While last year may not have been the beginning of mobile loyalty programs, it seemed 2014 was the year to launch them into the mainstream spotlight, with mobile loyalty apps from major retailers like Starbucks gaining widespread popularity among consumers. According to a recent article from Forbes, Starbucks reported last year that 15% of its sales volume was generated by its mobile app, with some 12 million customers using it. Undoubtedly, the current number of users is now higher.
The reason for Starbucks’ success? One might argue that the company’s rewards model has convinced users to not only download its app, but also continue to use it time and time again.
It’s about answering the question, “What’s in it for me?”
By creating easy, custom mobile experiences for customers that provide added value beyond the mere convenience of paying with a phone, retailers will be more likely to attract loyal customers that not only pay with their phones, but also sign up for loyalty programs to get rewarded for those transactions. If a customer knows that earning a free latté is as simple as purchasing five drinks with their mobile phone, they’ll be incentivized to be repeat users of the app and repeat customers of the store.
We predict that loyalty programs will be a crucial, driving force for mobile payments adoption in 2015. While mobile payments do arguably provide a more convenient way of paying for goods and services, that alone will not be enough to sway consumers from changing their current behavior. Because rewards and loyalty programs provide something different—persuasive incentives that provide actual value for the customer—these programs are more likely to present a compelling reason for a behavior shift.
Back in December, our own Tiago Soromenho shared the article “The chicken or the egg? Loyalty will drive mobile payments” with Mobile Payments Today. In it he predicts that mobile loyalty is the “onramp” to mobile payments, and that consumer loyalty will directly impact consumer adoption of mobile payments. Tiago states, “value will trump convenience.” Bottom line, consumers need more than just convenience to make them pick up their phones instead of their wallets when it’s time to pay. With the daily demonstrated success of apps like Starbucks, Dairy Queen, and Dunkin’ Brands, mobile loyalty is the most promising way to grow mobile-friendly customers.
We’ll be keeping our finger on the pulse of mobile loyalty programs as they continue to gain popularity in 2015, and look forward to seeing the changes they may bring for mass adoption of the mobile payments industry this year and in the years to come.