next generation mobile loyalty for brands | research

1White Paper l Next Generation Mobile Loyalty © 2013 LUMATA All Rights Reserved

W H I T E P A P E R

L O Y A L T Y

Next Generation Mobile Loyalty

2© 2013 LUMATA All Rights ReservedWhite Paper l Next Generation Mobile Loyalty

A framework for loyalty

Multi-channel engagement

Richer interactions

Rewarding through gamification

Offer optimisation

Reward partners

Redemption challenges

Programme optimisation

Badges: Next generation loyalty in action

Harnessing the power of mobile and social to retain loyal, profitable customers

The way in which brands interact with and reward customers is at a tipping point. For years,

loyalty programmes have suffered from being too generic, uninspiring, with passive points

collection mechanics.

Today, however, the mobile revolution has led to the rise of smartphones that enable rich, real-time interactions,contextual marketing, and anytime, anywhere connectivity. At the same time, consumers have embraced mobile andsocial as relationship channels and these hold the key ingredients to create the next generation of loyalty experiences and brand engagement.

In this white paper, we share key elements to consider when designing loyalty concepts and provide recommendations on how to best integrate mobile to drive the adoption and success of future programmes. We also touch upon conceptssuch as ‘Badges’ which enable brands to implement the next generation loyalty programmes powered by mobile and social channels.

CRM

DATA

LUMATAPLATFORM

INTERACT

REWARD

REDEEM

OPTIMISE

ENGAGE

3

Effective engagement remains a multi-channel activity,though mobile adds a new dimension on its own andthrough its ability to ‘mobilise’ other media channels suchas posters through QR codes, shortcodes, etc.

Orange/EE, who run the highly successful OrangeWednesdays programme with us in the UK, use a through-the-line strategy to promote their message. The incrediblypositive brand metrics around Film and Orange/EE are atestament to the effectiveness of the multi-channelapproach with mobile as the core channel for sign-up.

RICHER INTERACTIONS

Once customers are ‘engaged’, most loyalty programmeseither use tenure (renewal or extension of the brandrelationship) or transactions (spending £X) to rewardcustomers. The digital and mobile era has opened a host ofother ways in which customers can interact with a brand.

When designing loyalty mechanics, we recommendintegrating variables like ‘brand engagement’, ‘socialadvocacy’ (rewarding customers who act as brandambassadors) and ‘network influence’ (recognisingcustomers whose opinion matters to larger peer groups).

As the richness of interaction increases, brands are able tobuild more personalised relationships and better targetrewards or offers that customers value.

Lumata’s Expression platform has been designed to addressthe ‘big data’ challenge, where numerous sources of newand frequent data need to be captured, analysed and acted

A framework for loyalty

Lumata operates at the cross-section of mobile marketingand technology; from concept through to delivery. Wedesign end-to-end solutions that not only address theretention, upsell and cross-sell objectives of our clients, but also help them stand out from the crowd.

When designing loyalty mechanics, we start with theconsumer, thinking about how the experience can bemade simple, relevant, and non-intrusive (given thepersonal nature of the mobile channel).

In the following sections, we discuss the implication of mobile on each of these stages in the customer experience.

MULTI-CHANNEL ENGAGEMENT

Given the existing loyalty overhang with over 80% of thepopulation signed up to some sort of loyalty initiative inthe UK, getting customers to join a programme can be asignificant marketing challenge. Going digital and mobilelowers the barrier for people to sign up and engage.

We encourage brands to use out-of-home, in-store andother ambient media to drive acquisitions on mobilealongside traditional acquisition channels.

Mobile advertising is another key acquisition channel toattract participants who want to engage on the mobileweb and in apps.

© 2013 LUMATA All Rights ReservedWhite Paper l Next Generation Mobile Loyalty


OFFER OPTIMISATION

Another key element of rewarding customers is being ableto balance the cost of rewards with the customers’perceived value/desire for them.

Our research has shown that typically a brand has to getthe reward mix correct within the first two to threeinteractions with customers in order to maintainparticipation levels.

To address this, we actively build reward clusters forspecific customer segments and track which rewards arethe most and least popular. The Lumata Real-time OfferManagement module then balances the overall cost and availability of rewards with customer preferences and recommends the optimal reward mix per customer interaction.

We work directly with clients to identify a reward portfoliobased on customer profiles, and also our experience ofwhat works in other markets.

REWARD PARTNERS

Offering a unique portfolio of rewards from brand partnersis a relatively straightforward way of differentiating aloyalty offering. The challenge has been to attract the rightbrand partners while maintaining costs under control.

With mobile, real-time marketing and variables such as location are unlocking new opportunities for brandpartners to reach specific customer segments and deliverhighly personalised offers.

upon. We do this with a unique data processing approach:processing 'big data' but only retaining and tracking relevantvariables. We call this ‘smart data’ management. Theplatform can process 150+ variables but the challenge is ofcourse to establish which ones are worth tracking.

REWARDING THROUGH GAMIFICATION

One recent evolution in the loyalty space has been theemergence of gamification as a way of engagingparticipants in the reward process.

Our research has shown that engaging customers prior torewarding them is far more effective in generating brandadvocacy than simply delivering rewards.

While gamification is not for everyone, it is becomingincreasingly mainstream with traditional industries likefinancial services and telecoms employing gamification-ledinitiatives. The mobile channel offers a new dimension inenabling gamification by connecting the real world withthe digital world. One great example of this was Orange &EAT’s Quick Tap campaign, which enabled customers towin instant rewards by using an NFC-enabled handset tospin a virtual ‘wheel of fortune’. Customers tapped a posterto launch the app and spin the wheel of fortune to wininstant prizes in store. The goal was to make customerscomfortable with the ‘tapping’ habit.

NFC, geo-fencing, scanning technologies and Bluetoothare enabling brands to enhance the richness of thereward process. Done well, brands can truly differentiatethemselves through gamification as long as the path torewards is still simple to execute for the participants.


Today, there are numerous solutions ranging from directtill integration, standalone devices, Bluetooth, Wifi andcredit card validation channels available to brands trying tocreate a closed loop voucher validation system.

Lumata is technology agnostic when it comes to the lastmile of voucher redemption. For a typical client, weleverage a combination of direct till integrations,standalone devices connected to the mobile web andother online channels.

For brands starting from scratch, we work on tablet-ledsolutions that can be quickly implemented withoutrequiring large scale hardware upgrades.

The industry has matured to a stage where there arerelatively robust last-mile redemption solutions within the ecosystem.

The key, from our perspective, is to balance reliability,efficiency and cost with the ability to gather actionabledata in real-time.

PROGRAMME OPTIMISATION

The most powerful opportunity for next generation loyalty programmes is the flexibility to rapidly evolve thecustomer experience. Truly successful programmes will be customer driven.

At Lumata, we recommend using a combination of data-led optimisation and customer feedback. Brands must be ready to react to customer demands, likesand dislikes.

This heralds an exciting new area of loyalty mechanics.Mobile operators like O2 and Vodafone have been quick to invest in this area given their unique customer access.Going forward, we see other verticals such as retail andfinancial services employing similar approaches via smartphones.

Overall, it is crucial to maintain the focus on customervalue and ensure partner rewards are attractive forparticipants first and foremost.

REDEMPTION CHALLENGES

The biggest challenge when launching mobile-led loyaltyprogrammes for verticals like retail has traditionally beenthe effort of upgrading existing hardware to enable mobileredemption at point-of-sale.

Contact us

Contact our team of experts at Lumata to learn more about how you can take a lead in Next Generation Loyalty.

Call us now on +44 (0)20 7613 8900 or email [email protected].


WHAT IS IT?

The Badges programme enables participants to collectdigital badges – signs of recognition that unlock rewardsfor a host of actions such as tenure, transactions, socialadvocacy, peer influence and brand engagement viamobile and/or online.

Each badge is earned by participants for completing a setof pre-defined actions. This enables brands to be far moreholistic in their definition of customer value and recognisethe highly influential social advocates who may be equallyvaluable as the long term high spenders.

Badges: Next generation loyalty in action

SOCIAL

USE

SPEND

TENURELOCATION

MGMMake 1000thphone call

Send 1000th SMS

Download App

Use NetworkProduct(Non-Mobile, i.e. home broadband)

Play Online Game

Use Network Product(Mobile)

Get 100 Friends Linked

Use Social Network

Top Up

Stay for12 MonthsVisit Location

Abroad

Check In Venues

Visit A Major City(Home Nation)

Recruit Friend/Colleague

Forum Contributor

HOW DO PARTICIPANTS BENEFIT?

The Badges programme is designed to appeal to auniversal desire for recognition. Participants appreciate theflexibility of the programme and their ability to controlhow much or little they want to engage.

Equally, the mechanics allow brands to directly rewardcustomers for specific actions. For example, customerswho love music and are active influencers could be offeredconcert tickets as rewards for earning a ‘Socialiser’ badge,while digitally active low spenders could be offered freedata upgrades instead.

Lumata has recently introduced the Badges concept in the market, bringing together many of themechanics discussed in this paper to create a truly next generation loyalty programme.


Badges are versatile! The brand is able to design the programme to managespecific rewards for specific customers, which enables the brand to configure any number of rewardcombinations with badges.

Badges cut across sectors! The Badges programme can be designed to work acrossalmost any vertical as long as there is a web and/or appaccessibility for customers. From healthcare totelecommunications, we see Badges as highly relevant.

WHAT MAKES THIS DIFFERENT?

Badges are virtually pointless! The programme is designed to eliminate current points-based mechanics that are complex to manage, non-differentiated and also create liabilities on the balance sheet.

Badges are unlimited! There is no limit to the number or type of badges onecould create. Badges can be created by participants or thebrand itself. They can be permanent or temporary; limitededitions or universal. This enables the programme tocontinuously refresh itself and remain relevant.

Badges are visual! Badges have a powerful marketing hook that can be usedto build brand differentiation and encourage diverse brandpartners to participate (e.g. music, film, sport, food, etc.)by sponsoring badges.


L U M A T A . C O M

57-63 Scrutton StreetLondonEC2A 4PF

+44 (0)20 7613 8900

[email protected]

Lumata is a global software and marketing services companyfocused solely on the mobile marketing space. Our goal is to provide operators, brands and advertisers with thetools they need to manage their brand’s interaction withconsumers over mobile. Our 10-year heritage and successis built on a strong foundation of market-leadingtechnology, deep category expertise and a focus ontransparency and measurement. Lumata is backed byFrancisco Partners, a leading technology focused privateequity firm with over $7Bn under management.

next generation mobile loyalty for brands | research

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