Recently I’ve been doing a lot of work in the loyalty area especially dealer customer loyalty and manufacturer brand loyalty and thought I would share some of the technology surrounding loyalty schemes/programmes.
Consumers are more inclined to participate in a loyalty programme during a recession and that loyalty rewards hold increasing value in the current economic downturn.
A lot of loyalty programmes in use today are accompanied by a loyalty card (aka reward card, club card, points card, advantage card) which facilitates the tracking of the customer. Even though the card has some psychological benefits it essentially acts a an identifier.
Cards and Other Forms of ID
Plastic “credit card” style cards are normally used as they fit nicely in most peoples wallets and purses but variations do exist:
- Paper cards
- Plastic cards
- Key fobs
- Nothing (just ask the customer for ID)
Rather than just have the customers name on the front of the card normally for convenience and security reasons the card will hold a unique identification number. This number usually appears on the front of the card just in case the reader or card becomes faulty – this allows manual entry of the number. The number can be read in a number of ways to make it quicker and easier for the operator at POS. The main ways to read the card are as follows:
- Magnetic Stripe
- Barcode
- Smart Chip
- RFID (Radio-frequency identification)
The above technologies just read the unique identification number into a computer via their hardware and software. Once read, the number is then looked up in a database to retrieve the customers details, past transactions and entitled benefits. Any transactions are then entered into the database for future reference. It’s rare to see transactions or in fact any other data written to the card, this is due to cards having limited amount of space and card writers tend to be more expensive then readers. The other major benefit is that the data is centralised so it can be shared across dealerships.
Future of Loyalty Cards
There are some downsides to having cards:
- According to recent research a third of customers forget or don’t carry their loyalty card.
- There are so many loyalty cards out there it’s quite common to have too many cards to carry.
- With all of these cards being produced, there is a recycling and green element to consider.
- The cost of readers at the dealership can be seen as cost prohibitive.
One way to combat these issues is to use the customers mobile phone. More and more phones now have NFC (Near Field Communication) capability. NFC is an emerging technology that allows wireless communication between devices from about 4 inches in distance. Most people have a mobile phone and this can be used more and more as a loyalty tool. SMS, MMS etc. are currently used heavily in loyalty to send vouchers and codes to customers.
Barcodes have also evolved and moved to the mobile phone. Pepsi use a 2D barcode that customers can photograph with their phone to show messages or download ringtones and wallpapers.
Microsoft Tag
At this years CES 2009, Microsoft announced their own 2D barcode, called Microsoft Tag. This barcode is based on the High Capacity Color Barcode (HCCB)but has an interesting twist. The tag doesn’t really carry any information but a unique code that gets looked up on the internet. This way you can store more information but more interestingly, you can log how many times the tag has been scanned.
You’ll need an application on your smart phone (or iPhone). To get the application, point your phone’s browser to http://gettag.mobi. Here are a couple of tags that I’ve just created to test it out.
Conclusion
Treating the customer well, making them feel special and personalising communication is the basis for customer loyalty. All dealers should be doing these things from day to day, but combined with a loyalty programme and loyalty card the dealer can gain an insight into customers buying behaviour. Identifying who your best and worst customers are, along with gaining feedback from them will help position your business above your competitors.