Personalizing mobile loyalty programs

This post is adapted from the Mobile-first brand loyalty strategy guide, on how to design a more effective customer loyalty and engagement program on mobile.

Even traditional loyalty programs aim to be personalized—it makes intuitive sense for customers to feel as though the experience is custom-tailored to their individual preferences. But the degree of personalization is typically limited to the level of the customer’s engagement with the brand, and delineated by the amount of money they spend over time. Spend more dollars, earn more rewards.

It’s a straightforward mechanic that has served many traditional loyalty programs well, but in a mobile context, users have much higher expectations for personalized experiences. In the age of Google Now, which serves up highly individualized and even proactive content to millions of Android customers on a daily basis, even standalone brand apps have come to be expected to compete with world-class machine-learning algorithms. And for many brands, the scale and complexity of these systems is simply too much of an investment to reasonably justify.

But there are methods that can help any app impart the same sense of personalization without investing millions in machine learning. These mobile personalization tactics organize themselves into three arenas: the messaging users see, the criteria for which users are rewarded by the loyalty programs themselves, and the exact nature of the rewards or benefits they ultimately receive.

A conversation, not spam

Recent Pardot research revealed that upwards of 83% of customers find marketing communications to be distracting when they’re not relevant or contextual. In a digital context, marketers know that customers have become increasingly sensitive to these messages and increasingly good at ignoring them altogether. And yet marketing communications are essential to deliver an emotional impact to consumers: the brand’s ability to create emotion with personalized content accounts for 50% of customer loyalty.¹

So how can brands personalize their messaging strategy without investing in the types of machine learning that Google has perfected? The answer, at least in the short term, isn’t individualization, but instead segmented personalization based on user personas.

Personas have been a consumer marketing buzzword for years, but have exponentially more relevance in a mobile product development context. Understanding users at a deeper level than their demographics—beyond age, income, or location—can get at the real psychographic drivers behind their behaviors and their engagement with the brand.

What does the customer expect to get out of the loyalty program? How does the brand intersect with their daily lives? What specific benefits of the loyalty program are they most excited about?

Understanding users’ expectations and psychological motivators can inform content strategy for messaging in a mobile context, and provides a degree of personalization that approaches true individualization. Delivering messages based on what users actually want, and sending differentiated messages to segments of the loyalty membership based on personas, can ensure that customers notice and find value from the messaging a brand loyalty program delivers. As is true across all digital and mobile products, a one-size-fits-all mobile loyalty approach is really one-size-fits-none.

“Criteria” is a plural word for a reason

The way a loyalty or rewards program is designed to engage with users can be optimized for users’ motivations and to boost effectiveness. To be successful on mobile, personalization for rewards programs means rewarding customers not just for the dollars they spend, but for the type of customer they are. Persona research can help in this arena, too. Identifying existing members’ routes through the loyalty funnel and mapping those paths through an understanding of user personas can empower brands to understand how each persona uniquely interacts with their loyalty program and build rewards models around them.

Brands need to evaluate how the structure of their rewards programs can be personalized to better connect with their users. Dollars saved for dollars spent is cold and impersonal, the type of experience that an algebra equation can provide. But loyalty experiences that introduce a bit of unpredictability, experiences that feel independently tailored to different types of users, are the kind that users will proactively seek out and continually engage with from mobile.

Having different loyalty paths that speak to the interests and priorities of individual persona segments can augment the personalized feel of the mobile loyalty experience, and help first-time users understand the immediate value that the program can provide. As users continue to engage with the program and volunteer more information about their preferences, the targeted experience can only get smarter.

Smarter carrots for smarter phones

Finally, there’s the matter of actually rewarding customers for their behaviors. The primary distinction is behavior-based rewards, versus threshold-based ones. Both can be effective tools in the brand loyalty arsenal, within digital products and within traditional channels, but building smart behavioral rewards is much more sophisticated an undertaking than defining limits for spending at which a coupon is awarded.

Basing the structure of a loyalty program’s rewards on user personas and audience motivations is similarly effective at driving increased engagement and retention among target audiences. Rethinking the very structure of an existing rewards program can seem a daunting task, but both new and existing loyalty strategies can benefit from a user-centered design approach.

Consider not only the quantitative interactions customers have with your brand—for instance, the dollars they spend or the number of monthly transactions they have—but also the qualitative interactions they make. Are they regulars at a specific brick-and-mortar location? Are they exceptionally loyal to a particular in-store brand or product line? Are they a customer who likes trying new items from the menu or mixing up their selections with each visit? Better understanding these interactions can help inform a rewards structure that is deeply personal and highly engaging.

The best practices of modern product development stress the importance of incorporating user feedback at every stage of the product development process. From the ideation and planning phase that relies on audience research and persona segmentation, to development which leans on prototyping and iterative user testing, through deployment with analytics that can help identify the experiences that resonate most, users themselves will always be the fundamental source of truth for effective digital products.

Best practices

• Segment content and messaging to be different based on customers’ psychographic personas.
• Use untapped data about individual users to inform highly targeted communications.
• Track engagement at an audience persona level to automate experiences that resonate most.