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Loyalty schemes go mobile

News, 10 February 2016

GLOBAL: Brands and retailers are increasingly responding to consumer demand for mobile integration, with many now offering customers the opportunity to store their loyalty cards within a dedicated digital wallet, according to a new study.

In its report Mobile & Online Coupons: Redemption, Loyalty & Consumer Engagement 2015-2020, Juniper Research predicted that 3bn loyalty cards will operate as mobile-only or be integrated into mobile apps by 2020, up from 1.4bn in 2015.

Over the same period, it expected that beacon technology would be used to distribute around 1.6bn coupons, a huge increase on the current figure of about 11m.

"One of the key findings from this research is that where beacons have been deployed in-store, such as at Macy's in the US, coupons delivered via those coupons have generated very high redemption rates," Dr Windsor Holden, the report author, told Mobile Marketer.

"One of the most startling success stories from these initial deployments came from China," he added. Jewellery retailer Chow Tai Fook installed beacons in around 200 stores in early 2015 and reported that almost 60% of coupons were redeemed, generating an uplift in sales of $16m.

Many retailers and reward cards are trailing, however, not only as regards their use of beacons, but in the more fundamental area of digital loyalty integration.

In the UK, for example, the report said that 40% of Nectar Card holders had acquired a related loyalty app by late 2015, but less than 4% of Tesco Clubcard holders had done so. In the US, 61% of card holders at Walgreens had linked their card to an app, but just 27% of Target cardholders.

Holden suggested the disparities could reflect differing levels of satisfaction with the app or the success of retailer marketing of digital loyalty options.

Either way, the report said that retailers not offering mobile integration were likely to have far lower levels of visibility on consumer activity. As a result, it cautioned that they would be at a disadvantage when seeking to tailor offers and so increase the lifetime value of the consumer.

Data sourced from Juniper Research, Mobile Marketer; additional content by Warc staff