Loyalty programs are nothing new, in fact they date back a century ago. A notable, early effort was the US-based S&H Green Stamp program in the 1930’s. Consumers were provided with small stamps when they made purchases from participating retailers, stuck them onto pages of booklets and redeemed them for products when the collected stamps had attained a specific value. In recent times, merchants and tech startups have conceived forward-thinking programs to get consumer insights. How do retailers utilize the insights they acquire from such programs? Are these new frameworks a threat to traditional surveys? Let’s explore these factors.
Banking APIs to read transaction data
Toronto-based Drop is based on a straightforward idea. In contrast to traditional rewards programs which are built around a retail point-of-sale system, Drop uses banking APIs to read one’s credit card transaction data directly, and gives points for making purchases with partners within their program. The points can then be spent on personalized offers, for example: a discount on coffee at Starbucks or a free ride on Uber (a proposition that is designed to resonate with millennials). The ability to monitor shoppers’ purchase behaviour through their their credit use has convinced prestigious retailers such as Sephora, Bloomingdales, The Body Shop, Amazon, Under Armour, Casper and Boxed to join the Drop program. Drop’s CEO and co-founder Derrick Fung told TechCrunch that the program is a great way for participating retailers to better determine spend incrementality (due to Drop’s traceable qualities — for lack of better word). For example: proving music festival goers spend more on brands that sponsored a specific event.
Open Banking Meets Rewards
UK-based Flux is another interesting concept. Here’s how this new loyalty program works: once you’ve enabled Flux within the Starling app (a popular “neo bank”), you make purchases at supported merchants using Starling and any loyalty rewards you earn are automatically displayed in your Starling account alongside a fully itemized digital receipt. When you have accumulated enough points to qualify for a free item, Flux will then send cash-back to your Starling account on behalf of the Flux retailer. Flux wants to integrate at the banking app level to offer users a consolidated view of earned loyalty points across all their bank accounts. If you earn Flux points with one specific bank card, they’ll be displayed in and can be redeemed from any other bank cards or accounts that you have linked Flux to. This concept takes its inspiration from the open banking movement which is drastically changing the UK and European B2C financial sector as we speak. Such “multi-account” approach provides merchants with a great deal of “enriched data” which allows them to perform multivariate analysis and other forms of advanced testing.
A Threat To Traditional Survey Methods?
Modern loyalty and rewards programs have proven to be quite popular with both consumers and merchants. However that doesn’t mean they can entirely replace traditional survey techniques. Measuring the operational aspects of a loyalty program such as new signups, offer uptake, earn-and-burn transactions is important, yet it only reveals what happens in response to a marketer-controlled message. Retail professionals should also analyze how loyalty is improving customer intimacy, involvement with a brand, brick-and-mortar store visits, customer service call sentiment, shared content, and brand affinity. That being said, loyalty and rewards programs can be a great complement to traditional survey methods for the purpose of getting consumer insights. By Phil Siarri