At your service: How is mobile changing the loyalty program game?

Advertising a sale on potato chips in your store’s weekly flyer sounds simple, right? But as we all know, it’s more complicated. Ken Kuschei, director of consumer insights at Longo’s, explains: “You might have enough room on the flyer to put two bags, so you’ll put regular and barbecue potato chips.” However, if a customer prefers sour cream and onion or dill pickle, the image on the flyer may not resonate.

Although chips may be small potatoes, Kuschei uses this example to illustrate how mobile is reinventing loyalty programs in a big way.

Users of the Longo’s app, which integrates the grocer’s Thank You Rewards program, receive personalized flyers based on past purchases. That means those sour cream and onion or dill pickle lovers will see their chips of choice front and centre in their custom mobile phone flyers.

Mobile is pushing grocery shopping to become a more personalized experience, says Chris Bryson, founder and CEO of tech provider Unata, who worked with Longo’s on its app that launched back in 2013.

People are being trained to expect personalized content, he adds. “Consumers expect a one-to-one experience because that’s what they have with every other leading mobile experience, whether it’s Facebook or Netflix.”

As consumers shift to digital, there are huge opportunities to bringing grocery-chain loyalty programs to mobile. But also some challenges.

The 2016 Bond Brand Loyalty Report indicates there is still a way to go for many retailers’ apps in terms of improving the user experience and level of personalization. The survey found that while 44% of Canadian consumers would like to engage with loyalty programs through a mobile device, only 15% of respondents were satisfied with how reward points could be earned, and only 12% felt very satisfied.

Scott Robinson, VP of design and strategy at Bond Brand Loyalty says a high percentage of consumers want to interact with a brand or a program through a mobile app, but they don’t find the set of features and functionalities offered desirable. “That says to us that brands still need to put their finger on exactly what their customers are seeking through their app experience because it seems to be falling short of expectations.”

Still, loyalty apps offer grocers numerous possibilities for engaging customers and providing new experiences. Jeff Berry, senior director of research and development at LoyaltyOne, says grocers can leverage loyalty apps as part of an integrated, personal shopping experience.

“Grocers who use an app to shape real-time interactions with their customers in-store, leveraging the insights they have about the customers from loyalty program data, can create personalized, meaningful interactions with their customers,” says Berry. “Connecting a loyalty app to technologies like beacons and smart shopping carts would allow grocers to use Unata’s Bryson agrees. He sees opportunity for grocers to create personalized in-store interactions with customers through, for example, beacon technology. Shoppers could interact with store displays to discover who produced a desired bag of potatoes and where. Or they could interact with store signage to find gluten-free products down an aisle.

“When you combine mobile with loyalty and the user’s preferences or purchase history, you can personalize the shopping experience,” he adds.

For the past few years, Vancouver Island chain Quality Foods has tied its app to its in-store experience.

In 2012, the grocer added “My Deals” to its new app, which integrates the Q-Card loyalty program. Customers can select offers in the app’s My Deals section, and the discount is automatically applied at checkout. Shoppers can also use the app to check their points balance and view the day’s “Appy Hour” special from 4 p.m. to 6 p.m.

“You can cruise the aisles of any Quality Foods store and find shoppers with phones and tablets, looking at specials and activating My Deals,” says Rob MacKay, marketing director at Quality Foods. “We show them at the top of the screen how much money they have saved to date by using the app.”

MacKay says the integration of Q-Cards with the app has become an important part of Quality Foods’ relationship with its customers, but he doesn’t see the app completely replacing plastic cards anytime soon. “While we feel that we have an edge in app acceptance and usage, we are still in the early stages of this technology,” he says. “Proximity marketing appears to be the next phase, but it may be a little too personal for many people. We are very careful to ensure we don’t breach the trust and comfort level of our .”

Meanwhile, Longo’s is looking at ways to evolve its app, which currently allows users to easily access their points balance, see their past purchases, scan products in store to view ratings and reviews, and create shopping lists. Kuschei says the company is considering beacon technology as well as expanding its geo-fencing capabilities—two technologies that allow for real-time, location-based marketing.

Longo’s even looks to innovations outside of retail to see how it can incorporate new features into its mobile experience. One recent example is Pokéman Go, the location-based augmented reality game that has fans hunting for Pokéman creatures with their mobile phones.

“I think that type of technology is worth paying attention to,” says Kuschei. “I’m not sure how exactly we would integrate that into a loyalty program, but new technologies usually start in the gaming world.” And eventually, they can be seen in loyalty programs.

Other ideas around gamification are also being considered, such as entertaining ways for customers to earn points. Longo’s app users can already earn points by rating products, which Kuschei says allows the company to make better business decisions as it tells them what customers like. “But it also allows the customer to come closer to getting free product as they help us,” he says.

One of the biggest challenges grocery retailers have in the mobile space is keeping up with the rapid developments in technology. “The pace of change and innovation is really difficult because modern shoppers’ expectations are high and continue to get higher,” says Unata’s Bryson. “If your application doesn’t feel like it was made in the same year or decade as today’s hottest apps, and if the user experience isn’t on par, the shopper is going to give up.”

Another challenge is that grocers are now competing with coupon and flyer-aggregating apps such as Flipp and Checkout 51. A recent report from BMO Capital Markets stated that Flipp has a greater number of unique visitors than Loblaw’s PC Plus app and Shopper’s Drug Mart’s Optimum app. The report said BMO considers Flipp to be a “looming threat,” particularly for discount grocery banners.

“People just don’t have the attention span to go in 15 different directions to save a handful of dollars on their weekly grocery basket,” says Sean Claessen, executive VP of strategy and executive creative director at Bond Brand Loyalty. If you’re a grocer, he adds, “The challenge is you now have to convince shoppers that your app is worth space on their phone and worth paying attention to, more so than Flipp and Checkout 51, and a hundred other ways to get coupons and deals.”

However, grocery retailers have one big advantage over the competition: a more comprehensive view of the customer and what’s in their cart. “Checkout 51, Flipp and others just get a narrow understanding based on what coupons they’re downloading or redeeming in a way that is not true for the grocer,” says Robinson. With their data, grocers can gain “a broader sense of needs that a consumer might have… and not play the finite single-product price game.”

Grocers may be armed with data and have the ability to deliver personalized content, but they can’t forget about traditional channels. Content needs to be omnichannel, says Bryson. Mobile is great, but the experience has to also work well online. And that personalized content should still also be delivered by email.

Bryson believes the grocery industry is still a long way away from being able to take advantage of all the shiny new objects.

“Fundamentally, what grocers need to do is invest in their data. Invest in their content around products. And invest in an infrastructure that allows them to deliver personalized content.”

Only then will they keep customers engaged and keep them coming back to the app and to the store. Now that’s loyalty.