Why loyalty schemes need to deal with the plastic problem

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Time to declutter the wallet

Stop me if you’ve heard this one before, but I have had this experience twice in the past two weeks. Standing in a queue for a relatively small purchase of just a few items, stuck behind someone who’s fumbling in their wallet or purse. The quest for the misplaced loyalty card begins…

This real world scenario highlights one of the major challenges that comes with relying on a card based scheme. They are the antithesis to a frictionless retail experience; asking the consumer to invest more time and effort while creating frustration for other shoppers. Paper based registration forms only serve to make the problem worse for those waiting in line.

Obese Wallet Syndrome

Recently I emptied out my wallet and found a disturbing picture - eight loyalty cards (ignoring the membership cards) all contributing to another problem I have with card based loyalty schemes.

I’m tired of having to stretch my jacket pocket to fit in a bulky wallet full of these cards, many of which I wasn’t aware I had until writing this, and I’m not alone. John Lewis said slim card wallet sales were up by 90% year on year in 2017, driven largely by considerable adoption increase in contactless transactions.

As wallets shrink physically there will be room for far fewer cards and competition to deliver value from that space will increase. Never before has share of wallet had such a literal context for loyalty schemes.

Mobile paves the way

The fact that mobile payments increased 336% in the first half of 2017 compared to the previous year is a clear signal for how traditional loyalty programmes should be thinking.

This increase in adoption and by proxy, trust, in mobile devices represents an opportunity to engage with customer loyalty in new ways. The mobile device is continuously connected, and involved in every aspect of our lives. We’ve known for a while that people check their phones literally everywhere (a study from O2 and Sony found that 75% of people take their mobiles to the toilet). Combine that with a recent UK study that found that people are checking their phones 10,000 times a year. That’s 28 times a day to save you working it out. If you’re a millennial, increase that figure to 150.

Who we talk to, the calories we count, the emotions we feel, the thoughts we have, the friends we share experiences with, the people and things we love, it’s all there in this little device. It is a wealth of the most intimate information possible about us as individuals. And that information is valuable to brands.

Of course, to get access to this powerful data you need to earn it. To do this, I like to think of a simple equation: Connectedness + Value = Context.

Delivering value through control

Through our research into value at RAPP, we know that the modern consumer looks for different things from brands to represent value. It’s not just cheap prices and offers; people also want convenience and for brands to put them in control by only showing the most relevant options and enabling the customer to make choices in their own time without barriers.

Let’s take calories as an example. I have an app that helps me track calorie consumption on a daily basis, and I link that to my fitness tracker, which tells me how many calories I have burned, and yet to burn, based on my goal. Based on the number of calories I have available will change the context of what I want from various food or coffee outlets. The suggestion of a meal under 200 calories on days when I’m trying to be good and hit goals, to more indulgent options when I’ve earned them through exercise. If one of those providers offered tailored options based on that context, I would be happy to share my data in return for giving me the relevant options based on my needs.

The value exchange is critical in the face of GDPR and the recent Facebook/Cambridge Analytica debacle. It’s possible that brands will now have to work even harder to demonstrate a valid reason and benefit to convince customers to share with their data.

Delivering contextually relevant tailoring is only one part of the value equation. Customers will gravitate towards brands that give them control through flexibility, by using technology to enable removal of restrictions from the experience and enable customers to make decisions in their own time.

It’s something that Wagamama have recently acknowledged and responded to with their walk out payment trial. Customers were waiting an average of 12 minutes between asking for the bill and leaving the restaurant. “Bad bill experiences” impacted recommendation by a negative factor of four. Wagamama understand the frustration their customers experience and creates value by giving the customer complete control of when they want to leave. If you were reliant on a loyalty card to be scanned as part of that visit that kind of solution just wouldn’t be possible.

Face the future

Similarly the emergence of facial recognition technology creates opportunities to deliver value in a frictionless way. KFC recently piloted facial recognition as a method of payment, but it’s not a big leap to see them acknowledge the context of the visit and create value by tailoring the experience. For example, if you are with friends, group menu options could be presented with a bonus for their app download, registration and integration with existing mobile payment platforms like Apple or Amazon Pay? Now imagine trying to replicate that with a loyalty card and paper registration. The experience would be awful, not just for the customer, but those waiting in line too.

Environmental issues aside, plastic no longer represents a convenient vehicle for loyalty. In fact going a step further there is the possibility of completely cashier free retail experiences, which removes any potential queue from the retail environment and frees up the need for carrying any form of loyalty card. This convenience means you won’t even need your wallet to go shopping, and no wallet means no cards. Combine that with the convenience of 30 minute delivery and the idea of shops with zero inventory and the idea of having to carry anything at all on a shopping trip suddenly feels out of date.

For now though, I’ll settle for not having my time wasted in a queue because someone else wants to be “loyal”, and a wallet that doesn’t rip my jacket pocket.

Simon Cromey is a planning partner of RAPP UK

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