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Point & Stick
Loyalty-enabled apps are heat-seeking missiles of promotional opportunities.

Shopping apps are multiplying daily to entice shoppers into bricks-and-mortar stores. These apps are offering a variety of benefits — from locating available parking spots in the mall, to offers that periodically flash alerts on the app, to in-store GPS to help locate the bee pollen and musk-scented cologne for your Uncle Al.  

But like all apps (including the mindless but habitual kind), shopper fatigue will quickly excise the app from the phone if it doesn’t do more than flash an alert for an offer that looks like the same offer in the circular. Given the numerous apps available, how is a consumer to decide which mobile apps to download? In the old dot-com days we used to talk about stickiness, or how to make an application so formidable in its functionality that consumers couldn’t bear to lose it.

 One way to make the app sticky is to combine all the information and features of the retailer’s loyalty program. The app would instantly become more valuable to the shopper by providing relevant offers and information based on the retailer’s insight into the customer. The retailer would gain by adding another touchpoint with the customer that adds more dimension to the customer’s profile.  

For example, letting customers know how many points they have currently is something most retail loyalty programs can’t offer in a real-time environment. Most of the time, the only way customers know their point level is by researching it on the web prior to shopping or finding out from the register receipt after they make a purchase. Retailer point-of-sale systems often do not even provide the point-total information. But how would customer behavior change if they knew what their point total was, in real time?

Many pet retailers run frequency programs that are usually funded by the manufacturer brands: Buy 12 large bags of Eukanuba and get one bag free; buy 10 medium size bags of Blue Buffalo and get one bag free; or buy 144 cans of Friskies tuna and get 12 free. These frequency programs are often tracked by punch cards (that are lost, discarded, or mutilated) or by electronic loyalty-programs that cannot tell customers how many purchases they need to reach the next reward. But with an app that’s fed data from the loyalty system, customers can find out that they have 10 purchases and need two more to receive their freebie.

Does that change their behavior? Will they stock up to get the freebie? Does that simply transfer the purchase and accelerate the buy? Does it prevent customers from going to another store because they now have an extra bag?

New App Opportunities

A customer with a loyalty-enabled app provides the retailer with a heat-seeking missile of promotional opportunities. For example, each time a gold-level customer is in the mall or near the store, they could receive tiered offer options that are instantly redeemable: “you have 165 points — reach 200 points on today’s visit and receive an extra $5.00 off.”

Or, the app could tell the customer (perhaps Siri could actually tell the customer), that they are only 50 points away from another $10.00 reward, and if they purchased certain products on their visit they would receive double points and jump to the $10.00 level.

It is certainly conceivable that GPS, voice-assisted directions will soon be employed to alert you when you are near one of your favorite stores where you are a member of the loyalty program.

While you are listening to your favorite tunes or the latest Michael Connelly novel, Siri could interrupt to announce that, in 700 feet, you will be in front of a Dunkin’ Donuts where you are only two donuts away from a free coffee in their frequency program, or that next door, at the local running shop, you can receive a free pair of runner’s gloves if you buy a new pair of shoes.

The precision timing and targeting offered by the app would give aggressive and sharp retailers an opportunity to increase share by reducing or eliminating customers who shop multiple stores for similar items (i.e., pet food at pet stores and supermarkets, personal care at pharmacies and discounters, home improvement at hardware stores and club stores).

The Generation App Gap

As mobile-shopping apps multiply, it is worth noting that the shopping behavior of the marketplace is rapidly dividing itself along generational lines, perhaps more so than ever before. A recent article in The New York Times pointed out that age is the prime predictor of how people go shopping.

The Times profiled a family of four. The parents did some shopping on the web, but brought paper coupons with them when shopping at the mall and visiting real stores. They did their comparison-shopping with their eyes, as they marched around the mall and made the purchases inside a store with four walls.

Their teenage daughter barely knew where she was in the mall because she was continually surfing the apps on her phone, looking for the best deals and latest offers. While she perused the merchandise in the store, it was her apps that directed her where to go next. At the end of the day, she made all her purchases online after seeing the merchandise “live.”

Their preteen daughter used social media to crowdsource approval or rejection of various items she found while shopping in the stores. Using her camera, and exchanging photos of the items she considered, her friends would provide suggestions, alternatives, and approval or disapproval.

How much will lifestyle change and aging alter the use of and reliance on technology and devices? When the teen becomes an adult with a family, will she still wander the mall with her app at eye level? Or, will she be preoccupied with how much time she has left to get the items she needs to get back to her job or pick up her child from daycare?

Rather than casually surf all of her apps, will she make a beeline for the stores with the items she needs, and make purchases after seeing them because she knows they have the best price based on her online research? Or, will she visit the stores and then go online to find the best price and order online? Will the preteen continue to use social media to crowdsource her choices, or will she shop online and use social media to regale her fans with her purchase success?

The marketing menu is now longer than any Chinese menu and just as daunting. The concept of the consumer as media-director is becoming more of a reality. Knowing which media and devices each target customer uses when purchasing each category is now crucial. Understanding the information-gathering cycle versus purchase action is an important aspect.

Does the customer walk the stores to see the merchandise and then go online to find the lowest price? Bricks-and-mortar retailers would have an advantage if they knew the customer had the app and when they were in the store offered the customer a variety of incentives to purchase on the spot, rather than allow the customer to leave and potentially purchase from an online competitor with a lower price.

As the technology options continue to multiply, it would be wise to maintain a middle-of-the-road approach to both new communications distribution systems and old technology, and to consider all and any to be of value at any given time, depending on the customer segment and product category. Too much energy gets wasted on the hype predicting just how important each new technology will be and which old technology will become road kill.

The reality is that the new technologies with legs will find a space in the mix, and their relative importance in the scheme of things will be a function of which customer segments are devoted to using the new technology.

Given the hysteria over social media and mobile apps, it is worth noting that there’s nothing better than a good, old-fashioned 30-second commercial in a premium sports event on good old-fashioned television if you want to reach a male 25 or older. Yet, that’s not going to do you any good if your target buyer is any other demographic.

SPENCER L. HAPOIENU is president and co-founder of Insight Out of Chaos, a database and direct marketing company. He can be reached at spencer-@-iooc.com or (212) 935-0044.

JANUARY / FEBRUARY 2013 | PDF | Subscribe | Home