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Retailers should focus on loyalty over promotions in apps

December 26, 2013

The Starbucks app

It is clear from the current holiday season that retailers are enthusiastically using mobile applications to push promotions at consumers, but experts advise against overpacking an app with promotions and encourage focusing on loyalty.

Apps that are packed with sales pitches will most likely turn away consumers, whereas apps that create a relationship with consumers, provide value and/or utility and offer loyalty perks drive in the best consumers. In 2014, retailers need to use apps appropriately and in an engaging manner.

“I think it’s a bad idea to use apps exclusively for promotions,” said Jeff Berry, senior director of research and development at LoyaltyOne, Toronto, Ontario, Canada. “Generally consumers are looking more from your app than constantly a sales conversation.

“Promotions have a ‘you pushing sales’ element, and that’s not generally what they’re looking for in terms of engagement,” he said. “The app is a great opportunity for consumers to engage with a brand in a way that’s give and take as opposed to strictly promotional.

“It’s really having the selling feature not be the exclusive point of your app.”

Appropriate use
One of the seven trend-driven resolutions for loyalty marketers in 2014 from Colloquy’s Trendolutions is to use mobile apps appropriately.

According to Colloquy, an independently operated division of LoyaltyOne, the average consumer downloads 26 apps but only uses six of them daily. In order to make sure that retailers draw not only downloads but also repeat visits to their apps, they need to figure out the appropriate use for their brand and the specific value a consumer will gain from their app.

Apps are even more important for brand loyalty since consumers who download a retailer’s app tend to be more loyal to begin with. These are valuable consumers that retailers need to maintain a strong relationship with, and not turn them away.

The challenging part is defining what exactly is the appropriate use for an app.

“Generally what we’ve found in our research is consumers are looking for a few different things out of apps – entertainment value, so the whole idea around making the app something that actually is engaging and fun so that the consumer actually wants to come back to it,” Mr. Berry said. “Typically we’re finding that entertainment tends to be centered around a game, allowing people to actually do different things and engage with your brand in a fun way, or centered around music or sports.

“The second piece is really centered around utility, the app needs to offer something of value. It needs to be bringing news to the table, giving updates to consumers,” he said. “It also is a way to have the consumer engaged through feedback mechanisms, so things like ratings and reviews contained within your apps.

“The trick ultimately is you’re trying to get a consumer to download that app and keep it on a screen that they’re actually going to go on so the risk in not offering entertainment and utility value is they may download the app but they may not use it.”

App best practice
There a few things that all retailers’ apps need to have.

One is simplicity. The user experience of an app should be intuitive and easy, allowing consumers to quickly find and purchase products.

This means having great search functionality as well as an efficient checkout process, especially for members who have already entered their personal and billing information previously.

Apps should also reward users with offers and savings, not necessarily tied to direct sales pushes, but in ways that make a consumer feel like they are winning and getting a great deal. They should tie into loyalty programs that reward consumers with points for each purchase or other actions such as social media sharing.

However, retailers need to make sure not to pack too much information and content into an app, lest it become too overwhelming for consumers. Be wary of making an app inconvenient for consumers.

Additionally, apps should be entertaining and enjoyable. Go beyond basic utility to provide a fun and creative aspect to the app experience, be it through games, videos, music or anything else.

According to Nikki Baird, Denver-based managing partner at RSR Research, apps work best for loyalty and personalization, and mobile sites work best for promotions.

“Get on the learning curve quickly and plan to iterate a lot in short bursts. Make your splash screen quick but captivating,” Ms. Baird said. “Think through your content strategy to make sure that you have mobile-ready content.

“Apps, like sites, appear to currently be focused on commerce – on selling stuff,” she said. “But I think there is a lot more opportunity around being a loyalty resource – checking balances, checking new offers or new personalized merchandise offerings. And also assisting the in-store experience.

“But we’ve found in past reviews of retailers’ apps that it’s also important to have something extra – something fun like a mini-game or something that keeps people coming back for more. And that something extra needs to change either monthly or quarterly.”

App leaders
Starbucks is clearly a leader when it comes to apps. Not only does the retailer offer simple in-app payments and integration with its loyalty program, but it also provides an in-app inbox with special offers and free song and app downloads.

Mr. Berry also looks to a Canadian grocer, PC Plus, as an example of a model of a successful mobile app. PC Plus will make recommendations of recipes that contain products that a consumer recently viewed and then allow consumers to add the rest of the ingredients for the recipe to a shopping list in one click.

PC Plus’s app

Other apps that Mr. Berry looks to as leaders are Amazon and Safeway.

Jason Goldberg, vice president of the commerce practice at Razorfish, also points to Best Buy’s loyalty program and gamification as well as Sephora ‘s loyalty program as great uses of apps.

“Mobile apps need to have compelling value propositions beyond the experience that shoppers get via mobile websites,” Mr. Goldberg said. “Using the camera (for Visual Search, QRCode reading, submitting User Generated Content) and using NFC/BlueTooth for POS integration, micro-geo location (beacon, etc…) are great ways to extend mobile retail apps beyond mobile websites.

“Once a retailer launches a mobile app, it’s critical that they keep it fresh through frequent updates, new features and new content that give shoppers reasons to keep using the app,” he said. “Loyalty programs are one of the best ways to entice recurring app usage.

“For a retail mobile application to become successful, it must become a habit on the part of the shopper.  The best retail mobile apps give users multiple utilities in a single app.”

As retailers refine their mobile strategy in 2014, they should take these experts’ recommendations to heart and make sure that their app is appropriate. Retailers need to spell out an exact value or utility and ensure that it is being carried across to consumers.

“Apps play a special role here in that they are with the person all the time, and so you must use your best judgement in how you use this channel to communicate,” said Scott Michaels, executive vice president at Atimi Software, Vancouver.

“Retail apps should be holistic: include loyalty card review and account status, the current offerings, some fun / magic, and of course ecommerce to complete transactions,” he said.

Final Take
Rebecca Borison is editorial assistant on Mobile Commerce Daily, New York

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Rebecca Borison is editorial assistant on Mobile Commerce Daily and Mobile Marketer. Reach her at

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