Emerging technologies and loyalty programs
Emerging technologies and loyalty programs
by Cara Wolf
Almost everyone belongs to a loyalty program of some kind. Air miles, rewards points, cashback and membership coupons are some of the kinds of offers people receive in exchange for increased and repeat business.
According to Statisitca.com, there were 175 million loyalty program memberships in Canada in 2017; up from 130 million in the preceding reported period. The retail sector accounted for 51 per cent of the total 175 million loyalty program memberships. Loyalty and rewards programs are not realizing their full potential. Ten percent of rewards are unredeemed and up to 50 per cent of the members are inactive. Up to 70 per cent of surveyed consumers abandon loyalty rewards because it took between six and nine months or longer to accumulate enough points to redeem rewards. Customer acquisition, transaction and system management costs are constantly increasing.
So, what does that mean to you as a business owner or manager and how much should you invest in offering these programs? What types of emerging technologies are being used in the marketplace today and can you implement them successfully while keeping your customer’s data secure? A simple Google search generated 206 results for customer loyalty software programs! This article describes a few emerging technologies including RFID Technology, Mobile Apps, Blockchain and Artificial Intelligence as they relate to retail convenience store and carwash loyalty programs.
Radio frequency identification technology is used in the XpressWash car wash system. Mike Jorgensen, sales manager of XpressWash described the benefits of this system as follows: XpressWash allows the customer to get a carwash whenever and as often as they want for one fixed price per month or per year. No cash or credit card is needed at the time of the wash. Because the XpressWash system utilizes RFID technology and vehicle specific RFID tags that are attached to the windshield, only a single vehicle can be washed with each tag, thereby reducing fraud. Recurring billing options on the administrative back-end provides increased revenue streams and is easy to integrate into existing systems.
Mobile Apps exist in the marketplace to allow customers to pre-purchase car washes and earn rewards towards free washes and other product offerings. These connect with the carwash terminal via Bluetooth technology. Usage is tracked and reports can be generated about user activity and buying habits, while keeping information safe and secure. Business Insider recently reported that while just 16 per cent of the general population had used a mobile wallet, 35 per cent of millennials have already adopted the technology. Ninety-eight percent of millennials use a smartphone. Mobile payment options such as Apple Pay are increasing in user adoption preference.
At the basic level, a loyalty coin makes it easier for businesses to engage their customers. A universal loyalty cryptocurrency benefits merchants by assisting them to reduce their loyalty liability. Liability is an entry in the balance sheet of a company that indicates what they owe to others. Since loyalty points constitute a promise to give customers discounts or even free items, which would amount to money most of the time, it has to be recorded as a liability. If every customer decides to redeem their points all at once, the financials of the company will suffer. However, since anyone can participate in the mining of cryptocurrency, merchants could mine for themselves and offer the loyalty coins to its customers. They can also accept loyalty coins that other merchants mine. Since traditional loyalty points have no monetary value to the merchant after being spent, a blockchain-based coin could be traded for fiat currency, helping merchants recover some of the sales made with loyalty points. Supply-chain management is another key function that could benefit from blockchain technology by replacing third party vendors to facilitate payment transactions.
In retail, artificial intelligence or AI technology applications provide the most significant potential value in the marketing and sales function of the business. Within that function, pricing and promotion and customer service management are the main value areas. Combining customer demographic and past transaction data with social media monitoring helps generate individualized product recommendations dynamically and in real time. Recommendations that target individual customers can lead to a twofold increase in the rate of sales conversions. Many artificial intelligence apps exist that simplify traditionally tedious or time-consuming tasks. Customer loyalty platforms are being built with rule-based chat bots to increase customer engagement and satisfaction.
As the sophistication of technology advances so does our ability to evolve our decision-making capabilities as business owners. The fundamentals of increasing profits remain the same. The managers and owners that embrace new technologies will be the dominant competitors in the convenience and car wash industry. \
Cara Wolf, MBA CMC is the founder of Ammolite Strategies Inc.; an innovation advisory firm specializing in the implementation of emerging technologies. Her email is: firstname.lastname@example.org.
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