By Mehmet Sezgin, myGini
Smartphones have become integral to how we live, shop and manage finances. There are 229 million smartphones in the hands of US consumers. And with apps telling us the train is late, someone is at the front door and our favorite artist has just released a new single – we are constantly on the lookout for solutions that make life more convenient.
The rise of mobile payments is part of this trend. Mobile has reduced the payment process to a single tap of the phone, with NFC-enabled POS terminals allowing retailers to participate in a faster payment experience. It is understandable traditional banks and credit unions want to capitalize on this trend by creating their own mobile solutions – but there are challenges.
Banking apps need some shopping inspiration
The US banking system is characterized by a large number of players, with over 5000 FDIC-insured financial institutions – including an increasing number of digital-only banks. As the competition grows, so do consumer expectations.
Any new banking app that is to succeed on the market needs to appeal to a more tech-savvy audience. Creating meaningful interactions and boosting user activity takes more than an app that lets consumers view their balance and monitor transactions. There must be something new and exciting there – something that reflects real understanding of their customers’ needs, wishes and behavior.
To get a better idea of what people want from their banking provider’s app, we need to first understand how they shop. A shopping experience that fills consumers with the feeling of convenience, choice and being personally cared for makes them return again and again. Indeed, retailers were quick to realize that providing rewards, personalized offers and discounts incentivize consumers to jump on board and spend more.
Retail is an industry long on the hunt for ways to earn consumer loyalty. Can financial institutions take a leaf out of retailers’ playbook or is there a need to perfect the formula before they adopt the tactics?
Static loyalty makes shoppers switch off
The concept of earning shopper loyalty through promotions is not new. But for too long they have been provided via point cards, coupons and vouchers – and these methods are not without their problems.
How many times have you lost that little piece of paper you collect coffee stamps on, before earning that magical 10th cup? How many times has a clothing retailer’s “20% off on your birthday” offer bypassed you completely because you never received a reminder? How many hours have you spent browsing for coupons to use in your local area? And how often have they expired without warning?Paper is going out of vogue and the bore of having to log onto a website through your browser to access promotions and discount offers is not much better either. Studies show 57 percent of members abandon loyalty programs due to how long it takes to earn points. Shoppers are being let down by evergreen loyalty programs that offer no new incentives, show no sign of individuality and simply fail to bring any excitement into shopping. In the end, it boils down to a question of dynamic loyalty.
Four elements of dynamic loyalty
To combat this loyalty fatigue, retailers need to design their programs to be frequent, relevant, interactive and visible. Frequency directly challenges the sluggish or static nature of loyalty programs by fueling shopper curiosity and spending with regular, personalized offers. Relevancy says it’s not enough to know what a person wants, it is also crucial to know when they want it. If a cardholder is bombarded with deals about a freshly purchased high-value item they have no intention to replace in the next couple of years, a retailer’s deal will make them tune out at best and regret their original purchase at worst.
Simply giving people what they want, when they want it is not enough either. Retailers must go beyond that to earn shopper loyalty and trust. By making their platform interactive, they can remind the cardholder of any ongoing or close to expiring deals and rewards in a timely manner. Visibility of transactions and completed deals further reinforces trust, demonstrating to customers that they are in control of their expenses and are getting the rewards they signed up for. If a loyalty platform cannot do these things, it is as good as if it was not even there in the first place.