Gabi Kool, CEO of Coalition Rewards, explains how loyalty programs are evolving in the digital age.
Companies that offer loyalty programs understand that their existing customer base represents a rich vein for mining additional revenue. However loyalty programs constantly struggle to find and maintain that sweet spot that adds real value for customers and keeps them engaged. According to Gabi Kool, CEO of northern Europe-based Coalition Rewards, technology is increasingly helping to drive the evolution of loyalty programs that help create memorable experiences for consumers.
”First, no one likes carrying around all these plastic cards, so the loyalty programs will be in the phones,” Kool declares.
However, he quickly points out that as a loyalty program operator Coalition Rewards has decided to let the consumer decide the speed of the transition to mobile apps, and will continue to offer both alternatives.
”Plastic cards are still an option for many of our 1.5 million customers in Finland,” he adds.
Kool sees the new loyalty programs of today’s digital age shifting the emphasis from rewarding customer transactions to increasingly focusing on encouraging – and rewarding – desired behaviors.
In the United States, some retailers are already using the geo-location capability provided by beacon technology to provide customers with on-the-spot targeted campaigns and benefits, such as personalized check-in for hotel chains, or specific bonus offers for customers on the retailer’s premises.
Beacons, gamification incentivize customer behavior
Kool highlights the example of a US clothing retailer that uses beacons to prompt customers to enter nearby outlets to try on merchandise.
”They know if they can get you into a dressing room to try a shirt, the chance that you’ll buy something is four times larger. So they will give you points for trying a shirt, even though you haven’t bought anything yet,” Kool explains.
He notes that ultimately, such technology is being used to incentivize sales to customers already in or near a retail outlet. He says that while the US is clearly a step ahead in using beacon technology to add depth to loyalty programs, it’ll be the next big thing for Europe.
”Even in Finland’s harsh retail environment, we feel it’s going to be very important. We will run a pilot in August or September for a select number of members to join a beta version. We will test to see what people want to see with this kind of beacon technology,” Kool adds.
Gamification – using the elements of game playing such as scoring, rules of play and competition – is another development moving into the loyalty program arena, Kool observes. Coalition Rewards runs PINS, a global loyalty program that involves upwards of 700 local, global and online partners. Kool describes how CR partnered with the breakthrough fitness app Endomondo to harness the power of gamification in a campaign that saw participants compete to burn calories and gain PINS, the program’s loyalty currency.
”The idea was to promote a healthier lifestyle. People started signing up and getting involved. So your loyalty currency becomes a mechanism for rewarding certain behaviors or sharing opinions,” Kool expands.
Loyalty campaigns must add value
However, the loyalty program guru cautions that getting this close to customers and their day-to-day activities requires a permission-based approach for campaigns that ultimately, must add value to their lives.
If programs fail to offer added value or generate an emotional connection that consumers want to maintain, then they become a nuisance, or are seen as invasive and will be pushed aside, Kool says.
He highlights online retail giant Amazon as a prime example of a loyalty program provider that has refined the art of using customer information to add value to the shopping experience by offering targeted recommendations.
”We’re trying to do a similar kind of thing but in a more brick-and-mortar environment. But the idea is the same, which is to give people benefits or offers or content that are as intelligent as possible,” Kool says.
CR certainly appears to be on course for achieving its goal: Loyalty Magazine named PINS 2015’s Best New Loyalty Program of the Year. PINS also received the award for Best Loyalty Program Marketing Campaign for the launch of the program in Finland.