty programs, Covello explained. With a simple click on a phone, customers can now make seamless payments, eliminating the need to wait in queues. They can even pay with their loyalty points or receive personalized offers while making a purchase.

This level of convenience and personalization creates a perfect ecosystem for loyalty transactions.

“We’ve got all the tools available today,” Covello said.

Enhancing Loyalty With Tech and Payments

Loyalty programs have long been a staple in the business world, offering rewards and incentives to customers who repeatedly engage with a brand.

Many brands have already started leveraging digital wallets and contactless payments to enhance the delivery of their loyalty programs.

Starbucks, Covello noted, has successfully implemented this approach. By controlling the entire environment and integrating its loyalty program with its  payment terminals, Starbucks has created a seamless and rewarding experience for its customers. Other retailers and brands are following suit, using the data gathered from smartphones to understand customer behaviors and provide personalized offers.

“That device knows a lot about you, and really when we talk about loyalty, that interaction with the loyalty program is about gathering data on the user and gathering behaviors,” he added.

The concept of an ecosystem is crucial in this context. As customers interact with different devices throughout their day, such as smartphones, virtual assistants or even smart vacuums, each device collects data about their preferences and behaviors.

By unifying logins across devices, brands can track customers’ activities and deliver targeted ads and offers. Covello acknowledged that while there may be concerns about privacy, loyalty programs have always been based on the exchange of data for personalized benefits. When done well, this data-driven approach can bring tremendous value to consumers.

Accelerating the Loyalty Partnership

Within this data-rich context, artificial intelligence (AI) and machine learning are becoming instrumental in making sense of the vast amount of data collected by loyalty programs.

By analyzing customer data, AI can identify meaningful patterns and preferences, allowing brands to deliver offers that align with customers’ needs and budgets. Covello pointed out that during the pandemic, loyalty programs focused on providing offers for essential items like gas and groceries, considering the economic uncertainties faced by consumers.

“The advancements of machine learning and AI will help us crunch that data and bring better personalized offers,” he said. “And the more devices we interact with, the more personalized that offer will be.”

Gamification is another aspect that can enhance loyalty programs. By turning the loyalty journey into a game-like experience, brands can make it more engaging and rewarding for customers, Covello said, noting that “rewarding and gamification are essentially one and the same.”

Rewards can take various forms, including points, tiers or exclusive access to limited availability items. Industries that have limited availability, such as shoe companies releasing new products, can particularly benefit from gamifying their loyalty programs, Covello said.

As for what he sees 2024 holding?

“The partnership aspect of things will continue to accelerate,” Covello said, explaining that brands with similar values and target customers will collaborate to offer a more comprehensive loyalty ecosystems.

In an environment where consumers are tightening their belts, brands that can bring value and meaningful partnerships will be successful, he added.